The only true tax haven, of course, is heaven, but until then, why pay more estate duty than you need to, when you can easily structure your financial affairs to pay less tax?
Last week, estate duty gained new importance for taxpayers as the rate was hiked from 14 to 25 percent.
And, while many people may think that estate duty applies only to the super-rich, it doesn't.
If you add up the market value of your house, your unit trusts, the proceeds from your life assurance policies (your own policy and your employer's group life benefit) and the lump sum from your retirement fund, then the R1 million tax-free estate duty abatement is easily surpassed.
Your estate becomes liable for duty at 25 percent on the excess portion.
Two more considerations: Estate duty and donations-tax will be amalgamated next year into the new capital transfer tax, which is sure to be a more tight-fisted tax with higher rates - 40 percent is the international norm - and legislation to close the many existing loopholes.
Secondly, inflation will erode the real value of the R1 million tax-free abatement, making estate duty applicable to more people.
Southern Life's Dave Johnson has calculated that an estate valued at R700 000 today, will have grown to R1,8 million in 10 years' time, allowing for 10 percent growth and inflation each year. Under the existing tax rules, R800 000 of this amount will be taxable, and R200 000 estate duty will be paid.
There are numerous ways to lessen your estate duty. It takes an up-to-date and cleverly structured will, and the advice of an estate planning expert.
* LEAVING ASSETS TO YOUR SPOUSE:
If you leave your everything to your spouse, your estate will not be liable for duty, in terms of an exemption in the Estates Duty Act.
However, the estate of the second-dying spouse will be liable for the duty if the value exceeds the R1 million tax-free abatement.
The spouse exemption provisions allow for planning opportunities.
* TRANSFER OF ASSETS:
This means that where the estate value of one spouse exceeds R1 million and the value of the other spouse's estate is below R1 million, then the richer spouse can donate assets to increase the poorer spouse's estate to the R1 million abatement level.
This plan has the effect of reducing the couple's overall liability.
The transfer of assets between the spouses will not attract donations tax as such donations are exempt.
This exemption does not extend to income tax, and the donor spouse will continue to pay the tax on any income earned from those assets.
* STRUCTURE:
A spouse with an estimated estate value of over R2 million can structure his/her affairs, says Syfrets' Nico Botha, to take advantage of both the spouse's exemption and the R1 million abatement.
In terms of a spouse's will, R1 million of assets can be left to the surviving spouse (which is exempt) and R1 million of assets can be bequeathed to children, a trust, or other beneficiary, to equal the abatement.
If the estate of the second-dying spouse is below the abatement level, no duty will be paid by either spouse.
* DONATING A SPLIT ASSET:
A way to reduce your estate value during your lifetime is to donate your property - for instance, a house - in two parts, with the usufruct(or use during lifetime) going to your spouse and the ownership to your children, says Momentum Life's Martin Kourie.
The benefit of this ploy lies in the present manner of valuing these types of donations which allows you to reduce the value of the donation to below its market value.
While this ploy appears complicated, Mr Kourie says it is a wonderful estate planning tool and can save you a material amount of money.
* DONATE R25 000 OF YOUR ASSETS EACH YEAR:
The taxman allows you to donate R25 000 of your assets each year without incurring donations tax.