Estate duty rates

Estate duty will be payable at a rate of 20% on the dutiable amount of an estate, of a person who died on or after 1 October 2001.

Both spouses are entitled to this estate duty deduction and it is accepted that each spouse will seek to use the R3.5 miljon deduction by removing assets worth that amount from the estate whilst keeping practical control of the assets for the benefit of the spouse via a trust vehicle. It is now proposed that spouses be given flexibility in using their combined estate duty deductions without the artifice of the trust vehicle. The surviving spouse's estate will automatically benefit from the unused deduction of the deceased spouse.

Abatements

Single abatement……………….R3 500 000

Assurance and estate duty

Proceed of policies on the deceased’s life are deemed to be property in his or her estate subject to these concessions:

Premiums paid by another who is entitled to the policy proceeds, plus 6% compound interest, may be deducted from the policy proceeds.

Proceeds of policy on the life of the deceased are entirely exempt from estate duty where:

Proceeds payable to a surviving spouse or child of the deceased in terms of a registered ante nuptial or postnuptial contract or payable to a surviving spouse under any circumstances.
Policy taken out by partner, co-shareholder or co-member:
- for purpose of acquiring deceased’s interest in a partnership, company or close corporation, and
- no premium on policy paid or borne by deceased
Policy taken out by or at instance of deceased:
- no premium on policy paid or borne by deceased, and
- proceeds not paid to, or for benefit of: deceased’s estate; any relative of the deceased; any person wholly or partly dependent for his or her maintenance upon the deceased; company which at any time was family company in relation to deceased.
Other deductions:
- Liabilities at date of death (including CGT due on death)
- Bequests to charitible, educational and religious institutions within SA
- Property accruing (including bequests) to a surviving spouse

Farm property and estate duty

Effective 1 February 2006, the fair market value of farm property is its market value less 30%.

Community of property marriages

Only half of the joint estate is brought to account.