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Wills AND Estates Notes
Administration of Estates (University of South Africa)
Studocu is not sponsored or endorsed by any college or university
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WILLS AND ESTATES
WILL
WILL
TESTATE SUCCESSION
INTESTATE SUCCESSION
= WILLS ACT
= INTESTATE SUCCESSION ACT
1. FORMALITIES OF A WILL
1.
2.
3.
4.
In writing
Signed by testator / or another person – in presence 2 witnesses
Signed @ the END of the will + anywhere on the other pages
Witnesses must attest (declare to be true) and sign the Will
- anywhere on the last page of the will
- in presence of testator
5. If testator does not sign himself?
- ADD after signature: <On behalf of the testator and by the directions of the
testator=
- Sign at end + every page
- Certificate of Commissioner of Oath to be added (any page + sign other page)
- must certify that he satisfied himself to the identity of the testator
6. Testator sign – use of MARK
- Certificate of Commissioner of Oath to be added (any page + sign other page)
- must certify that he satisfied himself to the identity of the testator and that the
will is that of the testator.
7. No specified Clause required for a will to be valid
8. 16 years or older to have a will
9. 14 years or older to be a witness
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2. EXAMPLE OF A WILL
Last Will and Testament
I, the undersigned,
Ilse Wissing ( ID# 8012060019087)
of Unit 35 Stellenberg Complex, 185 Stellenberg Road, Equestria 0184
hereby declare this to be my Will. I hereby revoke all previous wills or testamentary writings made by me.
I nominate Mr. Y (7903125001089)
Unit 36 Stellenberg Complex, 185 Stellenberg Road, Equestria 0184
to be the Executor of my Estate.
Should he/she be unwilling or unable to act
as executor, I nominate Mr X (ID 481250 603238) .
I give my Executor the right of assumption.
I direct that the executor of my estate shall not be required by the Master of the High Court or other
competent authority to give security for proper performance of his duties.
Page 1 Signed by TESTATOR: ……………………………………………………………………………
WITNESS 1. ………………………………………… WITNESS 2. ………………………………………
(Out of Community of Property excluding the Accrual system)
I direct that my estate shall devolve as follows:
IN COMMUNITY / ACCRUAL
Special Bequests:
- I direct that the remainder of my estate after
the consideration of the marital regime should
devolve as follows:
R500 000 to my Father, Mr. PA van Niekerk
R500 000 to my Mother. Mrs. MC van Niekerk
1. My daughter etc etc
If I outlive one of my parents, the surviving spouse should receive the
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
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After my special bequests I bequeath the residue of my Estate to:
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
In witness whereof I have signed this will in (place) ……………………………………………
…………………………………………………………………………………………………………………………
on the ………… (day) of …………………… (month)…………………… (year) in the presence of the undersigned
witnesses who in my presence and in the presence of each other have signed this will as witnesses.
TESTATOR Signature: ……………………………………… Date: ………………………………….
WITNESS 1. Name:……………………………………………………………………………………………
WITNESS 1. Signature:………………………………… ID Number: ………………………………
WITNESS 2. Name: …………………………………………………………………………………………
WITNESS 2. Signature:………………………………… ID Number: ………………………………
3. EXCLUSION OF BENEFECIARIES
SECTION 4(a)
1. Witness to a will (and also their spouses)
2. Person who signed will on behalf of testator (also their spouse)
3. Person who wrote the will on behalf of the testator in their own handwriting (also their spouse)
COURT’S OVERRIDING DISCTRETION - Section 2(3)
= rescue provision if did not comply with strict formalities
IF:
1. Document was drafted / executes
2. By a person who has since died
3. Document correctly reflect the intention of such person to be his will or amended will
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By whom?
1. The court :
if you can prove that person did not unduly influenced the testator or
did not try to defraud the testator
2. The Master : only to extent – only if person would have benefited if testator died
intestate and only for the amount the person would have inherited under intestate
rd
3. 3 Witness: if 3 witnesses, disqualification always removed of remaining 2
witnesses not benefiting from will.
** Copy of a Will?
- court will accept if found to be properly signed and executed

Common law disqualification of beneficiaries
1. If person unduly influenced testator
2. Unworthy – if blameworthy for death
3. Person who has concealed the will
4. De bloedige hand erft niet
5. Person forging the Will
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4. AMENDMEND OF A WILL
(CODICIL)

