Page 16 - Nexia SAB&T Estate Planning Guide 2024

liability before he can receive the benefit of the inheritance, the liability will
fall outside the estate and accordingly not be deductible for estate duty
purposes. Where the liability remains that of the deceased estate, it will be
included as a deduction for estate duty purposes. The testator may therefore
wish to word the bequest price as follows: “x inherits the fixed property
situate at (address) provided he pays an amount to the estate equaling the
bond on the fixed property”.
Your Will and your fixed property
n If the testator bequeathed his immovable property to his surviving spouse
(either by way of Last Will and Testament or by intestate succession), the
following taxation consequences are applicable:
u Estate duty – There is no estate duty payable on all property accruing to a
surviving spouse [Section 4q of the Estate Duty Act (no. 45 of 1955)].
u Transfer duty: There is no transfer duty payable.
u Capital Gains Tax (CGT): fixed property bequeathed to a surviving spouse
does not incur capital gains tax, as this will be subject to roll-over relief.
n If an estate planner bequeaths fixed property to an heir or legatee in his Will,
no transfer duty will be payable. In fact, any immovable property left to an
heir or beneficiary is exempt from transfer duty as per Section 9(1)(e)(i) of
the Transfer Duty Act (no. 40 of 1949). This exemption extends to any heir or
beneficiary regardless of their relationship to the deceased testator.
n If the value of his estate is more than R3,5 million, estate duty will become
payable on the balance in excess of R3,5 million. Sufficient cash should be
made available to pay this duty in order to avoid selling any fixed property.
n If the property is subject to a mortgage bond, and the property is left as a
specific bequest, the estate planner may wish to secure the bond by life
insurance, the proceeds of which would clear the debt on his death, or could
make the bequest subject to a carefully worded bequest price.
n A fixed property bequeathed to a number of heirs in equal shares, may give
rise to impracticalities due to the indivisibility of the bequest. This may result
in a redistribution agreement being drawn up between the heirs.
n There may be specific provisions in an estate planner’s antenuptial contract
in regard to fixed property, which may override the estate planner’s wishes in
terms of the Will.
n There is a portable R3.5 million estate duty deduction between spouses.
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