Don’t let Sars inherit your wealth before your family does

There is a song that still comes to mind whenever I sit with a client to talk about estate planning. Don’t Pay the Ferryman by Chris de Burgh.

It was playing on the radio on a cold winter’s night in 2003 – the night my father died. I was 16 years old. He was only 45.

Like many families, we were dealing with shock and grief. But very quickly, another reality set in. We had no real idea what his estate looked like. As it turned out, neither did he.

Despite being a successful businessman and farmer, his affairs were in disarray. There was no life cover, no proper liquidity, and his will had not been updated in years. What followed was a painful lesson in what happens when estate planning is left too late.

The bank stepped in as executor. Fees mounted quickly. Then came the tax obligations – estate duty and capital gains tax that nobody had properly planned for. The problem was that most of my father’s wealth was tied up in illiquid assets. On paper, there was value. In reality, there was no cash.

We had to sell livestock in a weak market. My mother had to sell our family vehicle. At one point, she even had to borrow money from the small inheritance my grandmother had left her grandchildren – simply to help settle the estate’s obligations.

That experience changed my life. It is one of the main reasons I do the work I do today.

Too many people think estate planning is only for the very wealthy, or that it can wait until “one day”. But when someone dies, the South African Revenue Service (Sars), executor fees, and other costs do not wait. And if there is no plan, it is often the family who pays the price.

The hidden costs families forget

In South Africa, estate duty is levied at 20% on estates above R3.5 million, and 25% on amounts above R30 million. But many people underestimate the size of their estate.

Your estate is not just the cash in your bank account. It includes your home, investments, business interests, vehicles, household contents, and often offshore assets too. Add those up, and many retirees and business owners are well above the estate duty threshold.

Then there is capital gains tax. On death, Sars treats you as if you sold your assets on the date of death. That means growth in assets such as property or shares can trigger a tax bill, even though nothing has actually been sold yet.

Then come executor fees, which can be as high as 3.5% plus Vat on the gross estate, as well as 6% plus Vat on income collected while the estate is being wound up.

These are not small amounts. And if there is no liquidity in the estate, families are often forced to sell assets under pressure and at the wrong time.

Five practical estate planning steps

The first step is simple: know what is actually in your estate.

Many people have never taken the time to list their assets properly. Until you understand what you own, you cannot understand what it may cost your family when you die.

Second, update your will. A will that is outdated can create confusion, delays, and conflict. Major life events such as marriage, divorce, children, or the sale of a business should trigger a review.

Third, understand executor fees. Many families do not realise that these fees are negotiable, particularly if they have nominated an executor in advance. Banks often charge the maximum, and that can be costly.

Fourth, plan for liquidity. A valuable estate does not help if there is no cash to cover taxes and costs. Liquidity planning is one of the most overlooked aspects of estate planning, yet one of the most important.

Fifth, make sure your family knows where everything is. The best plan in the world is useless if your loved ones cannot find your will, your policies, or your financial records when they need them most.

The structures that can make a real difference

Once the basics are in place, the right structures can materially improve the outcome for your family.

An inter vivos trust, if properly established and managed, can remove growth assets from your personal estate and reduce both estate duty and executor fees. It is not suitable for everyone, but for business owners, property investors, and families with significant assets, it can be very effective.

Investment wrappers such as endowments and sinking funds can also play an important role. These can offer tax efficiency during your lifetime, may pay directly to beneficiaries, and can reduce executor fee exposure. Offshore wrappers may also help address foreign situs tax risk where offshore assets are involved.

Retirement funds are another powerful planning tool. Approved retirement funds generally fall outside your dutiable estate and do not attract executor fees. But investors must remember that these benefits do not necessarily follow the will, as retirement fund trustees must consider dependants when distributing benefits.

For families with larger estates or significant offshore exposure, dollar-denominated life insurance can sometimes create offshore liquidity outside the local estate. This is highly specialised, but in the right case, it can be valuable.

And then there is strategic gifting. From 1 March 2026, South Africans can donate up to R150 000 per year free of donations tax. Over time, this can be a simple and effective way to reduce the size of a dutiable estate.

Estate planning is really about your family

Estate planning is often framed as a tax discussion. It is not.

At its heart, it is about protecting the people you love when you are no longer there to protect them.

Will your spouse have access to cash quickly? Will your children be forced to sell assets in a weak market? Will your family be left with clarity and stability – or confusion and pressure?

That is the real question.

My family learned this the hard way. And if there is one message I would leave with anyone reading this, it is this: do not leave a mess behind simply because you never got around to sorting it out.

Because if you do not plan your estate properly, there is a very real chance that Sars, costs, and delays will inherit more of your wealth before your family ever does.