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Investment bonds ‘back in vogue’ for older SMSF trustees

Investment bonds ‘back in vogue’ for older SMSF trustees
Miranda Brownlee
07 December 2017 — 1 minute read

The transfer balance cap has seen investment bonds regain interest as an estate planning strategy amongst older SMSF trustees with larger balances, according to a technical expert.

Australian Executor Trustees senior technical services manager Julie Steed said she is seeing a rise in the number of older SMSF trustees considering investment bonds, particularly those with larger balances.

“They’ve met a condition of release and so they might be taking some money out of their superannuation and putting it into investment bonds for their grandchildren usually,” explained Ms Steed.


A member who has $4 million in superannuation and is age 65, for example, she said, probably doesn’t have any financial dependants in many instances and may not have any debt.

The member may decide, she explained, that they’re happy for their spouse to receive $1.6 million as an income stream. 

“[The spouse] will probably have to roll their pension back into accumulation phase but at least it can stay in super,” she said.

With the additional amounts, they may decide to put that in an investment bond, she said, particularly in situations where it’s a large family or where there may be some disagreements within the family about the will.

“Even if I've got a good will, things might get tied up while the family disputes different aspects of the will,” she said.

“We're seeing a lot of interest in those types of grandparents taking out multiples of $50,000 for their grandchildren, and putting them in an investment bond, and that's under an insurance contract, so it doesn't form part of the estate assets.”

“If the nominated recipient is alive, then the benefit will be paid to them, so a lot of those are starting to come much more back into vogue.”

Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: [email protected]momentummedia.com.au
Investment bonds ‘back in vogue’ for older SMSF trustees
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