Estate duty is the tax payable on the value of what you leave behind when you die. Many estates pay none at all, because of a generous abatement, but for larger estates it can be significant, and a little planning during your lifetime can make a real difference.
What estate duty is
Estate duty is governed by the Estate Duty Act 45 of 1955 and collected by SARS. It is charged on the "dutiable value" of your estate, broadly the value of your worldwide assets at death, less allowable deductions and an abatement.
The R3.5 million abatement
Every estate is entitled to an abatement of R3 500 000 (three million five hundred thousand rand). Only the value above that, after deductions, is potentially dutiable. This figure has been fixed at R3.5 million for several years and is not adjusted automatically for inflation.
The rates: 20% and 25%
Estate duty is levied at 20% on the dutiable value up to R30 000 000 (thirty million rand), and at 25% on any dutiable value above R30 million.
Key deductions
Several deductions reduce the value before duty is calculated. The most important is the spousal deduction: anything you leave to your surviving spouse is deducted in full, so bequests between spouses do not attract estate duty. Other common deductions include the debts of the estate, funeral costs and the costs of administration.
Planning ahead
Because the spousal deduction and the portable abatement are so valuable, the way your will is structured has a direct effect on the duty your family eventually pays. Tools such as trusts, properly nominated life policies and considered bequests can reduce or defer estate duty within the law. This is efficient estate planning, not avoidance, and it should always be done with professional advice tailored to your circumstances.
Plan your estate with confidence
We help you structure your will and estate to provide for your family and manage estate duty. All will drafting is free, however complex.
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