No. When the registered owner of real estate has passed away, his/her house must be transferred to another person – who is usually a family member. Assets in the name of the deceased will have to be transferred to the heirs of the estate in terms of the Estates Act in order to close an estate and obtain a filing slip from the Master of the High Court. The Master of the High Court appoints an executor to administer the deceased's estate. The executor is the only person legally authorized to administer the deceased's estate. The aim is to make sure that the deceased's financial affairs are settled in an orderly manner and that the heirs' financial interests are protected. The executor of the deceased's estate can sell real property directly to a third party, if the beneficiaries approve. The executor will sign the purchase offer/sale agreement on behalf of the deceased estate, as well as in time the transfer documents in the same capacity. The conveyancer must issue a certificate in terms of art. 42(2) of the Probate Act from the Master of the High Court where the estate was lodged, to prove that the Master of the High Court has no objection to this transfer. The cost of the transfer, including transfer duties, is usually paid by the buyer. The estate bears the cost of the municipal clearance certificates which are valid until after registration. The estate also bears the cancellation costs of any mortgage(s) registered on the property.
Yes. Taxes will be payable either as part of the estate, if you sell it before the estate is settled, or as capital gains tax on your individual profile if you sell it after you inherit it.
Yes. If the deceased has any assets (at least R 1 000) that need to be administered, then the Estates Act 66 of 1965 stipulates that an Estate of the Late XYZ account must be opened.
Generally speaking, no capital gains tax is owed by the surviving spouse or the estate if a person dies and leaves his/her entire estate or real property to the surviving spouse. If anyone other than the surviving spouse inherits from the estate, then capital gains tax, estate tax and gift tax (if applicable) are due.
The executor of the estate must make the capital gain calculation public and submit it together with the documentation to the South African Revenue Service as part of the deceased's annual income for the financial year in which he/she died. SARS will then check the calculation and documentation submitted and confirm the capital gains tax owed by the estate.
Yes. The executor of the estate is responsible for submitting the returns of the deceased as on the date of death as well as for the estate from the date of death until the estate is settled. The estate's executor is obliged to make sure that all the deceased's tax returns are up to date with SARS. NB: If the deceased was a pensioner at the time of his/her death, or even a few years before the date of death, the returns must still be completed and submitted to SARS so that SARS can inform the executor that the taxes in order and can issue a tax compliance certificate to the executor.
The application for a letter of executor/letter of authorization must be submitted to the Master of the High Court in the province where the deceased lived in the 12 months before his/her death. If the estate value exceeds R 250 000, the Master will insist that a professional body such as a bank or trust company ("trust service provider") help with the administration, as there are certain requirements that must be met in order to settle the estate .
The estate of a deceased person must be declared to the Master of the High Court within 14 days of the death. The death must be declared by any person (usually a trust company) who exercises control over or is in possession of any property or documents which are the will, or if so intended, of the deceased. The estate is declared by submitting a completed death notice and other documents to the relevant Master of the High Court.
You can prove that you are the executor of an estate by means of a letter of executor/authorisation issued by the Master of the High Court. Someone can be named executor in two ways:
The deceased can name you as executor in his/her will; or
if the deceased does not have a will or has not nominated an executor, the nominated beneficiaries can nominate someone as executor.
The administration of someone's estate is also called "administration" of the estate. An executor, as appointed by the Master of the High Court, settles an estate after the person has died. If you are named as executor in someone's will, but do not have the expertise to settle the estate, the Master of the High Court may instruct you to obtain the services of a company or professional. Some of your options are then to either renounce your role as executor or to remain executor, and give a company or professional person power of attorney to act as executor of the estate on your behalf. It is therefore recommended that you name a professional in your will to act as executor.
It's hard to say exactly, because every estate is different and presents unique challenges. At Eksekuteurs, our business rule is to try to settle an estate within nine months. Although we also manage this, we need to manage expectations and point out that estates with many challenges can take longer to complete. In some cases, an estate cannot be declared to the Master of the High Court because documents are missing or not signed or because of the cause of death. In such cases the Master of the High Court will not issue a writ of executor or letter of authority. And the estate cannot be settled until a letter of executor or letter of authorization has been issued.
In normal circumstances, it can take up to six weeks for the Master to issue a letter of appointment, provided all the correct and relevant documents have been submitted. At Eksekuteurs we make sure it's done right the first time. We try to get the court appointment within 7 days of submitting the application.
How long it takes to settle an estate depends on the complexity of the estate, which in turn affects the time it takes to get an inheritance. The regulations state that an executor must submit a liquidation and distribution account to the Master of the High Court within six months of the date of the executor's letter. But the total time it takes to settle an estate varies. At Eksekuteurs, our business rule is to try to settle an estate within nine months.
Everyone gets a rebate of R3.5 million on the estate tax. When an estate is settled, the deceased's estate is exempt from tax on the first R3.5 million of the taxable value.
