Estate Tax: Estate Duty and Abatement

Estate Tax: Estate Duty and Abatement

Learning what you’re liable to pay in Estate Tax.

Over recent years the South African laws regarding Estate Tax have undergone a few changes, resulting in the need for updating Wills and Estate Planning. Keeping up to date with these changes can seriously help in this matter. Specifically, understanding how Estate Duty is calculated will help you to plan your succession path in such a way as to minimise costs to your Estate, giving your heirs a higher inheritance.

  • Estate Duty refers to the amount you pay in taxes on your Estate, following an abatement
  • All Estate Duties are payable by the Estate itself
  • The current abatement in South Africa is R3.5million
  • Estate Duty is calculated at 20% of your Estate’s net worth

Estate Tax: Different Types

Estate Tax comes in different forms, including Estate Duty, Donations Tax, Gift Tax, and Capital Gains Tax. Your Estate will also come with transfer duty fees. All of these taxes and fees are payable by the Estate itself, meaning your beneficiaries shouldn’t bare the cost of any of the aforementioned, depending on how your Estate has been constructed and what your Last Will and Testament designates.

Estate Tax: Estate Duty

Estate Duty refers to the taxable worth of your entire Estate. Estate Duty is calculated at 20% of the Estate’s taxable worth, following an abatement of R3.5 million and this is paid by the Estate itself, meaning your beneficiaries won’t have to bear any costs. Limiting the amount you will have to pay in your Estate Duty can also be achieved by restructuring your Estate, or part of it, into the aforementioned categories, like donations and gifts. You could also spate your assets into Trusts which have an entirely different set of rules to Estate Duty.

The importance of your Estate Planning and its administration cannot be overstated. Hiring a fiduciary professional is your best bet for succession planning and minimising Estate Tax costs: contact Crest Trust today for more information.



Filed Under: Tax

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