Fact File

DECEASED ESTATES: QUICK FACTS AND FIGURES

EXECUTOR’S FEE

The executor is the person appointed to wind up the estate. He or she is entitled to a fee of 3.5% (excluding VAT) of the estate’s total assets plus 6% of income accruing to the estate from investments and rentals while the estate is being wound up.

These are maximum amounts and lower fees may be negotiated.

If the estate’s value is less than R250 000, an executor does not have to be appointed and the estate may be wound up by a family member on the authority of the Master of the Court.

FROZEN ASSETS

A person’s assets, including his/her investments and bank accounts, are frozen on death to enable the executor to properly assess how much the estate is worth to distribute it to the heirs.

In a dire situation, the deceased’s family can ask the executor to get a letter of authority from the Master of the Court to unfreeze some assets to provide money for living expenses.

TAXES

• Estate duty:

20% on the first R30 million, 25% on any amount above that. There is no estate duty on estates of less than R3.5m. For the second-dying spouse, an estate up to R7m minus the exemption used by the first-dying spouse is not taxed.

• Transfer duty:

There is no transfer duty on a property that passes from the deceased to another through an inheritance. However, there are still transfer costs to be paid to the conveyancing attorneys, which may be 10% or more of the value of the property.

• Capital gains tax:

CGT is payable by the estate on investments that need to be liquidated or transferred into the name of an heir. However, the exclusion in the year of death is R300 000, as against R40 000 a year during life.

LIFE POLICY

Any life insurance payout to the deceased’s dependants and/or beneficiaries does not go through the estate and, therefore, can occur within days of the death, helping enormously to cover the family’s living expenses while other assets are frozen.

The payout does not form part of the deceased estate and does not attract executor fees. The policy must have a nominated beneficiary or beneficiaries.

If no beneficiaries have been nominated, the payout will go into the deceased estate.

RETIREMENT SAVINGS

Any benefit in a retirement fund (pension, provident, preservation or retirement annuity fund) does not attract executor fees, but it does form part of the estate for the calculation of estate duty.

Unlike a life policy, the distribution of the money is decided by the trustees of the retirement fund, so that, although taking account of nominated beneficiaries, even non-nominated dependants may receive a portion of the payout.