FORMALITIES
1. Identified by signature of Testator or person signing on behalf
2. Signed in presence of 2 witnesses
3. Identified by signatures of 2 witnesses in presence of testator
4. If mark or on behalf of – Commissioner of Oath Certificate
<satisfied himself to the identity of the Testator and that amendment was made at the request
of the testator=.
NB Clauses:
- Amendment
- <All other clauses
remain valid=
Signature Testator
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Example:
X leaves R100 000 to M in his will. 3 months later he meets a new girlfriend (S) and decided to
leave the R100 000 to her and not M. He only scratches out her name and write S’s name in.
X dies and M wants to know if she is entitled to the R100 000 in his will?
1. Section 2(1)(b) of the Will Act prescribes that any amendment to a will must be signed by the
testator in the presence of 2 witnesses and the witnesses must sign the amendment.
Therefore X did not comply with the Act and M will inherent the R100 000.
2. It is important to note that s2(3) of the Act makes provision for the court’s discretion to accept
such an amendment not complying with the requirements if the court is satisfied that it was the
intention of the testator that the amendment is his amended will.
**Therefore if S contest the will, she will have to satisfy the court that it was the
intention of X to name her as the beneficiary.

EFFECT OF DIVORCE ON A WILL
- No effect on validity
- Section 2B
** if testator dies within 3 months of date of divorce – ex will not inherit
EXAMPLE:
X divorced M and marries S within 1 month of the divorce. He dies a month after his wedding day. X
never changed his will after divorce leaving his entire estate to M.
Q:
Who will inherit?
A:
Section 2B states that M is not entitles to any inheritance from X and that the portion that
M was entitled to will now devolved to S in terms of intestate succession.
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
Q:
What if X died 6 months after his divorce without changing his will?
A:
M, the ex-wife will inherit in accordance to the will.
S will be able to lodge a claim against the estate for maintenance of the surviving spouse.
(ONLY if unable to provide for own needs from own means or earings)
RENOUNCING OF RIGHT TO INHERIT
- If a person entitled to inherit in terms of will renounces right?
Benefit = to surviving spouse : s2C(1)
NB: Regardless of what the will states!!!!!!!!!!!!!!!!
- If no surviving spouse?
** WHO can then inherit?
- Descendants of descendant (per stripes)
1. Descendant – predeceased
2. Descendant – renounces
3. Descendant – disqualified
Example:
X marries M. They have 2 children S & C.
S has 2 children S1 and S2
The will states that the entire estate must go to M, S & C in equal benefits.
S renounces her inheritance.
Q:
Who will be entitled to S’s benefit?
A:
If M is still alive, M will as the surviving spouse be entitled to S’s share -S2C(1)
(even if X had a provision in his will stating that if one child renounces, the
portion should go to the other child, M would have still received the benefit!!!)
If M is deceased, S’s children will be entitled to the portion of S – S2C(2)
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5. WILLS – GENERAL

LEGACIES
- the bequest of a specific property, moveable or immovable, to a SPECIFIED person

THE HEIRS
- persons succeeding the residue of the estate
- if no legacies, the entire estate

MASSING – Section 37
- in a joint will
- When 2 people consolidate all or part of their property for a joint disposition to a specified 3 rd
person on the death of the 1st party
Requirements:
1. 2 people joining their respective estates
2. Bequest of the joined assets of the deceased and survivor to a 3rd party
3. Limited interest must be created in favour of the survivor
4. Survivor must adiate (accept) the conditions of the Mutual Will
Clauses:
1. Can specify that surviving spouse should have a limited interest in the property.
Bv. Right to stay in house.
NB. Must be included in Title Deed on Transfer!!!
** Surviving spouse can choose to Adiate (uphold) or repudiate (not uphold the will)
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
PER STRIPES
&
PER CAPITA
- Distribution by representation
- equal shares among persons entitled
- bv. A dies leaving his estate to B & C
- bv per capita for 4 children = 25% each
- B also dead (predeceased descendant)
- if childe predeceased = share is lost
B’s children will inherent his portion
i.e. will not go to deceased’s children


PENSION FUNDS
- NEVER forms part of a person’s estate!!!!!!!
= Excluded from administration of estate = NO ESTATE DUTY
SURVIVING SPOUSE MAINTENANCE
- ONLY IF NOT ABLE TO UNABLE TO PROVIDE FOR NEEDS FROM OWN MEANS OR
EARNINGS
Factors to be considered in determining reasonable maintenance needs:
1. Amount in estate available for distribution to heirs and legatees
2. Earning capacity, financial needs and obligations of surviving spouse;
3. Subsistence of the marriage

