Funeral bonds and prepaid funerals

Paying for funeral costs now

There are lots of good reasons to pay some or all of your funeral costs now. Most ways of paying for them don’t count in your assets test. In some cases we do count funeral bonds.

Burial plot

This is a specific spot or a right to a place at a general location such as an area of a cemetery.

How we assess burial plots

We don’t include a burial plot in your assessable assets, no matter what its value is.

You don’t need to tell us if you own one.

Prepaid funeral costs

This is where you arrange and pay for your funeral in advance. You can either prepay the funeral director or buy a funeral bond and assign the benefit to the funeral director.

Contract

When you pay for your funeral in advance you’ll need to get a contract that both:

sets out the services you’ve paid for
states that there are no more costs to pay.

How we assess prepaid funeral costs

As long as you have a contract that says you’ve paid in full for your funeral, your assessable assets for the assets test won’t include either:

the amount you prepay to a funeral director
the amount you invest in a funeral bond that has been assigned to a funeral director.

You only need to tell us about prepaid funeral expenses if you own a funeral bond.

Funeral bonds

We sometimes call funeral bonds funeral investments. These 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 the funeral director
it can only do this to pay for funeral costs.

How we assess funeral bonds

Exempt bonds

Your funeral bond won’t count as an assessable asset if any of the following occur:

you have assigned it to a funeral director
it’s for fully prepaid funeral services
you have a contract that sets out the services and says they’re paid in full.

We won’t include the value of up to 2 bonds as long as:

you don’t also have prepaid funeral expenses
the amount you’ve invested in the bonds is under the Funeral Bond Allowable Limit.

Funeral Bond Allowable limit

As at 1 July 2024 the allowable limit is $15,500. The Department of Social Services reviews this limit on 1 July each year.

If you jointly own a funeral bond, we count it as a single bond that you own. This means the Funeral Bond Allowable Limit is the same as for any other bond.

You and your partner can both invest in a single bond. The allowable limit for this bond is the same as for any other – not double.

Bonds that aren’t exempt

If your funeral bond isn’t exempt, we’ll count it as a financial investment. This means both your:

share of the current value and interest is an asset
deemed income from the investment counts as your income.

Each year you should get a statement from the fund stating both:

the bond’s current value, including any interest to date
when the bond’s value increases.

If you have money in a number of funeral bonds, you can choose which 1 or 2 to make exempt. Your aim here is to keep the highest amount you can exempt from the assets test. We can help you work this out.

Tell us about your funeral bonds

You must tell us about any funeral bonds you own. You need to do this even if you know they’re exempt from the assets test.

If you know the bond is exempt

You need to tell us both:

how much you and anyone else have invested in it
if you own it by yourself or jointly.

If you don’t know it’s exempt

You need to give us documents that show all the following details:

the current value of the bond
the amount you and the other owner invested in it
if you own it by yourself or jointly
if you have a contract with a funeral director.

Tell us about changes

If the bond is exempt

You don’t need to tell us if you earn interest from it.

You’ll only need to tell us if any of the following occurs:

you pay more money into the bond
you invest in another bond
the other owner of a bond you jointly own, dies.

If the bond isn’t exempt