Insurance proceeds and estate duty: no duty where policy never vested in the deceased minor before death

Insurance policy proceeds payable to the proposer on the death of a minor life assured were not chargeable to estate duty where the policy remained vested in the proposer until the assured attained majority. Because the deceased never reached the age for vesting, he had no beneficial interest capable of ceasing on death, so no property passed on death under sections 5, 6 or 7 of the Estate Duty Act, 1953. The amount also could not be assessed as the deceased's separate estate under section 34(3). The addition to estate duty was therefore unsustainable.

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Issues: Whether the insurance policy proceeds received by the father on the death of the minor son were liable to estate duty as property passing on death or as a separate estate under the Estate Duty Act, 1953.

Analysis: The policies, by their terms and endorsements, remained vested in the proposer until the life assured attained majority. If the life assured died before attaining majority, the proceeds were payable to the proposer and were treated as his estate. The deceased never attained the age at which the policies could vest in him, and therefore he had no beneficial interest capable of ceasing on death. In that situation, sections 5, 6 and 7 of the Estate Duty Act, 1953 did not apply, and the amount could not be brought to duty as the deceased's separate estate under section 34(3) of that Act.

Conclusion: The insurance proceeds were not liable to estate duty in the hands of the deceased minor, and the addition as separate estate was unsustainable.

Ratio Decidendi: Where a policy remains vested in the proposer until the life assured attains majority, and the life assured dies before vesting occurs, no property passes on death and no interest of the deceased ceases so as to attract estate duty.

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