FIDEICOMMISSA AND USUFRUCTS
- Person/s having the right to use or enjoy the property and fruits thereof
- Property is to be enjoyed by another, to whom ownership will devolve upon the happening of a
specified event or condition
- Usufructuary will NEVER acquire ownership – must be registered at Deeds Office
<I bequeath my estate to my children subject to a life usufruct over my estate in favour of my wife=
- Fiduciary can acquire ownership if fideicommissary dies prior to the condition
- Limit of # of fideicommissa for immovable property = 2 successive (2 generations)
<I bequeath my estate to A subject to the condition that on A’s death my estate will devolve on B=

HABITATIO AND USUS
o Habitatio
- right to dwell in another’s house without detriment to it
o Usus
- the right of using property of another for one’s daily needs without the detriment to the
substance of the property

HEIRS TO INHERIT FREE OF COMMUNITY AND ACCRUAL SYSTEM
- Will may preclude benefits to form part of beneficiary’s community estate
- MUST BE STATED
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
COLLATION
- Anything given to a person while still alive should not be included in the estate
- therefore whatever a person received does not form part of their inheritance
<There shall be no collation=

FUNERAL DIRECTION
- Specific clause should be inserted to indicate preference

TESTAMENTARY TRUST
- Created by a Will
- only comes into existence upon death of testator

THE LIVING WILL
- right to decide whether he wants to live or die and accepts or refuse treatment
- instruction regarding treatment etc.

CLAUSES IN A WILL
1. Heading
- to identify who’s will it is
- Name ; ID ; Address
< I, the undersigned, Ilse Wissing ( ID# 8012060019087) of Unit 35 Stellenberg
Complex, 185 Stellenberg Road, Equestria 0184 hereby declare this to be my
Will.=
2. Revocation
- where no revocation all the previous wills will be valid and must be read together.
<I hereby revoke all previous wills or testamentary writings made by me.=
3. Appointment of executor
- freedom to choose any person
- always include an alternative nominated executor
- must include clause for executor to be able to charge extra for professional fees
< I confirm that my Executor shall be entitled to charge in addition to the Executor’s remuneration for his
administration of my estate his professional fees for professional work attended to in that profession during
the course of his administration.=
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4. Security
- every executor must provide security to the satisfaction of the master
- for proper performance of his fuction.
- Will can direct Master to suspend with this obligation:
<I direct that the executor of my estate shall not be required by the Master of the High Court or other
competent authority to give security for proper performance of his duties.=
6. THE EXECUTOR

Remuneration
- 3.5% of gross value of the estate (as reflected in Liquidation Account)
- if registered for VAT, may charge VAT
- 6% of the gross income accrued and collected AFTER death

DUTIES
- must always act with due diligence and care
1. Take charge of the property
2. Report Estate and obtain letter of Executorship (Register Estate & obtain #)
3. Notice to creditors of death – Section 29
o Advertise in GZ & Local newspaper where decease resides at time of death
o 30 days or as specified to note their claims ( if lodging a claim late – still entitled but may be
liable for cost of redrafting)
4. Opening an estate banking account (if more than R1000 in cash)
5. Gathering information valuations balance certificate realisation of assets
6. Drafting Liquidation and Distribution Account
o Submit to Master within 6 months of grant of letter of Executorship
o Advertise Account in GZ & Local Newspaper
o Deal with any objections
**Account must lie for inspection for not less than 21 days
7. Finalisation of Administration
- paying creditors, administration expenses, taxes and duties
- distribute the estate
- CASH = must be distributed within 2 months from date distributable
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8. Final Requirements
- confirm to Master that:
o heirs and creditors have been paid
o immovable property have been transferred
o bonds cancelled / taken over
o confirm transfer of shares in a private and listed company
- NOW entitle to be paid

REPORTING DOCUMENTS TO BE SUBMITTED TO THE MASTER
1. The Death Notice
- personal details of deceased
- to be completed by surviving spouse or relative
2. Death Certificate
- if person signing the death notice was not present at death or did not identify
the deceased after death, copy of Death Certificate to be lodged with the
master;
3. The ORIGINAL Will
- recommended to even lodge revoked Wills
4. Inventory
- a provisional inventory to be lodged with master = estimate value of known
Assets;
- no reference made to liabilities
5. The Acceptance of Trust as Executor
- written application to be made to the Master for the appointment of Executor nominated by
Will
- copy to SARS (by the Master)
6. Next of Kin Affidavit and nominations by heirs
- of no will or no executor nominated in will = master need to make a dative appointment;
- Documents to be lodged:
o Certified copy of the marriage certificate
o Affidavit of the next-of-kin of the deceased
o Nomination from the surviving spouse, heirs or creditors nominating person as executor
dative.
7. Antenuptial Contract
- if married out of community of property
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8. Covering Letter to Master

