Will my wife pay estate duty?

2012-09-29 12:18

Letters from our readers this month highlight the need to understand the interest rate on your loan.

Make

sure you always understand exactly how much your debt is costing you,

not only your monthly repayments but how much you will pay over the

whole period of the loan.

It is also important to make informed decisions about whether or not to fix your interest rate

Dick writes:
In the event of my death, what taxes are due on my life policies?

Since my wife is the beneficiary, does she pay the taxes, or does the estate? Also, would these policies drastically increase her tax burden in the year they became due?

Maya replies:

The good news is that there is no estate duty paid between spouses, so everything you leave to your wife will be free of estate duty.

You also receive a tax abatement of R3.5 million before your estate pays estate duty.

This means that you could leave R3.5 million to your children without any tax implications.

If you did not use the abatement, it would accrue to your wife so that on her death her estate would only pay tax on amounts above R7 million.


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