INSURING AGAINST DEATH DUTIES [To the Editor of THE •
SeEci.4..ron.]
Sin—in your last issue you write " At present if the owner of an estate worth £100,000 took out a policy for £100,000 to cover it, the only effect would be that his estate would pay duties on £200,000." This is but partially true, since the only duty payable on £200,000 would be estate duty. Legacy and/or Succession duty would probably be payable in addition, but only on the value of the legacies or successions, which could not amount to as much as £200,000 since estate duty would have alreadY been deducted from this sum.
It seems, therefore, that when you speak of " duties on 1200,000 " you really mean estate duty. If so, a policy for £100,000 is unnecessarily large ; actually it need not be for more than £28,205, as a short calculation will show. (The total value of the estate will be £128,205, a sum which attracts estate duty at the rate of 22 per cent. ; the duty will amount to £28,205, leaving a net sum of £100,000.) Al regards the proposal to exempt a properly ear-marked insurance fund, may I point out that there is no essential difference between a policy to insure against death duties and a whole life assurance or any other form' of investment ? All have the effect of contributing towards a fund out of which estate duty is to be paid, and there is no real reason why one should be exempted more than any other.—Yours
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