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THE BASICS OF ESTATE PLANNING
What Every Family and Business Owner Should Know
✎ By Gittins Attorneys · ⌛︎ 8 min read · ➤ 06 August 2026
This is the first instalment in our four-part newsletter series on estate and succession planning. This edition covers the basics: what actually shapes the size and cost of your estate, and the tax consequences, i.e. estate duty and capital gains tax (CGT), that every plan has to reckon with.
Over the next three weeks, we turn to the tools that address these issues directly: getting your will right, using a trust effectively, and understanding how a deceased estate is actually administered.
ESTATE PLANNING IS NOT JUST FOR THE WEALTHY
Estate planning is not only about who inherits what. It is about whether your estate will have enough cash to meet its obligations, whether a business you own can carry on without you, and whether the people you intend to benefit actually receive what you intended, without unnecessary delay, dispute or cost. Every estate, large or small, is affected by the issues below.
THE COST OF DYING: ESTATE DUTY & CGT
Estate duty.
Estate duty is a tax levied on the net value of everything you own at the moment of your death, and it is calculated and paid by your estate before anything is distributed to your beneficiaries.
Not all of your estate is taxed. Every estate qualifies for an abatement, currently being R3.5 million, which is deducted from the net value of the estate before any duty is worked out. It is only the value above this threshold, known as the "dutiable amount," that attracts estate duty at all.
Once the dutiable amount has been worked out, estate duty is charged at 20% on the first R30 million of that amount, and at 25% on anything above R30 million. For most estates, this means an effective rate of 20%, where the higher 25% rate only applies once the dutiable amount itself exceeds R30 million, which catches large estates rather than the majority.
A short example helps illustrate this. If an estate has a net value of R8 million, the R3.5 million abatement is deducted first, leaving a dutiable amount of R4.5 million. Estate duty at 20% is then levied on that R4.5 million, giving rise to a liability of R900,000, payable by the estate before any distribution to beneficiaries.
There is a further, significant relief available: anything left to a surviving spouse, whether directly or through a trust that qualifies, is deducted in full before estate duty is calculated.
This is known as the spousal deduction, and in effect means no estate duty is payable on the first death to the extent that assets pass to the surviving spouse.
It is important to understand that this defers the duty rather than eliminating it: the liability carries forward and becomes payable on the death of the second spouse, when those assets eventually pass to children or other beneficiaries.
For this reason, couples should plan around how and when bequests pass between spouses, rather than assuming that leaving everything to one another avoids estate duty altogether.
Capital gains tax at death.
Capital gains tax (CGT) is not a separate tax in its own right, it forms part of income tax. When you dispose of an asset for more than it cost you, a portion of that profit (the "capital gain") is included in your taxable income and taxed at your normal income tax rate.
CGT is usually associated with selling an asset, but it is triggered by any "disposal," which is a wider concept, and applies to donating an asset, transferring it into a trust, and, importantly, dying, can all trigger it.
When you die, SARS treats you as having disposed of most of your assets to your estate at their market value immediately before death, even though no actual sale has taken place and no cash has changed hands. This is called a deemed disposal. Any growth in value between when you acquired an asset and the date of your death is potentially subject to CGT, and this liability must be reflected in the final income tax return submitted on your behalf and settled by the estate.
Not every disposal at death actually triggers CGT immediately, and there are also many exclusions that can reduce this liability. Assets left to a surviving spouse are treated as if the spouse had always owned them at the same original cost, so no CGT arises on the first death, and the gain is only taxed when the surviving spouse eventually disposes of the asset. This works in a similar way to the spousal deduction for estate duty described above: it defers the tax rather than removing it permanently.
The two taxes interact.
A lower CGT liability reduces the deduction available against the estate for estate duty purposes, so relief on one side does not always translate into the full saving it appears to on paper. Getting the sequencing and structuring right is where planning, not just awareness, starts to matter.
WHY LIQUIDITY MATTERS AS MUCH AS VALUE
An estate can be substantial on paper and still run into trouble if it lacks cash. Estate duty, CGT, administration costs and any accrual claim would generally become due before assets can be transferred to beneficiaries.
Where an estate is asset-rich but cash-poor, think a family farm, a business, or a single property, the executor may have no option but to sell something the family wanted to keep, simply to raise the funds required to settle liabilities. Life cover, correct
🛈 THINGS TO REMEMBER
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Your marital regime determines how much of your estate is actually yours to leave, and what claims may arise against it.
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Business and shareholding interests need their own succession plan. A will alone rarely deals with this adequately.
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Check who your life policy and retirement fund beneficiaries actually are; outdated nominations are one of the most common planning gaps.
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Estate duty and CGT are calculated differently but interact with each other. Plan for both, not one at a time.
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Review all of the above after any major change in your life, such as marriage, divorce, a new child, a new business, or a significant asset purchase or sale.
Every topic raised in this week’s newsletter edition is something our team handles day to day. Whether you need a will drafted or reviewed, a trust established or properly administered, guidance through the deceased estate administration process, or advice on managing estate duty and CGT exposure, Gittins Attorneys Inc. can assist you from start to finish. If any of this raises questions about your own estate, business or family circumstances, get in touch with us - we'd be glad to help you put a plan in place.
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