Your will and estate

Some interesting information regarding your will and estate duty for South African residents

John Frith, a chartered accountant, discovered in 1997 while he was executor to his late father's estate, that the residuary heirs of all estates paying estate duty had been prejudiced by additional tax. Surviving spouses and charities, where they are the residuary heirs, were particularly prejudiced as in terms of the Act, they are not subject to estate duty. An additional cash payment equal to 25% of the estate duty amount is paid to SARS, if a will does not have a spouse and/or a charity as the residuary heir.

For example, if one makes a bequest of R800 000, a bequest above the duty free portion, one would fairly assume that the estate duty relative to that bequest is R160 000 being 20% of what caused the tax. If the residuary heir of the will is not a spouse and/or charities, the related tax is R200 000 or R40 000 more. This is 25% more than the R160 000 that the tax should be.  The full amount of additional tax is deducted from their inheritance.  Extensive investigation into the additional tax issue, and an understanding that it had already cost heirs tens of billions of rand, motivated John to challenge SARS on the formula used to compute estate duty, used where a spouse or charity was the residuary heir (this formula had been accepted by administrators).  SARS lost the tax court case and took it directly on appeal to Bloemfontein. SARS lost the Bloemfontein Appeal Court decision handed down in 2000.

John's has developed Your Family & Charity Will (YFC Will) to ensure that in future wills, beneficiaries are not prejudiced by the additional tax, in addition to ensuring full advantage is taken of all tax allowances and other aspects that should be considered in a will. The 2000 Bloemfontein Appeal Court Judgment against SARS gives every person the opportunity to stop the additional tax.

To take advantage of the opportunity, your will must be structured to ensure that your residuary heirs are always and only a combination of spouse and/or charities. If your spouse is your residuary heir, ensure that if your spouse dies first, that as an alternative, you have a charity as the residuary heir. This also applies to your spouse.

The YFC Will allows you, the testator, to decide how to distribute the R40 000 per R1 million rather than forcing your executor to pay the additional tax. You decide the portion to be paid to beneficiaries leaving the remainder to a charity of your choice.  
 
Both spouses need YFC Wills to take maximum advantage of allowances and to cover all eventualities regarding sequence of death.

If you would like John to revise your will as a YFC Will, it will costs R1 000 plus a liaison fee.  You can contact him on :

John W Frith CA(SA), PO Box 2440, Port Alfred, 6170 
Tel: 046 624 9000, Fax: 086 668 3374, Cell: 083 378 3374
Email: john@yfcwill.co.za
His website can be found on : http://www.yfcwill.co.za

For more information, read this article on the Accountancy SA website :
Estate Duty : Paying less by giving more

The choice of executor is entirely up to you and although John does administer estates, this service is contrary to the traditional approach of preparing a will in order to achieve the nomination as executor.

Your original beneficiaries will never receive less.

Because testators have not been informed or properly assisted with their wills, currently, each year, more than R5 billion rand is paid to SARS as additional tax. Each year, the heirs of estates are prejudiced by this amount and, in addition, charities are being deprived of some 20 to 40 million rand.

Something to think about...!

If you'd like to discuss this offer, you can also contact the Kingswood College Bursar, Stephen Gardner on 
Tel : 046-603 6600, 
Cell : 083 564 5158, 
Email : s.gardner@kingswoodcollege.com 

He will be able to put you in touch with the Kingswood College Centenary Trustees for more information.


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