Source: Sureplan Friendly Society (Published: April 16, 2013)
The danger of using a bank account to provide for funeral expenses
In 2013 legislation was rushed through parliament that allows the federal government to claim money from bank accounts that have been inactive for three years as “unclaimed moneys”.
From May 31 the government will be able to claim money from accounts that have not had a withdrawal or a deposit made within three years (previously it was seven years) and it will be transferred to the Australian Securities and Investment Commission (ASIC).
While the new law has been criticized as a cash grab, the government says that if anyone can prove ownership of the funds from the inactive accounts, the money can be reclaimed from ASIC but this is a process that could take months.
Critics have further pointed out that some of the inactive bank accounts have been set up for rainy day scenarios such as; for inheritance purposes, for a child’s education or to cover funeral expenses.
In effect, the tightening of the time frame for inactive bank accounts means people wanting to plan ahead for their funeral arrangements need to find an alternative funding method otherwise they could leave their family with the headache of reclaiming the bank account balance from ASIC. Considering this, anyone wishing to put some money away for their funeral arrangements, the purchasing of a funeral bond such as our Sureplan Gold is a wise option.
Sureplan Gold is a conserative, low risk fund that invests only in A and AA rated fixed interest securities and cash that could be considered as a funeral saving plan. Sureplan Gold has no contribution or application fees and people are able to pay in a lump sum or make regular deposits. A A bonus can be credited to members’ policies annually from any surplus (growth) generated in the fund that historically has been as good as a bank. Unlike bank interest, any annual bonus, if paid, is not part of a member’s tax assessable income.
Funeral Bonds are considered an exempt asset for pension purposes up to a maximum threshold (which changes each July 1 yy), therefore useful for people on Centrelink or the Department of Veterans’ Affairs pensions. This allows an individual to put away $13,000 (as at 1 July 2018), or in the case of a couple $26,000 and have it not be income or asset tested. This can assist people who are on a part-pension or can help others who are just outside the pension threshold to qualify for a part-pension and the associated fringe benefits.
In addition, should people need to undertake an asset assessment to determine their eligibility for a government subsidy when entering an aged care facility, a funeral bond may also be considered as an exempt asset.
To set up a funeral bond through Sylvan Funerals, please contact us on (07) 3812 4000 or click here for more information