Nomination of Executor
- no person may liquidate or distribute an estate without having been issued with Letter of
Executorship
- Types of Executors:
o Executor testamentary
- nominated by Will
- must apply to the Master in writing
- appointed by Master
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o Executor dative
- where no person was nominated by Will
- or nominated persons unwilling or unable
- Master will appoint
- Who may be appointed?
o
o
o
o
o
o

Practising Attorney
Practising Accountant
Board of Executors
Trust Company
Surviving spouse
Member of family within second degree related by blood or marriage
Appointment of a Master’s Representative
- if estate is less than R250 000
- in place of Executor
- does not have to comply with all the provisions of the Act = quicker and cheaper
** no bank account
** no statutory notices
** need not lodge Liquidation and Distribution Account
- Master can still appoint executor even if less than R250 000
Exam Question:
Q:
A:

What is the difference between appointment of an Executor and a Master’s
Representative?
1.
A Master’s Represantives may be appointed if the estate is less than
R250 000.00. The court have the discretion to still appoint an Executor.
2.
The Master’s Represantives does not have to comply with all the provisions of the act
3.
Letters of Executor and Acceptance of Executorship ship is replaced by <undertaking and
Acceptance of Master’s Directions
Taking over by the surviving spouse – Section 38
- surviving spouse buys out other heirs in order to retain assets
- Requirements for Application
1. One of the spouse’s has died
2. No provision to the contrary in the will
3. Major heirs and creditors has consented
4. Master is satisfied there is no prejudice
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
Redistribution Agreement
- Informal agreement where indivisible assets such as furniture, motor vehicles etc. is left to
children in equal shares.
- Formal Agreement is cases of immovable property such as a house
 Must be attached to the Liquidation and Distribution Account
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Exam Question:
Q:
A:

What is the difference between a Redistribution Agreement and Taking over?
Taking over:
- only if testator is survived by a spouse
- Consent necessary from major heirs and creditors
- master satisfied there is no prejudice
Redistribution:
- available to all heirs
- no need for consent from major creditors
Requesting extension for lodging of L & D Account
- Normally within 6 months from date of grant of Letter of Executorship
- If not?
** can apply to the master in writing
- Application must be in writing and must specify:
1. Why account can not be lodge in time;
2. What steps take to expedite the submission of the Account;
3. What progress has been made in liquidation and realisation of estate;
4. amount of money on hand or in bank account
5. Why an interim account can not be lodged
6. Whether the estate is solvent
6. INTESTATE SUCCESION
- Intestate Succession Act

SURVIVING SPOUSE – NO DESCENDANTS
- S1(1)(a)
- 100% to surviving spouse

DESCENDANT – NO SURVIVING SPOUSE
- S1(1)(b)
- in equal shares
- if predeceased with issue = issue will inherent predeceased share per stripes

SURVIVING SPOUSE + DESCENDANTS
- s1(1)©
- Spouse = R250 000 or child share whichever is the greater
- Children = residue
- Predeceased child + issue = issue will inherent predeceased share per stripes
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Example:
H died
Was married to W out of community of property
They had 4 children A, B , C, D
D died before H and had no children
C has two children C1 & C2
W had a child before marrying H, N. N was adopted by H
H had a child with his mistress S. S1
The Estate is R2.4 million
Q:
Who will inherent and how much?
A:
Step 1: Work out the child Share
# of decendants = 5
+ surviving spouse
= R2.4 / 6
= R400 000
Step 2: Surviving Spouse
= R400 000 because she is entitled to R250 000 or a child share whichever is greater
Step 3: Descendants
A = R400 000
B = R400 000
C = R400 000 (if she was dead C1 = R200 000 & C2 – R200 000)
D = R0.00 – died and left no issue
N = R400 000 (adopted children is entitled to a child share)
S1 = R400 000 (illegitimate children is entitled to inherit a child share)
Q:
How would it be different if H & W was married in community of property:
Step 1: Entitlement in terms of Marital Regime
W = R1.2 million
Step 2: 50& of Estate – Child Share
R1.2 million /6
= R200 000
Step 3: W’s portion
= R250 000 as per the Intestate Act or a child share whichever is the greater
Step 4: Residue of Estate for distribution amongst descendants
= R2.4 –R1.2 – R250 000
= R950 000 / 5
= R190 000 for A, B, C, N & S1
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
NO SPOUSE OR DESCENDANTS
- If survived by parents = equal share per surviving parents
- If only mother = 100% if father had no illegitimate children ( and if his 50% will go to the children)

