Estate planning:
it's a family affair
When it comes to estate planning, no two families are alike. That’s why our approach always starts with understanding yours. From blended families and children living abroad to dependants with special needs, family dynamics play a central role in crafting a customised estate plan that works – for generations to come. We set out the most important factors to consider.
The emigration equation: For children living overseas, the details of how they left South Africa matter. Was a formal emigration process followed? Has their South African tax residency been ceased? These questions are critical, because without completing the necessary formalities, any inheritance due to them offshore could face significant hurdles.
Caring for special needs: Where a beneficiary has special needs, their lifelong financial support must be carefully structured. A testamentary trust – created through your will – can be registered with the South African Revenue Service as a ‘special trust’, offering both control and tax advantages.
Second marriages: For clients who’ve been married before, we review the divorce decree and any related maintenance order. These obligations don’t vanish with death and must be factored into the estate plan to avoid surprises later.
Business succession: Entrepreneurs need to consider not only who inherits the business, but also how it continues to operate. A clear succession plan is essential to preserve value and continuity.
Assets, liabilities and tax exposure: Once family and structural issues have been addressed, we turn to the financial picture – assessing assets, liabilities and potential tax exposure.
Separate wills: Increasingly, our clients are investing offshore, both to mitigate local risk and to tap into global growth opportunities. Where offshore assets are involved, a single South African will may not suffice. We generally recommend separate wills – one for local assets, another for assets abroad. This streamlines the probate process and ensures compliance with local laws in the jurisdiction where the offshore assets are held.
Executor matters: In South Africa, the Master of the High Court will only approve a professional executor to wind up an estate. Family members or friends nominated in a will won’t be automatically appointed. To prevent delays at a sensitive time, it is vital to appoint a professional executor upfront.
Tax realities, here and abroad: South Africa operates on a residence-based tax system, meaning local residents are subject to income tax and estate duty on their worldwide assets. Depending on the location of the offshore assets, clients may also be subject to taxes in the UK and/or US.
Estates over R3.5 million (after liabilities) are subject to estate duty at 20% on the first R30 million, and 25% on the balance thereafter. Death is also treated as a deemed disposal for capital gains tax purposes.
While assets inherited by a surviving spouse are exempt from both estate duty and capital gains tax, this is merely a deferral. On the passing of the second spouse, the full tax implications come into effect – making liquidity planning essential.
At Sanlam Private Wealth, we have all the necessary skills and expertise to assist you in drawing up your estate plan. If you’d like further information, please contact Kajal Chowthee on +27 (0)31 560 3666 or kajalc@privatewealth.sanlam.co.za.
The formation and registration of trusts, and the provision of independent trusteeships – both local and offshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
