C&A Friedlander Attorneys

When attending to the administration of an estate, estate duty is required to be calculated, and if estate duty is applicable same needs to be paid to SARS upon receipt of the final assessment from SARS or within one year of the date of death of the deceased.

Estate duty is calculated by taking the gross value of the estate, being all property and deemed property, and deducting estate liabilities and all other allowable deductions which provides the net value on which estate duty is levied at 20% on estates that exceed R3.5 million and where the net value exceeds R30 million then the estate is liable for 25% on the balance exceeding R30 million.

To put this in to context, it is important to take note of what constitutes “property” for estate duty purposes and in terms of the Estate Duty Act (the “Act”) property includes any right in or to property which is movable, immovable, corporeal or incorporeal, as well as real rights such has rights attached to fixed or movable property as well as personal rights such as any usufruct or right to an annuity. It is important to note that Crypto assets are regarded as movable, incorporeal property in an estate.

Deemed property is any benefit that is received due to the death of the deceased and includes all domestic life insurance polies on the life of the deceased and accrual claims on behalf of the deceased person against the surviving spouse.

Property that is excluded from estate duty includes any benefit payable to the deceased from an approved retirement fund as a result of their death.

Bear in mind that any person who is not an ordinary resident in South Africa at the time of death but who owns property in South Africa will have a South African estate however property situated outside of South Africa will be excluded. This changes when a person is an ordinary resident in South Africa and then all assets situated outside of South Africa will be applicable for estate duty purposes.

The next step in the calculation, and to some the most important part of estate duty calculations, the allowable deductions against the gross value of the estate, and such deductions are provided for in section 4 of the Act and include the following: funeral, tombstone and deathbed costs, debts owed by the deceased in South Africa, costs of administration of the estate, costs incurred by the estate to adhere to the requirements of the Master of the High Court such as property valuation costs and fees to professional persons, deductions in respect of foreign assets, rights and debts, bequests to certain institutions, improvements made by beneficiaries to property in the estate, accrual claims, limited interests created by the predeceased spouse which were enjoyed by the deceased; value of books and artwork; valuation of shares, and a bequest to a surviving spouse.

Once we have the net value of the estate the final deduction can be applied, namely the section 4A rebate of R3.5 million, which then provides us with our final dutiable amount. The R3.5 million rebate is applicable to all estates from March 2007 to present. Where there is a predeceased spouse the estate of the subsequently deceased spouse will then be entitled to a rebate of R7 million less any amount used by the predeceased spouse’s estate.

The estate administrative process is time-consuming and complex, including to have deal with and calculate estate duty. Should you need assistance with the administration of an estate please do not hesitate to contact our estates department.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).