Policies for L and D - EDA

Question 1

A1 - EDA

Answer 1

Life policy on life of the deceased ceded/donated to spouse/child ito:

an ANC or PNC (registered at the deeds office)

EDA = excluded (exception)

Question 2

A2 - EDA

Answer 2

Life Policy on the deceased with a nominated beneficiary that is not the estate - maturity value was paid directly to the beneficiary

EDA= included (Add no 6 deemed property ito section 3(3))

Question 3

A3(i) - EDA

Answer 3

Life policy on life of the deceased where there is not a nominated beneficiary or the estate is the nominated beneficiary or if the nominated beneficiary predeceased the deceased

EDA: included less no 4, add no 6 deemed property ito section 3(3))

Question 4

A3(ii) - EDA

Answer 4

Life policy on life of deceased. Maturity values is used to settle a liability = credit cover policy

EDA: included less no 4, add no 6 deemed property ito section 3(3))

Question 5

B1 - EDA

Answer 5

Reason: to acquire an assets (ie shares) of the deceased

Life policy taken out ito of a buy and sell agreement by NON partner/NON shareholder/NON director

EDA= Included. Add no 6 deemed property ito section 3(3)); LESS premiums paid and interest @6% earned on premiums. (If ED is payable, such a person would be liable to contribute)

Question 6

B2 - EDA

Answer 6

Reason: To acquire an asset of deceased

Life policy taken out in terms of a buy and sell agreement by partner, shareholder or director

EDA: Excluded (exception)

Question 7

B3 - EDA

Answer 7

No reason: will not acquire an asset of deceased (no buy and sell agreement)

Life policy taken out by another

EDA: Included. Add no 6 deemed property ito section 3(3)); LESS premiums paid and interest @6% earned on premiums. (If ED is payable, such a person would be liable to contribute)

Question 8

B4 - EDA

Answer 8

Reason: it might not be easy to replace the services of the deceased in business = Key Man Policy

Life policy taken out by business

Life police was taken out to cover potential losses as if key person dies the business could suffer severe losses.

EDA: excluded (exception)

Question 9

C1 - EDA

Answer 9

Life policy has a surrender and maturity value (the policy has either been cashed or ceded)

EDA: such a policy has a surrender value and is a sec 3(2) property - not deducted under number 4 and not added as property deemed under number 6