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Newsletter 29

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Newsletter 29
Dear Colleague
 
Remember the EFBOE competition which kicked off on 1 November 2018?  Have another look at the previous month’s newsletter for all the details.  Let those Wills and “buite boedels” flow in!  Information on the front-runners will, from time to time, be announced in the “Let’s Talk EFBOE”-newsletter.  We appreciate your business and look forward to a promising new year.
 
With the year coming to its’ end soon, we would like to take this opportunity to wish you joy and peace for the upcoming festive season!  To all those who are fortunate enough to have time off from work over the festive season, have a blessed time and if you are going away, please travel safely.  For those who must stay behind and keep the engines running, may it be so peaceful and quiet that you can at least do some catch-up work!
 
EFBOE’s offices will close on Thursday, 13 December 2018, at 12h00 and re-open on Monday, 7 January 2019, at 08h00.
  
MYTHS ABOUT WILLS
 
Read more on this subject in 2019!
__________________________________________________________________________________________________
 
IMPLICATIONS OF ESTATE DUTY:  Part 2 - Deductions
 
In the previous edition we defined property which attracts estate duty.  In this edition we concentrate on the deductions allowed in terms of the Estate Duty Act.
 
DEDUCTIONS
 
Some of the most important deductions are the following: 
  1. The cost of the funeral, tombstone and death-bed expenses.
  2. Debts owed to people who primarily live in South Africa.
  3. The extent to which these debts must be paid out of property included in the estate.  It includes the deceased’s income tax payable (also capital gains tax) until date of death.
  4. Certain deductions are allowed for foreign assets, not specified in this article.
  5. Debts and liabilities due to non-citizens:
            These are deductible - but only in so far as such debt exceeds the value of the deceased’s
             assets situated outside South Africa, which are not included in the taxable estate of the
             deceased.
  1. Bequests to certain public welfare organisations:
            Where property is bequeathed to such organisations which are exempt from income tax or
            to the state or any local authority in South Arica, the value of such property will be
            deducted from the estate duty.
  1. Property rights bequeathed to the surviving spouse [Article 4(q)]:
  • This includes the value of the property which is bequeathed to the surviving spouse and which is not an allowable deduction yet.
  • The yield of an insurance policy payable to the surviving spouse is deemed property for the calculation of estate duty, but deductible according to Article 4(q).
  • Article 4(q)-deduction will not be allowed for property bequeathed subject to a bequest price.
  • Article 4(q)-deduction will not be allowed for benefits to a trust established for the benefit of the surviving spouse, if the trustees have the discretion to allocate the property or income derived from it to any other party besides the surviving spouse (discretionary trust). Where the trustees have no discretion to both the income and capital of a trust, an Article 4(q)-deduction will be allowed (established trust).
 Allowable R3,5 mil deduction between spouses
 
The law makes provision that the R3,5 mil-deduction from estate duty can be rolled over to the surviving spouse so that a R7 mil-deduction can be utilised at the surviving spouse’s death.  This roll-over is only applicable if the entire estate of the first dying spouse is bequeathed to the surviving spouse.
 
Life insurance for estate duty
 
Normal estate duty will be charged on insurance yielding.
 
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”.
__________________________________________________________________________________________________
 
WAIT, WHO DIED?
 
Some people win the lottery and some acquire fortunes through other means.  But then there is John Hall, an English retiree who received an unexpected fortune from another source. 
 
In 2015, John Hall found himself heir to a distant cousin and mysterious widow whom he had never known.
 
The childless and sibling-less Shirley Diane Street died intestate at a nursing home in Folkstone, in Kent, where she lived for 23 years after retiring from work in London.  Finders International was investigating her ₤1 million-plus estate for an episode of BBC Heir Hunters and contacted Hall, who suddenly gained a branch on his family tree and a sweet ₤200,000 share of the estate as well.
 
This pensioner was over the moon about this ‘out of the blue’ monetary surprise, floating on “heir” – who wouldn’t be?
 
Until next time!
The “Let’s Talk EFBOE Team


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