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Trusts and Estate Planning

I guess that you are familiar with the Estate Duty allowance of R3,5m? If you bequeath everything to your spouse, then his/her allowance becomes R3,5m multiplied by two. That is R7m. But what happens to the allowance if he/she subsequently marries, bequeaths everything to his/her new spouse and then dies? Is it now R3,5m x 3?

3Spouses

The answer lies in s4A(2) of the Estate Duty Act –

s4A(2) Estate Duty Act

(2) Where a person was the spouse at the time of death of one or more previously deceased persons, the dutiable amount of the estate of that person shall be determined by deducting from the net value of that estate, as determined in accordance with section 4, an amount equal to the amount specified in subsection (1)

(a)   multiplied by two; and

(b)   reduced by the amount deducted from the net value of the estate of any one of the previously deceased persons in accordance with this section.

It takes a bit of unscrambling, but the result is quite simple –

The total allowance in a chain of marriages is the personal allowance of R3,5m multiplied by two, so whenever any person in the chain dies, their allowance is R7m minus any allowance already claimed by another deceased person in the chain.

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