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There may be good reasons for a trust to own a life assurance policy, but it needs to be done correctly. If this is something you are considering, make sure you are aware of these issues: 1. Estate duty Many articles erroneously state that a trust-owned policy avoids estate duty. A trust-owned policy is still a deemed asset in terms of the Estate Duty Act, and the only estate duty benefit is if the trust pays the premiums on the policy, and is the owner and beneficiary, such premiums paid by the trust compounded at 6% will be allowed as an exemption against the eventual duty. Make allowance for the eventual duty when you do your estate and cash/liquidity planning. 2. Income tax Unless the life assured is that of an employee of the trust, which is very rare, the premiums paid by the trust will not qualify for a tax deduction. However, the eventual policy payout will then be free of income tax. 3. Authorisation It is vital that the trust has passed an authorising resolution authorisin...

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