Set up a trust policy

Here is another idea of how a wealthy person can reduce estate duty:

- contribute a certain sum for each beneficiary in a trust policy now
- invest this sum in our combined fund or annuity
- allow the beneficiary to draw out a monthly sum from a certain birthday
- restrict the right of the beneficiary to draw out the principal sum

This gift is subject to estate duty, if the benefactor dies within 5 years of the transfer. This liability can be covered by a 5 year term policy.

RATIONALE: It is better for a wealthy person to transfer part of your wealth to your beneficiary now. If you do not want them to use the money immediately, you can set up a trust policy to ensure that the fund is withdrawn in instalments.