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Newsletter 29

Newsletter 29

Dear Colleague
Everytime you smile, it is a gift to someone. 
Share your smile with the world. 
It is the beginning of peace and a symbol of friendship.
Multiple scientific studies have demonstrated the benefits of a positive mindset.  It not only improves one’s mood, but also reduces the risk of depression and stress-related disorders, amongst other things.  Therefore, a wise person will focus on the positive, however small.  Focus on the present and turn negative self-talk into positive self-talk.  First thing in the morning, look in the mirror and say:
“This is going to be a great day, I am going to be great!”
We remind you of the Clientèle Estate Preservation Plan underwritten by Clientèle Life.  A remarkable plan that protects the financial interest of the estate’s beneficiaries from the costs associated with the winding up of an estate, as well as providing financial security during the sometime lengthy administration process.  Apart from the benefits to your clients, there are also great benefits to yourself.  See Newsletter 24 of November 2018 as well as our blog on for full details on the plan.
…..  Read more in the next edition!

In terms of the Estate Duty Act 45 of 1955, taxes are charged on the taxable value of an estate.  If a tax payer resides in South Africa when he/she dies, the norm is that all assets (including property deemed to be property), wherever it is situated, could be included in the gross value of the estate for the calculation of the estate duty payable.
Currently it is 20% of the taxable value of estates up to R30 million and 25% of the taxable value of estates above R30 million.  Foreigners/non-residents also pay estate tax on their property in South Africa.
To minimise the consequences of estate duty, an understanding of the calculation thereof is required.  The following is applicable in determining liability:
  1. Which property must be included.
  2. Which property is deemed to be property.
  3. Allowable deductions:  possible deductions allowed in the administration of an estate.
In this edition we will discuss the definition of property and cover the first two points.  In the next edition we will discuss the tax deductions allowed in an estate. 
Property includes all property or rights on property, including moveable, immovable, corporeal or incorporeal property registered in the name of the deceased at the time of his/her death.  It also includes types of annuities, options to buy land or shares, goodwill or intellectual property. 
It also includes an accrual claim under the Law on Matrimonial Property that the estate of the deceased has against the estate of the surviving spouse.
  1. Insurance policies
  1. It includes yields from foreign insurance policies on the life of the deceased (payable in South Africa in ZAR), irrespective of who the owner (beneficiary) is.
  2. The yield of such a policy is subject to estate duty.  It can be reduced with the total of the premiums, plus 6% p.a., to the extent that it was paid by a third party (the beneficiary) that is entitled to the yield of the policy.  Premiums paid by the deceased are not deductible.
  3. If the yield on the policy is payable to the surviving spouse or to a descendant of the deceased in terms of a properly registered prenuptial agreement (i.e. registered at the Deeds Office), it will be entirely exempt from estate duty.
  4. If business partners took out a policy on each other’s lives with adherence to certain criteria, the yield will be exempt from estate duty.
  1. Benefits payable by pension- and other funds by or because of the death of the deceased
Payments by these entities (pension-, retirement annuity-, provident funds) normally consists of two components – a lump sum at time of death and an annuity thereafter.  The lump sum component was previously subject to estate tax, but since 1 January 2009, any lump sum payments received from such a fund, is excluded for estate duty purposes, with certain exceptions.
  1. Donations at the time of death
Donations where the beneficiary will not benefit up to and including the death of the donor and where the donation only realises when the donor dies, is not subject to donations tax.  It must be included as an asset in the estate and is subject to estate duty.
  1. Property which the deceased was able to alienate immediately before death (Article 3(3)(d) of the Law on Estate Taxes), for example to donate an asset to a trust, can be considered as deemed property.
In the next edition read about the allowable deductions in an estate.
This is a general information article and not legal or professional advice.  Always consult a qualified financial advisor for specific and relevant advice.
Source: Moore Stephens “Estate Planning Guide”.

Alan Meltzer died on 31 October 2011 at the age of 67, a year after he had divorced his wife, Diana, whom he had been with for 13 years.
He was the founder and former owner of Wind-Up Records and built it up into an indie-label powerhouse.   In his recent years, he became a celebrity high stakes poker player.  He lived in a luxury apartment building on New York’s exclusive Park Avenue.
The contents of his Will have since been disclosed and it became public knowledge that he left $1 million to his chauffeur, Jean Laborde, a father of five, and $500,000 to his doorman, Chamil Demiraj.  Apparently, both of his former employees supported him through his messy divorce from Diana.  The former Mrs Meltzer had no ill feelings about his beneficiaries, even though she would have inherited a third of the estate of about $8 million had they not divorced.  On the contrary, she said it was no business of hers if her ex left his fortune to “bums”.
His benefactors described him as a very nice man.  Mr Laborde said: "I don't know what to do exactly with the money, but one thing I know for sure – each year I'm going to bring the guy some flowers for his grave.”
Until next time.
“The Legatus Times” Team

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