Changes to the Age Pension asset threshold have been much in the news lately, with legislation now passed that means from 1 January 2017, the upper thresholds will be reduced, while the lower thresholds will be increased. For those who may narrowly miss out on a full or part Age Pension due to these new thresholds, there is a cost-effective and legitimate means by which to decrease your assessable assets.
Under Human Services rules, the purchase of a prepaid funeral plan from a funeral director not only decreases the amount of assessable assets you hold, it also saves your family the hassle and financial worry of planning a funeral.
Regardless of the value of prepaid funerals, they are excluded from the asset test. From 1 July 2016, the Funeral Bond Allowable Limit applies and only the first $12,500 of a is exempt from assessment and this is indexed in line with the consumer price index (CPI) on 1 July each year. It’s important to consider how the applied rules will affect your claim for an Age Pension before purchasing.
So, what’s the difference between a prepaid funeral and a funeral bond?
Simply put, a prepaid funeral allows you to make all the plans for your funeral and pay at the rate quoted on the day. Prices will not rise and your family will not have to find thousands of dollars in a hurry when you die.
A funeral bond is a managed investment where the interest earned is added to the capital and is paid to your estate or funeral director upon your death.
Of course, not everyone has the money sitting around to pay for a funeral before the event, which is why Simplicity Funerals offers Australia’s leading prepaid funeral plan, with payment plans available to help you spread the cost.
As with any financial decision, you are encouraged to speak with an independent financial advisor before making any commitment.
Find out more about prepaid funerals at Simplicityfunerals.com.au/prepaying-a-funeral
For details of how funeral bonds and prepaid funerals are treated under the asset test, visit Humanservices.com.au