NO SPOUSE, DESCENDANTS, PARENTS, DESCENDANT FROM PARENTS
- look for closest relative
- if no relatives traced = paid to Guardian’s Fund and if not claimed for 30 years = to the state
7. LIQUIDATION AND DISTRIBUTION ACCOUNT
Section 5(1)
a) HEADING
b) Money Column
c) Liquidation Account = value of estate
d) Recapitulation Account
e) Distribution Account
f) Income and Expenditure Account
g) Fiduciary Assets Account
h) Estate Duty Account
i) Certificate by the Executor
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 HEADING
- Describe as L & D
- The ordinal Account (whether 1st of 2nd)
- Final or Supplementary Account
- Name / ID / Date of Death, marital Status etc.
- Marital Regime
- Massing
- Master’s Reference # and office must be stated
 MONEY COLUMN
- either DT / CT columns
- remember column for VOUCHERS!!!!
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 Liquidation Account = value of estate
Asset - Liabilities - Estate Duty = Balance for Distribution
**NB – Fiduciary or Usufructuary right + Policies with named beneficiaries EXCLUDED!!!
Liquidation Account - Summary
ASSETS
1. Immovable
2. Moveable
3. Claims in favour of estate
TOTAL ASSETS
Rxxxxxxxx
LIABILITIES
1. Administrative Expenses
- Master’s Fee
- Executor’s Remuneration & Fees
- Bank Charges
- Advertisement
a) Section 29
b) Section 35
- Transfer cost and duty
- Electrical Compliance Certificate
- Bond Cancellation
- Valuation Cost
- Cost of realisation of Shares
2. Claims Against the estate
- Creditors
- Maintenance : Minors
- Maintenance: Surviving Spouse
- Marriage Claims
(
(
TOTAL LIABILITIES
ESTATE DUTY PAYABLE
)
)
(
(
)
)
BALANCE AVAILABLE FOR DISTIBUTION
(
) = MINUS
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Liquidation Account - DETAIL
Assets
- Immovable Property:
D = Description (full) – According to title deed
V = Value – Gross proceed of Sale
- Market value if not sold
D = Divestment Note (who gets it)
- not necessary if realised to cash
House / Farms
****if out of community, registered both names
= only include deceased portion
*** in community – FULL value
- Moveable Property:
D = Description (full)
V = Value – Gross proceed of Sale
- Market value if not sold
D = Divestment Note (who gets it)
- not necessary if realised to cash
& SHARES (use selling price if sold) & Cash Assets
- Claims in Favour of Estate
D = Description (full)
V = Value – Gross proceed of Sale
- Market value if not sold
D = Divestment Note (who gets it)
- not necessary if realised to cash
LIFE INSURANCE POLICIES (IF NOT BENEFCIARY) ; ACCRUAL
- If policy surrendered (policy over other person’s life) = SURRENDER
VALUE
- in name of deceased = MATURITY VALUE
- beneficiary name in Policy – EXCLUDED FROM LIQUIDATION
ACCOUNT
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TOTAL ASSETS
RXXXX
Example:
Investment at bank recoverable for R100 000.
Included in this amount is interest as of date of death of R10 000 and interest accrued after death of
R5000.00
Answer:
Capital Amount:
Interest at date of death:
R85 000
R10 000
- do NOT include the R5000.00 = Income AFTER death – Income and Expense Account
LIABILITIES
1. ADMINISTRATION EXPENSES


Master’s Fee (calculated on gross value of assets)
Only if R15 000 +
R15 000 –R16999 = R42
R17 000 + = R6 for every R2000
Example: Assets – R200 000
R200 000 –R17 000
= R183 000 / R2000
= R91.5 (R92.00) x R6
= R552 + R42
= R594
Max = R600 (R203 000 +)
** In community – On gross value of JOINT Estates
Executor’s Remuneration and Fees
3.5% on gross value of assets
6% on gross value of income collected AFTER death
VAT may be charged if registered
Total Assets = R200 000
R200 000 x 3.5%
= R7000
If VAT registered = R7000 x 14% = R7980
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
Estate Advertisements
- Section 29 : To creditors = 30 days
- Section 35 : For inspection = 21 days
 BANK CHARGES
 TRANSFER COST AND TRANSFER DUTY
** If property is sold = BUYER pays it
 BOND CANCELLATION COST
 ELECTRICAL COMPLIANCE CERTIFICATE (ALWAYS SELLER)
 VALUATION COSTS