All executor fees are charged at a fixed rate of 3.5%, excluding VAT, of the gross value of assets and 6%, excluding VAT, on all income received by the estate during its settlement. The duration of the settlement process therefore determines how much an executor can ask for all income received. Banks rarely give discounts and rarely make concessions on their fees. At Eksekuteurs we charge a lower rate, and as a business rule we aim to settle all estates within nine months. Our goal is to keep executor fees as low as possible by shortening the settlement term. We also give a rebate of 25% on the standard rate and do not charge the fee of 6% on income received.
If someone dies, it is important to remember that there are four types of taxes that apply to estates: 1.) income tax of the deceased (personal tax); 2.) capital gains tax; 3.) estate tax; and 4.) gift tax (if applicable to the specific estate.
Income tax (personal tax)
It is the duty of the executor of the estate to ensure that all the deceased's income returns match the records of the South African Revenue Service (SARS).
If the returns of any year are outstanding, the executor will have to request the relevant tax certificates/IRP 5 forms from the relevant institutions and then send them to the tax practitioner so that they can be submitted to SARS and placed on record.
The estate will have to pay income tax on all income, be it dividends, rental income or interest earned during the estate administration process.
There are two types of valuations that must be carried out: firstly an ante-mortem valuation (all) and secondly a post-mortem valuation (all income and deductions from the estate since the deceased's death).
B: If the deceased was a pensioner at the time of his/her death, or even a few years before the date of death, the returns must still be completed and submitted to SARS so that SARS can inform the executor that the taxes in order and can issue a tax compliance certificate to the executor.
Capital gains tax
When someone dies, it is assumed that the deceased has renounced his/her assets. The reason is that there has been a change of ownership, as the assets will now be inherited by the heir(s) named in the will.
This "change of ownership" is subject to capital gains tax on the estate, which must be paid to SARS.
If the executor of the estate receives property from or property in the estate, these assets will be subject to capital gains tax.
However, it is important to note that no capital gains tax is due on certain assets in a deceased estate. This includes assets for personal use (with certain exceptions), assets inherited by the surviving spouse, proceeds from life insurance policies and interest on pension, provident or retirement annuity funds.
On death there is a one-off exclusion of R300 000, which means that R300 00 of the profit or loss is exempt from capital gains tax.
Any amount above R300 000 will be 40% taxable depending on the deceased's marginal tax rate.
Estate tax
Estate tax is calculated on the gross value of the estate.
Everyone gets a rebate of R3.5 million, and tax is therefore only payable on the amount that exceeds R3.5 million.
Estate tax amounts to 20% on the first R30 million and 25% on the value above R30 million.
Pursuant to art. 4(Q) of the Estate Tax Act, the liability for estate tax on the assets inherited by the surviving spouse is deferred. This means that it is assumed that the deceased disposed of the assets on the day of his/her death, but the liability for the tax is deferred until the surviving spouse dies.
Tax on donations is not part of the calculation of a person's liability for income tax, and the calculation of this takes place separately each time a donation is made.
Gift tax is not levied on an individual's income, but on the capital transferred, which is usually in the form of assets.
Donations involve two parties: the donor (who makes the donation) and the recipient (who receives the donation).
The donor pays the donation tax. If the donor fails to pay his tax within the prescribed period (usually at the end of the month in which the donation took effect, or within such period as the Commissioner may allow), then the donor and the recipient are jointly and severally separately liable for the donation tax.
Donations (subject to certain exemptions discussed below) are subject to donation tax at a rate of 20% on the value of the donation and money for donations made on or after 1 October 2001.
The following donations are exempt from donation tax:
Donations between spouses.
Donations that are only realized when the donor dies, for example if someone has a life-threatening job.
Donations from which the recipient will only enjoy the benefit when the donor dies.
Donations that are canceled within six months of taking effect.
Donations to traditional councils, traditional communities and certain tribes.
Property situated outside the Republic of South Africa. This only applies if the donor acquired the property before becoming resident in the Republic, or acquired by way of inheritance from someone who was not resident in the Republic, or by using funds obtained by selling the property and replace it with other properties.
Donations to the government, provincial administrations, municipalities, etc.
The Master of the High Court grants the same authority to the executor as the deceased himself would have. The executor has full authority to act and request information as if he were the deceased. Without appointment by the court, no one has authority to act on behalf of a deceased individual.
If an estate has a deficit, the executor will either sell assets to meet the financial requirements, or the heirs will pay the deficit in order to preserve the assets, such as property, so that the assets can be passed on to them. An estate that does not have enough assets to pay all the debts will be declared bankrupt, and the beneficiaries will inherit nothing.
What you have determined in your will is what will be done after your death. If you do not have a valid will, your estate will be divided as stipulated in the Intestate Succession Act, which will not reflect your wishes and may not be in your heirs' best interests.