Insurance bonds can cut aged-care accommodation fees

– Holding an insurance bond inside a trust can produce a better result from Centrelink and Veterans Affairs’ means tests 

– The insurance bond does not generate taxable income and a trust is assessed on taxable income – so no income is assessable by Centrelink

– Centrelink/DVA sees these bonds in trust as non-assessable for pensioner income

– People seeking aged care accommodation should act by middle of 2014

Aged-care fees can be drastically cut through using tax-paid insurance bonds.

Austock Life says that insurance/imputation bonds do not distribute taxable income (insurance bonds are internally taxed) and so Centrelink sees the bonds as non-assessable for a pensioner’s income, if held inside a properly structured trust.

“Centrelink and the Department of Veterans Affairs assess family trusts on taxable income and not deemed income and so – as long as the bonds are the sole asset of a trust – the structure can cut aged-care costs,” said Richard Atkinson, AUSTOCK Life.

“From 1 July 2014, the government will be changing the rules for assessing the assets of people seeking aged care accommodation. AUSTOCK Life recommends that the carers and financial advisers of people seeking aged care accommodation should act quickly to grandfather the current more favourable asset treatment

“The current income and asset test rules will change from 1 July into a comprehensive means test which will treat income more harshly than in the past. If at all possible people seeking aged care accommodation should move before the middle of the year,” said Mr Atkinson.