COST OF REALISATION – SHARES = STOCK BROKER’S COMM

Postage and Petties – MAX R150
2. CLAIMS AGAINST THE ESTATE

FUNERAL EXPENSES

NORMAL CLAIMS BY CREDITORS

MAINTENANCE CLAIMS IN RESPECT OF MINORS
** only of surviving parent is unable to support child
** Creditors ALWAYS 1st in line for claims
MAINTENANCE CLAIM – SURVIVING SPOUSE


MARRIAGE CLAIMS
- IN COMMUNITY
* claim for 50% of estate (reflected in distribution
account)
- ACCRUAL
- NO ACCRUAL
SEE ** Below
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** IN COMMUNITY
- Surviving spouse claim for ½ of the estate in terms of the matrimonial property regime
- Reflected in Distribution Account NOT liquidation
o Liabilities ALSO liabilities of surviving spouse = ½
o EXLUDING Funeral + Estate Duty = NOT community expenses
EXAMPLE:
- Survivor is sole heir of the Estate in term of the Will
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** ACCRUAL SYSTEM
- survivor may have claim against the deceased in terms of S 3(1) of the Matrimonial Act
- Spouse who shows the smallest accrual has claim against the other spouse for:
½ the difference between the respective accruals of their estates = LIABILITY
- If accrual of deceased SMALLEST – claim against surviving spouse’s estate = ASSET
- Exclusion to Accrual:
1. Inheritance legacy or donation
2. Donation between souses
3. Patrimonial Loss damages
4. Asset excluded from accrual under ANC
5. Assets acquired from the excluded assets
- Initial net values escalated in accordance with the CPI (consumer Price Index)
** Original Value x CPI (CPI in the month the deceased died) / CPI of month initial net value
EXAMPLE:
X & Y married in September 1999
CPI @ 60.3
X dies in May 2010
CPI @ 154.1
Initial Net value of X’s Estate – R175 000
Q:
Calculate the Net value of X’s Estate at time of death
A:
R175 000 x 154.1 / 60.3
= R447 222.22
NB: Same calculation to be done for surviving spouse’s net estate
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 Income Tax and Capital gains Tax
- Executor must lodge deceased’s final income tax return to Receiver of Revenue (SARS)
- Tax Period: 1 March to date of death
- Capital Gains Tax (CGT):
o
o
o
o
o
o
o
Normally calculated by Auditor – Accountant’s Fee reflected as claim against estate
CGT MUST be included in Final Income Tax return
CGT = Sales Amount exceeding market value
13.65% on Capital Gain (individuals)
An additional TAX
When disposing of an asset (deceased deemed to have disposed of asset day before death)
If disposed to beneficiaries = market value at date of death – NO CGT implication
Example:
Capital Gain on property is R1000 000
= CGT is R136 500 (R1000 000 x13.65%)
BUT R300 000 annual exclusion for death
=R 136 500 –R 300 000
= R0.00
NO CGT payable
o Exclusion in case of deceased estate – NO CGT
1. Assets transferred to surviving spouse
2. Assets bequeathed to an approved public benefit organisation
3. Long term insurance policies of the deceased
4. Small business interest – R500 000 exclusion
5. Personal use assets (fiduciary interest and usufructs excluded)
6. R2000 000 exlusion on disposal of Primary Residence
-CGT = liability (included in Liquidation Account)
 ESTATE DUTY
- calculated in Estate Duty Addendum
- R3.5 million rebate
- Rate = 20%
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 RECAPUTILASATION ACCOUNT
- TO DETERMINE IF ESTATE IS LIQUID OR ILLIQUID
- REFLECTS LIQUIDITY OF ESTATE
- Cash and Assets reduced to Cash minus liabilities
CASH AND ASSETS REDUCED TO CASH
- As per the liquidation account : Divestment Notes
- Can use voucher number only
Less LIABILITIES (as per the liquidation account)
Less Cash Legacies (specific persons getting Cash amount)
Less Estate Duty
SURPLUS / SHORTFALL
TO BE DISTRIBUTED / AWARDED TO HEIRS ETC ETC
SHORTFALL – TO BE PAID BY THE SURVIVING SPOUSE
- SEE DSITRIBUTIO ACCOUNT
- Shortfall: Executor must record how shortfall is to be paid
- Surplus: Recorded in Distribution Account
 THE DISTRIBUTION ACCOUNT
- WHY
o Will = <awarded to in terms of the Will=
o Intestate = <in terms of the Intestate Succession Act=
o In community of property = <in terms of the matrimonial regime of the deceased=
- TO WHOM
o Beneficiaries – Full Names , major/minors
o Minors – Date of birth + ID#
o In community of property – State wording <surviving spouse=
- WHAT
o What Assets and what amount of cash to be awarded to each beneficiary
- Collation
o Bringing money or assets back into estate where assets/ money was given to another
person
o If not Excluded SPECIFICALLY in Will, then included in Estate
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- Redistribution Agreements
o Informal agreement to divide certain goods among beneficiaries = Movable
o Immovable = FORMAL Agreement
o Must be reflected in Distribution Account and reference made to agreement
Distribution Account
BALANCE FOR DISTRIBUTION


