Funeral Bonds

What is a Funeral Bond?

A Funeral Bond is a simple and tax effective way to help meet your future funeral costs, with no age or health restrictions. You can incorporate the investment as part of a pre-paid funeral arrangement and there is also the potential to improve pension benefits.

A funeral bond ensures the money is set aside to fund the future costs of funerals and to reduce stress for family. Funeral Bonds are managed investments that earn interest. Funeral bonds have all the following features:

• the money must be in an independently managed funeral fund
• the interest must be added to the capital
• the fund can only release the money after your death
• it can only do this to your estate or to a funeral director
• it can only do this to pay for funeral costs.

What are the benefits?

A Funeral Bond reduces assessable assets with both Aged Care providers and Centrelink.

A Funeral Plan Bond will not affect your means tested pension so you can invest up to the current Government threshold of $15,500 for 2025 financial year. Provided you do not invest more than $15,500 in a funeral bond, the investment will be exempt under both the income and assets tests for Centrelink. This amount is updated every 1 July at which point you may add additional funds to your bond should you choose, whilst not exceeding the new limit.

This can help to boost your Centrelink entitlements to improve your cash flow.

The interest is added tax-free to boost returns. The total value can grow over the $15,500 limit and will be fully exempt, provided you did not invest more than the allowable threshold.

What should I be thinking about?

• A Funeral Bond can be used to tax effectively save and pay for funeral expenses.
• You are not required to report any investment returns in your personal tax return each year.
• A Funeral Bond’s earnings are taxed at a maximum rate of 30%.
• Upon your death, the investment can be redeemed to pay funeral costs.
• If the expenses are less than the balance of your investment, the remainder is available for your estate.
• You cannot withdraw any money from your Funeral Bond prior to your death, as it is designed to be used to meet your future funeral expenses.

This information is of a general nature. It does not consider your personal objectives, needs or situation. It does not represent legal, tax or personal advice and should not be taken as such. If it has been provided to you with a Statement of Advice (SoA), you should rely on the personal advice in the SoA.

Care has been taken to provide up to date and accurate information relating to the subject area however BR Advice Pty Ltd (ABN 30 612 056 523, AFSL 488655), Blue Rock Private Wealth Pty Ltd (ABN 95 166 927 055, AFSL 452733), and their representatives make no representation as to its accuracy or completeness.

Published: July 2024.

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