Benjamin Franklin once said there are only two things certain in life: death and taxes. Coming to terms with death and the afterlife should be left to metaphysics and theology. Coming to terms with the Tax you have to pay when you die is an entirely more straightforward endeavour.
Throughout your life you will gather many different and valuable assets, most of which you will want to pass on to your heirs when you die. Through effective Will creation and Estate Planning this should happen automatically with few, if any setbacks. The trouble comes in after you die: what Tax is liable to be paid on your Estate? This is where death and taxes meet.
Ever heard of Estate Duty?
Estate Duty is the Tax payable on your Estate, calculated according to your Estate’s worth. This is the only Tax you will need to pay on your Estate. Fortunately for you, Estate Duty is payable by the Estate itself, meaning you can rest in peace while your heirs await their inheritance. Estate Duty also means that your heirs don’t have to pay any Tax on their inheritance.
How does Estate Duty work?
When you pass on, your Executor will handle all the legal documentation required to pay the final Estate Duty on your Estate. In South Africa, SARS calculates Estate Duty the following way: 20% of your Estate’s Net worth, following an abatement of R3.5 million. This means that your heirs are guaranteed 100% of your Estate up to the worth of R3.5 million, and still receive up to 80% of what remains thereafter.
That’s all there is to it really. The time of bereavement for your family should pass by with as little stress as possible. Provided your Estate Planning has been dealt with correctly and you have appointed an effective Executor to handle your affairs when you pass on, your Estate Duty poses no real threat to the well-being of your Estate.