Estate Planning

A properly structured deferred variable annuity policy (and the assets contained within it) is separate from a policy owner’s estate. Upon death, payment will be made as per the policy owner’s instructions once a death certificate has been presented.

As the policy is not part of the estate, its proceeds can not be used to meet any outstanding liabilities of the policy owner and there is no probate period or last will and testament required – it is merely paid out in either a lump sum or as annuity payments, or a mixture of both.

As the policy is paid out as per the policy holder’s directions, it can not be contested or disputed like a last will and testament can. The beneficiary can also be a family trust, which ensures that family assets remain within the family. Because policies are generally owned by the life insured, should their financial circumstances change at any time prior to death, part or all of the policy can be cashed in or surrendered.

Unlike superannuation, there is no tax on the death benefits if they are paid to non-spouse or non-descendants. Within super, if death benefits are paid to non-spouse or non-descendants, then the proceeds are taxed at 15% plus the Medicare levy.

The ability to nominate a trust as beneficiary of the policy ensures efficient estate planning. Often it is not financially wise to merely bequeath assets to a spouse or descendant as those assets no longer have any asset protection benefits. They become open to lawsuits. Having a trust as the beneficiary ensures uninterrupted asset protection.