ESTATE PLANNING TO LESSEN DEATH DUTIES

Press, Volume XCIX, Issue 29269, 29 July 1960, Page 8

ESTATE PLANNING TO LESSEN DEATH DUTIES

Methods of estate planning to lessen the crippling effects of death duties were outlined by Mr J. McAnally, chief accountant of the Guardian Trust and Executors Company, in an address to a conference of A.M.P. Society agents in Wellington recently. The objective of estate planning. he said, was not only to reduce the liability for death duty but also to provide, by means of trusts and settlements, an avenue for the beneficiaries to share the testator’s income during his lifetime. Properly set up, a trust would also act as a reserve from which death duty might be advanced and so preserve the estate. Before dealing In detail with planning to suit estates of varying size, Mr McAnally quoted official statistics showing the numbers and values of estates filed for death duty purposes each year. Of the 11,000 to 12.000 estate accounts so filed annually, he said, 80 per cent in numbers were under £5000; 10 per cent, were between £5OOO and £10,000; 8 per cent, were between £lO,OOO and £30,000, and only 3 per cent were over £30,000.

“These percentages are approximations only," said Mr McAnally, “but are sufficient to show that contrary to opinions held in some quarters today, 80 per cent of estates could carry life insurance and retain its full effectiveness. So long as graduated rates of duty are in force with low rates for the small estates it will remain so." Important Feints

Mr McAnally listed the following as 10 important pointe to remember in estate planning: Any estate planning scheme should be simple and fully understood by the dor.or. No plan should reduce a man’s estate to such an extent that he would be forced to rely in his old age on his children or others. Avoid any* scheme which was patently a subterfuge. In small estates life insurance was the most effective, and the

provisions of the Married Woman's Property Act, 1952, could be very helpful. Supplement any sale, gift or transfer of a life insurance policy with a medical certificate that the assured had a normal expectancy of life. The net spread by Section 5 of the Estate and Gift Duties Act was very wide, and no estate planning scheme should be put into operation without legal advice.

Properly handled gift duty could be regarded as death dutypaid in advance. Revision of wills of husband and wife was a necessity. A well defined track of events should be left so that any questions as to how. why or when an asset was given could be answered, say, 30 years afterwards.

It was the job of the Inland Revenue Department to collect death and gift duty on assets which come within the scope of the act. Its officers had had long and wide experience, and whilst they were very fair, they would not countenance any dealing which did not comply with the act