How an Investment Bond helped me secure tax-effective outcomes in my Family Trust

Vivian recently explored the advantages of incorporating Investment Bonds into her family’s wealth management strategy, especially within the framework of their Family Trust. This decision stemmed from the need to optimise tax management and streamline distributions and withdrawals within her financial portfolio.

One of the key benefits she discovered was the symbiotic relationship between the bond and her Family Trust. The bond’s investment in growth assets aligns well with her long-term wealth accumulation goals, leveraging the power of compounding income and gains to grow her capital steadily over time.

Unlike most Managed Funds, the bond offers the flexibility of not requiring regular distributions. This feature proved invaluable for Vivian’s Family Trust, allowing her to manage distributions more strategically and efficiently.

Another compelling advantage surfaced after a decade of investment: withdrawals from the bond became exempt from capital gains tax. This aspect significantly enhanced her tax planning and overall financial performance.

"The ease of application and investment streamlined my wealth management processes and allowed me and my family to focus more on strategic decision-making."

What truly sets the bond apart is its accessibility. While the initial commitment is for a ten-year term, Vivian found comfort in knowing that she could access funds from the bond at any time if needed. Although early withdrawals may incur some tax liabilities after applicable offsets, this flexibility aligns with her and her family’s evolving financial needs.

Moreover, the simplicity of establishing a bond — with no setup costs involved — made it a straightforward addition to her investment portfolio. The ease of application and investment streamlined her wealth management processes and allowed her to focus more on strategic decision-making.

An aspect that particularly resonated with Vivian was the bond’s exclusion from the estate planning and probate process. Upon death, the funds in the bond seamlessly transition to the nominated beneficiary outside of any probate proceedings. This feature not only ensures the continuity of financial support but also provides peace of mind to those overseeing the Family Trust, reducing administrative burdens during challenging times.

In conclusion, integrating Investment Bonds into her financial strategy has proven instrumental in optimising tax management, enhancing investment flexibility, and streamlining wealth transfer processes. It has become an essential component in the ongoing efforts to build and preserve wealth for current and future generations within their family structure.

  • How it works

    A person connected to the Family Trust opens the bond. The Family Trust then contributes money to the bond. The bond is non-distributing therefore there is no distributable income actions needed for the Trust.

    For example:

    Family Trust with $500,000 Beneficiary A Beneficiary B
    Investment Bond starting amount $200,000 n/a n/a
    Trust Income from Bond 0 0
    Investment Bond grows to $600,000 after 10 years*, and Trust makes tax-free withdrawal of $100,000 to each beneficiary  $100,000 $100,000
    Tax payable $0 $0

    *example growth rate for illustration purposes only

Grow your wealth

An Investment Bond allows you to manage tax and control distributions or withdrawals. A bond complements the aim of a Family Trust and serves to help solve tax and trust distribution issues. A bond invests in growth assets to grow your capital by compounding the income and gains.

Grow your wealth,
consolidate your legacy