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The procedure to follow when a person dies

Plus the taxes and deductions payable by the estate.

Facing death is never nice; it’s rather traumatic, to say the least. Dealing with a loved one’s personal and financial affairs is therefore never easy either and can be a long and drawn-out process, thus prolonging the traumatic experience, unless you plan properly.

Death is one thing that is inevitable to all of us and the entire process can be made more acceptable for your loved ones if you plan properly and ensure that you have everything together that your executors may require to complete the estate administration process as quickly and efficiently as possible.

Documents/information required for administration of an estate

Therefore, to simplify matters, a detailed list of requirements is as follows:

  • Original last will and testament.
  • Original death certificate and DHA-1663-A Notification of Death Form.
  • Identity documents of deceased and spouse, if applicable.
  • Name, address of employer and salary number of deceased.
  • Details of the pension fund.
  • Name, address and reference number of medical aid society.
  • Income tax details (if registered).
  • Name and telephone number of the accountant.
  • Name, address, and telephone number of deceased’s usual doctor.
  • Name, telephone number and case number from police station should the deceased have died due to unnatural causes (e.g. motor vehicle accident, shooting, suicide etc).
  • Partnership agreement and name and address of all partners.
  • Particulars of company or close corporation or business.
  • Name and contact number of auditor/accounting officer.
  • Details of divorced or predeceased spouse.
  • Antenuptial contracts and/or divorce agreements.
  • Original title deed in respect of each property and/or details of bank where a bond is held.
  • Rates and taxes account(s) and/or details of the body corporate or managing agents.
  • Registration certificates in respect of motor vehicles.
  • Firearms – to be handed to a reputable dealer for safekeeping. Copies of licences to be provided.
  • Certificates/details in respect of timeshare.
  • Original share certificates or electronic share account details.
  • Hire and letting contracts.
  • Cheque books, investment statements, credit cards, ATM cards.
  • Details of accounts owing by deceased.
  • Copies of identity documents of beneficiaries and marriage details and certificate.
  • Copies of birth certificates of minor beneficiaries.
  • Any other documents not mentioned above.

Once the nominated executor has the above information available there are certain official documents they need to complete and then lodge with the Master of the High Court so that the Master can issue the letters of executorship which will allow the executor to officially start with the administration process of the estate.

The Estates Act 66 of 1965 as amended, actually instructs anyone to report an estate to the Master of the High Court within 14 days of death but in practice that hardly ever happens. It is merely a matter of reporting the estate as soon as possible.

Taxes and deductions payable in an estate 

The various taxes and deductions payable in an estate may vary depending on the size of the estate and the nature of the assets such as property portfolio, share portfolio, overseas assets etc.

However, in general, the following will apply:

  • Executor’s fees:
    • Fixed by government regulations at a maximum of 3.5% (ex-vat) based on the capital value of assets as at the date of death.
    • 6% fee (ex-vat) on all income collected after the date of death (i.e. interest and share dividends).
  • Master’s fee: Minimum of R600 to a maximum of R7 000 depending on the size of the estate.
  • Advertisement fees: 2 x sets of advertisements at approximately R362 per set.
  • Sundries fee: R260 once-off.
  • Bank charges: R200 once-off.
  • Courier fees: Depending on services charged for.
  • Valuation fees: Fee will depend on the nature and size/value of the property.
  • Transfer fees: Payable to attorneys to transfer properties, if applicable, based on the value of the property.
  • Income tax: Will all depend on the taxable rate of the individual concerned. Important to note is that any assets inherited from an estate are not taxable, it is only income earned on such assets (i.e. share dividends or interest on investments) that may end up being taxable either by the estate or by the beneficiaries.
  • Capital gains tax: Will all depend on the nature of the assets and whether disposed of or transferred to beneficiaries.
  • Estate duty:
    • Liability or not will all depend on who the beneficiaries are.
    • No estate duty payable where asset value in an estate is less than R3.5 million.
    • No Estate duty payable when a spouse inherits the estate of the deceased spouse.
    • All liabilities/administration expenses are also deductible for estate duty purposes.
    • Payable at 20% of the net value of an estate exceeding R3.5 million subject to various allowable deductions.

The above is merely a brief overview and not the alpha and omega of what will be required of a person when faced with the reporting of a deceased person’s estate and the ensuing administration process. For further information, you are more than welcome to contact the writer.

ADVISOR PROFILE

Michael Haldane

Global & Local Investment Advisors

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