So, you’re living overseas, minding your own business, and suddenly — you get word that you’ve inherited something from South Africa. Great news, right? Well… mostly. Before you start shopping for that villa in Spain, there are a few legal and tax hurdles you should know about.
Whether you’re the one leaving something behind (hello, benefactors) or you’re the lucky one receiving it (hi there, beneficiaries), here’s your go-to guide to understanding the ins and outs of inheritances, estate duty and deceased estates in South Africa and all the official bits — made simple, jargon-free, and easier to understand.
Let’s break it down, shall we?
Cross-border inheritance is more common (and more complicated) than you think
With millions of South Africans living abroad, it’s becoming more common for estates to have beneficiaries who reside overseas. Unfortunately, international estate planning isn’t as simple as writing a will and calling it a day. Different jurisdictions, timelines, and tax requirements mean one estate can involve multiple legal systems. That’s where things get sticky, especially if there’s no valid will or if the estate includes immovable property, trusts, or foreign beneficiaries.
It’s also important to understand that receiving an inheritance from a South African estate while living abroad doesn’t necessarily exempt you from taxation in your country of residence. While South Africa does not levy withholding tax on inheritances paid to non-residents, you may be required to declare the inheritance in your own tax jurisdiction.
What is estate duty in South Africa?
South African estate duty—sometimes referred to as death tax or inheritance tax in South Africa—is levied on the dutiable value of a deceased estate.
- The first R3.5 million of a deceased estate is exempt from estate duty (the abatement).
- Anything above that is taxed at:
– 20% up to R30 million
– 25% on anything over R30 million
For married couples, the estate duty surviving spouse exemption in South Africa allows the unused portion of the first spouse’s abatement to roll over to the second spouse’s estate.
So, if you’re a beneficiary living abroad, estate duty could still apply to the deceased estate, and your inheritance could be delayed if the tax affairs of the estate aren’t wrapped up.
Capital gains tax on death in South Africa
When someone dies, their assets are deemed to be disposed of at market value. This triggers a capital gains tax (CGT) event, even if nothing is sold.
● CGT applies to both movable and immovable property.
● It forms part of the deceased’s final income tax return.
So yes—capital gains tax on deceased estates in South Africa is a real thing, and it can eat into what beneficiaries receive, especially if there’s no liquidity in the estate.
What is a Letter of Executorship (and why does it matter)?
If you’ve recently lost a loved one in South Africa, you’ll hear about a Letter of Executorship before you hear about any inheritance. This document, issued by the Master of the High Court Deceased Estates office, authorises someone to administer the estate.
- If the estate is worth more than R250,000, a Letter of Executorship is issued.
- If it’s less, a Letter of Authority may be granted instead.
Many expats are confused by the executorship letter’s meaning—but it simply confirms the legal power to wind up the deceased estate in South Africa. And yes, a beneficiary can be an executor of a will in South Africa—if there’s no conflict of interest.
Read more: Understanding and Navigating Letters of Executorship in South Africa.
Administration of deceased estates in South Africa – the will matters more than you think
A valid South African will is essential when dealing with deceased estates in South Africa. The absence of a valid will brings into play the rules of intestate succession in South Africa, meaning that the estate will be distributed according to the Intestate Succession Act.
That might not match the deceased’s wishes. Worse, it might delay the process significantly. Outdated wills, multiple wills, or those not compliant with local or international laws can cause additional headaches, especially when it comes to the process of probate in South Africa, during which the will must be validated and the estate’s debts settled.
Pro tip: Update your will to reflect your current situation, assets, and offshore heirs. This is especially vital if you own property in more than one country.
Read more: Secure your family’s future – the power of beneficiary nominations in South Africa.
Exchange control restrictions can block your inheritance
Even though you’re cleared of estate duty, inheritance tax, and CGT, South African exchange control regulations can complicate things when it comes to claiming your inheritance. Foreign beneficiaries (non-residents) may need to get special approval from the South African Reserve Bank to transfer inherited funds abroad. Without proactive planning, this could delay or even prevent your inheritance from being paid out. If you haven’t formally tax emigrated or don’t have a tax clearance certificate for the deceased estate in South Africa, it can take time to get approval—if it’s granted at all.
Funds inherited by non-residents from South African estates must be reported to the Financial Surveillance Department of the South African Reserve Bank. Financial institutions handling these transfers usually require documentation confirming the source of funds, residency status, and that all tax obligations have been met.
Read more: How to get a tax clearance certificate for a deceased estate in South Africa.
What’s involved in winding up a South African estate?
The administration of deceased estates in South Africa is a process—and it’s not a short one. Here’s what you can expect:
- Report the death to the Master of the High Court.
- Obtain the Letter of Executorship.
- Advertise for creditors.
- Gather and value assets.
- Pay off debts, taxes, and estate fees.
- Submit a liquidation and distribution account.
- Distribute what’s left to beneficiaries.
So how long does it take to wind up an estate in South Africa? It can take anywhere from six months to several years, depending on the complexity, tax clearance, and whether the estate is contested or the individual died intestate.
Read more: Deceased estates and distant heirs: the expat’s guide to claiming your South African inheritance.
What documents do you need?
To receive your South African inheritance as a non-resident, you’ll usually need:
- A certified copy of your ID or passport
- Proof of your banking details
- Proof of your non-resident status
- A Tax Clearance Certificate (Deceased Estate) from SARS
Read more:
- Document checklist for transferring an inheritance from South Africa.
- How to get your inheritance money out of South Africa.
What are unclaimed funds for deceased estates in South Africa?
In South Africa, unclaimed deceased estates, also known as unclaimed funds, refer to assets held by financial institutions and other entities that belong to deceased individuals but have not yet been claimed by their rightful beneficiaries. There are various resources and processes available to help identify and claim these unclaimed funds.
How to search for unclaimed deceased estates:
- Online databases: The Association for Savings and Investment South Africa (ASISA) website and the Verifi website offer search tools to identify possible unclaimed assets.
- FSCA unclaimed benefit search engine: The FSCA provides a search engine to locate potential unclaimed benefits.
Does inheritance have to be shared with a spouse in South Africa?
This one’s tricky. In South Africa, whether a spouse is entitled to a share of an inheritance depends on the marital regime. If the couple is married in community of property, the inheritance is generally shared unless explicitly excluded in a will.
For marriages out of community of property (whether with or without accrual) the inheritance typically remains the sole property of the spouse who receives it, as inheritances are excluded from the accrual unless otherwise specified. Ultimately, a valid will can override these defaults and clearly outline how inheritance should be distributed.
FinGlobal: cross-border financial specialists for South African expats
If you’re a benefactor, it’s advisable to sort out your will, know your estate’s obligations, and get professional help to structure cross-border bequests. If you’re a beneficiary, be patient and proactive, especially if you live abroad.
Cross-border inheritance isn’t impossible, but it is more complicated. With the right guidance, you can avoid delays, minimise taxes, and (hopefully) avoid endless calls with SARS. Need assistance with claiming your South African inheritance from abroad? FinGlobal can help you cut through the red tape. Simply leave your contact details below and we’ll be in touch to discuss your requirements.