Rxxxx
Rxxxxxx
Rxxxxxx
TO LEGATEES
TO HEIRS
Consisting of:
Moveable
Cash
Rxxxxxx
Rxxxxxx
****** Must balance!!!!!!!
R1000
1000
Examples:
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Intestate Example:
Collation Example:
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Redistribution Agreement Example:
 THE INCOME AND EXPENDITURE ACCOUNT
- AFTER DEATH
- INCOME min EXPENSES
INCOME AND EXPENDITURE ACCOUNT
Distribution
Liquidation Account
INCOME
- Income on Investments after death
- Dividends
- Interest
- Rental Income
Min EXPENDITURE
- Executors remuneration @ 6% of Total Income
** Remember VAT if registered
R xxx
R xxx
R xxx
R xxx
Rxxxxx
Balance awarded as follows:
Mr X as sole heir in the Estate
Rxxxx
IF NO INCOME or Expenditure – MUST BE STATED
Rxxx
Rxxx
MUST BALANCE
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 THE FIDUCIARY ASSETS ACCOUNT
- ONLY ASSETS HELD BY FIDEICOMMISSUM
- like a <mini= L&D Account
A bequeath his estate to B subject to the condition that on B’s death the estate devolves on C
A’s Estate
B’s Estate
C’s Estate
Property appears In
A’s:
Property appears In
B’s:
Property appears in
C’s:
Liquidation Account
FIDUCIARY ASSETS ACC
+
Estate Duty Addendum
Liquidation Account
- Any income earned on fiduciary assets after death = reflected separately in an Income and
expenditure account under the Fiduciary Account and provision made for distribution to the
fideicommissary heirs
Example:
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 ESTATE DUTY ADDENDUM
- Actual Property
- Deemed Property
- s4(q) deduction = what accrues to surviving spouse
- Parties involved in Estates:
1. Master
2. Executor
3. Creditors
4. Surviving Spouse
5. Heirs / legatees = beneficiaries
6. SARS
- L & D account must be lodged with Master within 6 months of grant of letter of
Executorship
ACTUAL PROPERTY
+
DEEMED PROPERTY
=
GROSS VALUE
ESTATE
SECTION 4
DEDUCTION
=
NET VALUE ESTATE
R3.5 MILLION
SECTION 4A Rebate
=
Dutiable x 20%
DUTIABLE AMOUNT
= Estate Duty
Payable to SARS
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ACTUAL PROPERTY

TOTAL ASSETS - LIQUIDATION ACCOUNT
Min : 1. Insurance Policies – NO BENEFICIARIES
2. Matrimonial Claims
3. Shares – PRIVATE COMPANIES ( at market value : Selling – Market value to be included)
4. Farm – NB remember 30% reduction in Estate Duty Addendum
- Property Sold = Gross Proceeds from Sales
- Property NOT sold = Fair Market Value
+

