Estate duty implications re new amendments

Quote :

The SA Law Commission, in its Report on the introduction of a legitimate portion or the granting of a right to maintenance to the surviving spouse, recommended that a claim for maintenance against the estate of the deceased spouse be given to the surviving spouse by operation of law. The Maintenance of Surviving Spouse Act 27/1990 gives effect to this recommendation by providing the surviving spouse who is unable to support himself/herself from his/her own means and income with a claim for maintenance against the deceased spouse's estate in an amount sufficient to provide him/her with his/her reasonable maintenance [sec 2(1)].
The claim for maintenance of a surviving spouse has the same order of preference in respect of other claims against the estate of the deceased spouse as a claim for maintenance of a dependent child against the estate of the deceased spouse. These claims will, if they compete with each other, be reduced proportionately [sec 2(3)(b)].
In determining the reasonable maintenance of the surviving spouse , the court must take into consideration, inter alia, the following factors:
- the amount in the deceased estate available for distribution to heirs and legatees;
- the existing and expected means;
- earning capacity;
- financial needs and obligations of the spouse;
- the standard of living of the surviving spouse during the subsistence of the marriage;
- his/her age at the death of the deceased spouse [sec 3]

Whether the claim by the surviving spouse would be successful depends largely on the above.

Many thanks, much appreciated.

purenp wrote:

Hi
I am not 100% clear on the facts of claims surviving spouses have against their deceased spouses' estates. The facts are as follow;
deceased estate is worth roughly R 13,500,000 (married anc) for 33 years. 2 major children aged 28 and 30 and one minor (lagally adopted) child aged 12. Surviving spouse assest worth R 4,000,000 and earns R 26,000 pm. Deceased spouse was rather upset when he found out about monies his wife inherited offshore and never revealing this to him. This led to him changing his will to make his 3 children the sole heirs of his entire estate without her knowledge. Now, the surviving spouse wants to know what claims are available to her against her late husband's estate and if any of these claims would be successful if instigated?

Your comments would be greatly appreciated.

The SA Law Commission, in its Report on the introduction of a legitimate portion or the granting of a right to maintenance to the surviving spouse, recommended that a claim for maintenance against the estate of the deceased spouse be given to the surviving spouse by operation of law. The Maintenance of Surviving Spouse Act 27/1990 gives effect to this recommendation by providing the surviving spouse who is unable to support himself/herself from his/her own means and income with a claim for maintenance against the deceased spouse's estate in an amount sufficient to provide him/her with his/her reasonable maintenance [sec 2(1)].
The claim for maintenance of a surviving spouse has the same order of preference in respect of other claims against the estate of the deceased spouse as a claim for maintenance of a dependent child against the estate of the deceased spouse. These claims will, if they compete with each other, be reduced proportionately [sec 2(3)(b)].
In determining the reasonable maintenance of the surviving spouse , the court must take into consideration, inter alia, the following factors:
- the amount in the deceased estate available for distribution to heirs and legatees;
- the existing and expected means;
- earning capacity;
- financial needs and obligations of the spouse;
- the standard of living of the surviving spouse during the subsistence of the marriage;
- his/her age at the death of the deceased spouse [sec 3]

Whether the claim by the surviving spouse would be successful depends largely on the above.

Hi
I am not 100% clear on the facts of claims surviving spouses have against their deceased spouses' estates. The facts are as follow;
deceased estate is worth roughly R 13,500,000 (married anc) for 33 years. 2 major children aged 28 and 30 and one minor (lagally adopted) child aged 12. Surviving spouse assest worth R 4,000,000 and earns R 26,000 pm. Deceased spouse was rather upset when he found out about monies his wife inherited offshore and never revealing this to him. This led to him changing his will to make his 3 children the sole heirs of his entire estate without her knowledge. Now, the surviving spouse wants to know what claims are available to her against her late husband's estate and if any of these claims would be successful if instigated?

Your comments would be greatly appreciated.

Forum Admin wrote:

Bart Hi,

Thank you for a very informative piece.

Do you have any indication what the Estate Duty implications are. Will , for instance, a Key-man policy still be Estate Duty exempt if it conforms to the old rules ( not having been taken out at the instance of the insured, Family Co etc etc)

 

Regards
Tienie

Hi Tienie

Keyperson policies will still enjoy the Estate Duty exemption if it conforms with the requirements of sec 3(3)(a)(ii) of the Estate Duty Act, and just to confirm these requirements:

Policies on the life of the deceased owned by a third party are deemed to be property in the estate of the deceased for estate duty purposes (s.3(3)(a) of the Estate Duty Act).
However, the proceeds of a keyperson policy will not be deemed to be property in the deceased’s estate if the requirements of s.3(3)(a)(ii) are met, namely:
(i) the policy was not effected by or at the instance of the deceased; and
(ii) no premium was paid or borne by the deceased; and
(iii) no amount due or recoverable under the policy has been or will be paid into the estate of the deceased; and
(iv) no amount has been or will be paid to or utilised for the benefit of:
· any relative of the deceased, or
· any person who was wholly or partially dependent on the deceased, or
· any company which was at any time a family company in relation to the deceased.

A “family company”, as defined in the Estate Duty Act, means any company other than a quoted company which at any relevant time was controlled or capable of being controlled directly or indirectly, by way of majority holding of shares or any other interest or in any other manner by the deceased, or by the deceased and one or more of his/her relatives.

A “relative” of a person, as defined in the Estate Duty Act, means the spouse of that person or anybody related to him/her or his/her spouse by blood within the
third degree or any spouse of anybody so related. Parents, brothers and sisters and their spouses, and the children of brothers and sisters and their spouses thus qualify as relatives.
If the policy does not qualify for this exemption, the policy proceeds less premiums plus 6% compound interest will be deemed an asset in the estate in terms of section 3(3)(a) of the Estate Duty Act.
In terms of present departmental practice only the net proceeds of the policy after the estate duty has been deducted, will be subject to income tax.

Regards

Bart Hi,

Thank you for a very informative piece.

Do you have any indication what the Estate Duty implications are. Will , for instance, a Key-man policy still be Estate Duty exempt if it conforms to the old rules ( not having been taken out at the instance of the insured, Family Co etc etc)

 

Regards
Tienie