08 Apr 2025

Managing taxes in a deceased estate

When planning your estate, understanding the tax implications on a deceased estate is crucial. In this episode of Everything Counts, Motheo Khoaripe hosts Nirvashni Rajkumar (an Investec financial adviser), Lieze-Mari Brink (from Investec's tax and fiduciary team) and Nikki Bush (best-selling author and women’s empowerment champion), to explore estate duty, capital gains tax, income tax after death, and how trusts can enhance tax efficiency and asset protection.

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Everything Counts | Episode 19: Managing death and taxes

When planning your estate, understanding the tax implications on a deceased estate is crucial. In this episode of Everything Counts, we dive into estate duty, capital gains tax, income tax after death, and how trusts can help with tax efficiency and asset protection.

Listen to the full series

Estate duty and capital gains tax

Upon death, worldwide assets are subject to capital gains tax at a maximum rate of 18%, with certain exemptions for spouses.

Income tax after death

Executors must file a final tax return for the deceased and manage estate tax obligations until assets are distributed.

Inheritance tax & offshore considerations

South Africa does not impose an inheritance tax, but beneficiaries abroad should consider exchange control regulations when transferring funds. It’s essential to consult with a financial advisor to understand implications, especially if assets are located in jurisdictions like the US, UK, or France, which impose their own death duties.

Trusts for tax and estate planning

Trusts offer asset protection, succession planning and tax benefits. However, they require careful structuring and administration.

FREQUENTLY ASKED QUESTIONS

What is death tax?

A death tax refers to any tax imposed on the transfer of assets after a person passes away. It generally encompasses two primary types of taxes:

1. Estate duty: A tax levied on the total value of a deceased person's estate before distribution to beneficiaries.
2. Inheritance tax: Imposed on the recipients of an inheritance, though South Africa does not have one.
What is estate planning and why is it important?

Estate planning ensures your assets are distributed according to your wishes while minimising taxes, legal fees, and delays. It includes wills, trusts, and tax strategies to protect beneficiaries. Proper planning prevents disputes and safeguards wealth for loved ones after your passing.

“It's quite clear that structuring your estate correctly is vital to minimise those taxes and fees, ensuring your beneficiaries receive the maximum benefit from your hard work.” Motheo Khoaripe
Is inheritance taxable in South Africa?

While South Africa does not impose an inheritance tax, the deceased estate is subject to estate duty (20-25%) and capital gains tax on assets. Beneficiaries may face tax on future income or gains from inherited assets but not on the inheritance itself.
How can I reduce inheritance tax in South Africa?

To reduce inheritance tax, consider strategies like setting up a trust, using spousal rollover relief for capital gains, gifting assets during your lifetime and insurance policies to cover estate duties. Consulting a financial adviser ensures effective tax planning and compliance. "You won't get taxed again when that inheritance lands in your bank account," Lieze-Mari clarifies, but future income on those assets will be taxable.
Why use trusts for estate planning?

Trusts provide benefits such as asset protection, tax efficiencies, and succession planning. They help control how assets are distributed and can safeguard wealth for beneficiaries. But Nirvashni highlights the importance of evaluating individual needs and making sure that the benefits of the trust outweigh the costs of setting it up: “It’s vital to focus on what you are trying to solve for before setting up a trust.”

Understanding the intricacies of managing taxes in a deceased estate is essential for ensuring that your hard work benefits your loved ones. By working on your estate plan with your financial adviser, you’ll make sure that your family has financial stability in the future.