LIMITED INTEREST – FIDUCIARY ACCOUNT
- right of use is taxable
- fiduciary + usufructs
- Usufructuary interest (right of enjoyment of another’s property)
o ONLY in Usufructuary heir’s ESTATE DUTY Account NOT in Liquidation
= PFMV x 12% x F
* PFMV – Present Fair market Value @ date of death
* F – See table A
- Calculated: AGE NEXT BIRTHDAY of person to whom benefit accrues
- Fiduciary Interest (As per the Fiduciary Asset Account)
o Must be included in the ESTATE DUTY Account + Fiduciary Asset Account
= PFMV x 12% x F
* PFMV – Present Fair market Value @ date of death
* F – See table A
- Calculated: AGE NEXT BIRTHDAY of person to whom benefit accrues
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Example:
Peter Punk died on 1 November 2006 and his will contained the following provisions:
1. I bequeath my Block of flats <Interlaken= to my eldest son Paul Punk, on condition that on Paul’s
death the block of flats is to dissolve on my nephew Barry Biker
Paul Punk was born on 11 August 1965 and died on 24 January 2012.
Barry Biker was born on the 26th of April 1978 and is still alive.
On the 24th of January 2012 the flats were valued at R148 000.
Q:
Calculate the value of the fiduciary interest to be reflected for Estate Duty purposes in the
estate of Paul Punk.
A:
PFMV x 12% x F
= R148 000 * 12% x (34 at next birthday – 8.17262)
= R145145.73
Thus R145 145.71 is the amount dutiable in Paul’s Estate
DEEMED PROPERTY
- Assets that only acquire value as a result of death
1. Insurance Policies
o If beneficiary was named – not included in liquidation account but added under deemed
o In name of deceased – only if policy have matured = death
- no difference who owns or pays the premiums
- If taken out by another person :can deduct premiums paid + 6% interest in calculation of
duty payable.
Bv. Son takes out a policy over the life of his father for R50 000.
R50 000 – premiums – 6% interest = Amount to be included
o Maturity value
o In deceased had a life policy over the life of another person = add the surrender value
= DO NOT INCLUDE IN ESTATE DUTY ADDENDUM
2. Donations mortis causa
3. Matrimonial Claims – Accrual Claims = Claims in favour of the Estate
4. Property which the deceased was prior to his death competent to dispose of for his own benefit
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- Exclusions from deemed property:
1. Antenuptial Contract
2. Buy and Sell Agreements
- only if purpose is to acquire shares / interest in the Company
3. Key-Man Insurance
- Company takes our Policy over life of Shareholder, Member.
- Proceed payable to company NOT family or any other beneficiary
 Claims in favour of the Estate (part of deemed Property)
- ACCRUAL SYSTEM
o Spouse with smaller accrual entitled to claim against estate of other spouse
o Amount = ½ of difference between accruals of estates
o Claim in terms of the Matrimonial Property Act
o Included in Liquidation Account = Asset or Liability
SECTION 4
DEDUCTION
= total liabilities as per liquidation account [s4 (a) – (d)]
(a) – Funeral, Tombstone and death-bed expenses
(b) – Liabilities of deceased – debts due
(c) Administration Expenses Allow in administering the estate
- Advertising x 2
- Bank Charges
- Cost of Valuibg assets
- Cost of realising assets
- security
- Transfer costs
- Master Fee’s
- Executor’s Fees
(d) Administration Expenses incurred in giving effect to the Act
- bv valuation costs in appraising property
= Public Benefit organisations [s4 (h)]
- must be within RSA
= Value of Property as accrues to surviving spouse [s4 (q)] = WILL
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= Accrual in terms of Matrimonial Regime [s4 (1A)]
- Value of Accrual Claim against the estate in terms of the Matrimonial Property Act
- deduction for Estate Duty Purposes
R3.5 MILLION
SECTION 4A Rebate
- current rebate allowable on an estate
Dutiable x 20%
DUTIABLE AMOUNT
= Estate Duty
Payable to SARS
- payable within 12 months of date of death
 Apportionment of Estate Duty
- Certain person who have benefited from estate must also contribute to estate duty
- NET VALUE OF BENEFIT ÷ NET VALUE OF ESTATE x ESTATE DUTY PAYABLE
= Contribution by beneficiary towards DUTY
Example:
Benefit of X is R 20 000
Net value of the Estate is R4 million
Duties Payable is R100 000
Q:
How much will X have to contribute?
A:
R20 000/ R4000 000
= 0.005 x R100 000
= R500
 Rebate on successive deaths
- Applicable on estate duty
- Within 10 years from the 1st dying
- 2 years
=
100%
- 2 to 4 years =
80%
- 4 to 6 years =
60%
- 6 to 8 years =
40%
- 8 to 1 years =
20%
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 THE EXECUTOR’S CERTIFICATE
= END ACCOUNT
- Statement by Executor that Account is a true an proper Account of the Administration of the
Estate +
- Statement to the effect that all income after death to the date of the Account has been accounted
for.
 STEP BY STEP
1. Lodge L & D Account with Master
2. Master can issue Query Sheet
3. Advertise Account (only if Master is satisfied with account)
- Section 35
- lie for inspection for min 21 days
4. Distribution
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