The Transfer Duty Considerations of Massing
Posted by Jean-Mari de Beer
This article will aim to highlight the tax considerations associated with the massing of estates.
What is massing?
Massing occurs when parties consolidate their assets or some of their assets into one massed estate or partially massed estate for the joint disposition thereof on the death of the first-dying of the spouses.
Massing is effected by way of a joint Will, where parties clearly provide for the massing of the whole or a portion of their estates on the death of the first-dying of the parties. The survivor usually receives a benefit from the massed estate in the form of a limited right. On the death of the first-dying party, the survivor must decide whether he / she wishes to accept the benefits to which he / she is entitled to in terms of the joint Will.
The consequences of Donations Tax, Transfer Duty, Capital Gains Tax, Estate Duty and Value-Added Tax, with massed estates, will be illustrated below:
Transfer Duty
Transfer Duty, subject to certain exemptions, is levied when immovable property or a right to immovable property is transferred from one person / entity to another.
No Transfer Duty is, however, payable where the acquisition of property is by virtue of a bequest form a deceased’s estate. When massing occurs, only the deceased’s share in the immovable property qualifies for this exemption applicable to property owned by deceased persons. The surviving spouse’s share in the immovable property, transferred in terms of the massing of estates, does not qualify for this exemption, from Transfer Duty, applicable to the property owned by the deceased.
Transfer Duty will thus be payable on the survivor’s ½ share in the immovable property, which devolves upon the heirs.
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