DECEASED ESTATES PAY TAX

It is true! Even after you are no longer part of the economy, you are still liable to pay tax!
As you may already know, everything is taxed, even small items you purchase at the shop on a regular day like a can of coke.

HOW DOES THIS WORK WITH A DECEASED ESTATE?

The way in which your Estate Duty is calculated depends firstly on whether you are married, and according to the marital regime if indeed you are married. The total gross value of your estate is considered, including all assets registered in your name as at the date of death, and all deemed property (proceeds from certain domestic life insurance policies and claims in terms of the Matrimonial Property Act). All liabilities in the estate are then deducted from the gross assets to give a net value of the estate.

From the net estate, the allowable abatement permitted in terms of the act is currently R3 500 000, which is deducted to determine the value of your dutiable estate. 20% of the dutiable amount is what is then payable to SARS from the estate. In other words, liability for Estate Duty will only arise if your net estate is more than R 3 500 000.

HOWEVER, IT IS NOT ALL DOOM AND GLOOM!

The act also includes provision for “roll-over” of estate duty where parties were married. Here, the dutiable value of the estate of the surviving spouse will be reduced by whatever portion of the abatement that was unused in the first dying spouse’s estate.

Assume that a husband has an estate with a net dutiable estate of R2 million, with him dying first. In the husband’s estate, there will be R2 million utilized of the R3,5 million abatement.
The R1,5 million that is not utilized in the husband’s estate will be “rolled-over” to the surviving spouse’s estate, which essentially means that the surviving spouse now has an abatement of R5 million – this taking into consideration all the allowable deductions as per the Estate Duty Act.

Should you require any assistance contact our experts: info@lhtc.co.za