When someone dies, their estate must be reported to the Master of the High Court, and an executor winds it up: collecting assets, paying debts and taxes, and transferring what is left to the heirs.
The executor
The executor is named in the will — often a family member, a bank, a trust company or an attorney. If there is no will, the Master appoints one. The executor may charge up to 3.5% of the gross value of the assets plus 6% of income collected after death, plus VAT if they are VAT registered. This is a maximum; a lower fee can be agreed.
Taxes on death
- Estate duty: after deductions (debts, costs, bequests to a spouse or public benefit organisations), every estate gets a R3.5 million abatement. What remains is taxed at 20% up to R30 million and 25% above.
- Capital gains tax: death is treated as a disposal of assets at market value. CGT is assessed in the deceased’s final income tax return, with a higher annual exclusion in the year of death.
- Income tax: the deceased’s income up to the date of death is taxed as usual.
Property left to a surviving spouse is fully deductible for estate duty, and any unused abatement can pass to the spouse’s estate.
If there is no valid will
The Intestate Succession Act decides who inherits. A surviving spouse with no children inherits everything; children with no spouse inherit everything. Where there are both, each spouse receives a child’s share or R250 000, whichever is more, and the children share the rest. Without a spouse or descendants, parents and then siblings and other blood relatives inherit.
How long does it take?
Simple estates can take six months to a year; complex ones longer. Heirs receive their inheritance only after the Master approves the liquidation and distribution account.
Make it easier for your family
Keep a valid, up-to-date will; make sure there is enough cash or life cover to pay debts, duty and costs; and keep a list of your assets, policies and accounts in a safe place.