Deceased estates and the law

Deceased estates and the law
Understand the tax implications

Death is a difficult and emotional subject to handle. While we can’t take away the pain, we can make the experience a little easier by helping you prepare for the practical realities that need to be in place.

Johan Swart
Johan Swart - Head of Tax Services
18 February 2019 | 2.21 minute read
Last Will

What is a deceased estate?

A deceased estate refers to all the property, possessions and assets that legally belonged to a person who has died.

An inheritance is what a living person is legally given from the deceased person’s estate. Usually, the person who died would have written up a will that would list how they want to share out their possessions after they die.

Laws that impact to deceased estates

There are three sets of laws in South Africa that relate to deceased estates and inheritances.

  1. The Administration of Estates Act: This gives the legal rules for the disposal of the deceased’s estate. The disposal of an estate means arranging to close off all the deceased person’s financial and legal affairs. This can include paying off any debt and selling or giving away their property, usually according to their wishes as given in their will.
  2. The Wills Act: This affects all testators – any person who has made a will – with property in South Africa.
  3. The Intestate Succession Act: This governs the devolution (the legal transfer) of estates for all deceased persons who have property in the Republic but who die without a will.

Tax implications for deceased estates

In South Africa, there is no tax payable by the heirs who get an inheritance.

Capital Gains Tax (CGT) is a tax paid from any profit made after selling an asset. It is not payable by those who receive an inheritance. However, the costs of Estate Duty – a percentage of the value of the estate that is legally due to the government, as well as CGT, are usually payable by the estate. This means the amount needed to pay these taxes will come out of the money left by the person who died.

Donations for individuals are subject to a Donations Tax of 20%, with an annual exemption of up to R100 000 of the value of all donations made during the tax year.

Donations between spouses are exempt from Donations Tax, as are donations made to certain public benefit organisations.

How to register a deceased estate

Visit the SARS website for full details. You will need the following documents:

  • Death certificate
  • Letter of executorship
  • Certified copy of the executor's ID
  • Proof of the physical address and contact details of the executor or agent
  • Power of Attorney (if applicable)
  • Liquidation and distribution account

Need help navigating the legal and tax implications of a deceased estate?

Clearly, the ways in which taxes and the law affect death are complicated. At Legal&Tax, we have the legal and tax experts who will guide you through these details step-by-step, helping you move onto a path of healing and hope.

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