Important numbers to keep in mind regarding your Estate, winding up costs, and Estate Duty/ Death Tax:
Current Estate Duty/ death tax rate in RSA: 20% off the dutiable amount for estates that are up to R30M in value and 25% off the dutiable amount for estates over R30M in value.
Current Estate Duty abatement for individuals: R3.5M
What does this mean? The first R3.5M of your estate, as an individual, is free of estate duty! Hooray!!
But, remember to plan for any sum above that as it will be considered dutiable after the estate liabilities and allowable deductions, etc., are offset.
Remember too, that there are also winding-up costs for finalizing a deceased estate as it is an involved, statutory-regulated process. The regulated fee for this is currently 3.5% of the gross value of the estate. That being said, different attorneys have different fee policies, so speak to them and find out. You can always ask for fee estimates upfront.
Final thoughts. It is wise to:
- do estate planning and get a professional Will drawn up for you, such that it best suits your intentions and circumstances AND will take into account saving you estate duty where allowable;
- take out a policy if needed to cover death expenses, including the costs of winding up your estate and paying estate duty;
- keep your tax returns up to date;
- keep your important documents in order;
- Help change the rhetoric. Don’t think of Wills and Estate planning as morbid or planning to die; think of it as taking responsibility for managing your important affairs and stewarding or building your estate, and think of it as planning to LIVE.