The Hidden Costs of Dying in South Africa: A Wake-Up Call to Plan Ahead

23 May The Hidden Costs of Dying in South Africa: A Wake-Up Call to Plan Ahead

We meticulously plan for life’s milestones — education, weddings, homes, retirement — but rarely for the one we certainly all face: death. While wills are often discussed, few truly grasp the financial labyrinth left behind when a loved one passes. In South Africa, death and taxes aren’t just inevitable — they’re deeply intertwined, with the taxman playing a starring role in your final financial act. Below, we break down the often-overlooked costs when you pass away, empowering you to prepare wisely and protect your legacy.

The Price of Farewell: Funeral Costs

• Funeral Services: Burial or cremation, transport, catering, and funeral home fees can easily spiral. Research funeral policies thoroughly—many exclude tombstones or memorial services.
• Memorials: A tombstone or service adds thousands. Pro tip: Specify your wishes in your will to avoid family disputes.

Estate Administration: The Invisible Bill

• Executor’s Fees: The current prescribed fee is 3.5% (plus VAT) of the estate’s gross value.
• Legal & Admin Costs: Attorneys’ fees (e.g. transfer costs, bond cancellation costs), the Master of the High Court’s fees, newspaper notices for creditors; it all adds up.

Debts: The Ghosts of Financial Past

Outstanding Debts: Credit cards, loans owed, mortgages, etc. must be settled first.

Medical Bills: Unpaid treatments become the estate’s responsibility.

Property Transfer: The Silent Shock

• Transfer Fees: Removing the deceased from Title Deeds incurs costs, which costs are determined by the property’s value.
• Bond cancellation costs: Attorney’s fees.
• Municipal Arrears: Unpaid rates or taxes? To be paid up before transferring property.

The Taxman’s Finale

• Income Tax: Pre- and post-death earnings (e.g. rental income, interest on investments, etc) are taxable.
• Capital Gains Tax (CGT): 40% of the profit from asset sales (where CGT is not excluded) is added to your income in your final income tax returns.
• Estate Duty (applicable where the dutiable value of your estate is above R3.5 million):
  • 20% of the dutiable value of your estate is payable to SARS.
  • 25% of the dutiable value of your estate (if the dutiable value is above R30 million) is payable to SARS

Not enough cash available in your estate to settle costs and liabilities?

• Your heirs might be required to pay in the cash shortfall before their inheritances can be received.
• If the heirs do not have the financial means to settle the cash shortfall, the Executor can and must sell as much of the assets as are needed to cover the cash shortfall.

What should you do to avoid unplanned costs?

1. Plan Early: Make sure you have a valid Will. Funeral policies and insurance policies payable to your estate upon your passing might be advisable if there is a possibility of not enough cash available in your estate to cover all debts and costs, bequests and maintenance obligations.
2. Professional Guidance: Executors, attorneys, and tax experts are worth their fees
3. Communicate: Prepare heirs for administrative realities to reduce emotional strain.

Please note this guide is illustrative. Laws and thresholds change—always consult an attorney, certified estate planner and/or tax professional.

Death may be certain, but financial chaos isn’t. By confronting these costs today, you gift your loved ones clarity for tomorrow. 💡

Written by Olajide Pariola