Death and taxes are the only certainties in life – a phrase we have all heard before. Definitely, tax is something we all hate. As South Africans, we are accustomed to basic taxes such as income tax, interest tax, capital gains tax and then finally, at death, estate duty.
If you own physical property or a direct offshore share portfolio (above a certain value) at the time of death, your estate may also be hit with an international tax bill.
In both the UK and the US, you will encounter situs tax. Situs tax refers to the taxation of assets based on their location or situs. In other words, it is the jurisdiction where the property is located, or deemed to be located, that determines the taxation of that property.
For example, if you own a house in a particular state, that state has the right to tax that property, regardless of where you live. Similarly, if you own stocks in a particular country, that country has the right to tax the capital gains and dividends from those stocks. Situs tax can also apply to intangible assets, such as intellectual property or trademarks, which may be taxed in the jurisdiction where they are registered or used.
It’s important to note that different jurisdictions may have different rules regarding situs tax, so it’s important to consult with a tax professional if you have assets located in multiple jurisdictions to ensure compliance with all applicable tax laws.
You do not get a “free pass” because you are not a resident of a particular country. It applies to anyone who owns any of the referred assets. These taxes can be as high as 40% of the market value of the asset in question. With the increased communication between different tax jurisdictions, the chances of “getting away” with not paying tax are becoming smaller.
The most commonly known countries where situs tax does apply are the US and UK. In the US, these taxes will be levied (according to a sliding scale) on estates of non-residents, where the combined value of the assets in the country exceeds $60 000. In the UK, the estate taxes will be levied on estates with a combined asset value in excess of £325 000. As applies in the RSA, where we have an abatement and a roll-over between the first dying and last dying spouse, the UK has a similar ruling, but it is subject to certain requirements and has limitations. Within the US, you will only get an exemption should your surviving spouse be a US citizen.
One fortunate aspect is that South Africa has a double taxation agreement with both these jurisdictions. This prevents the same asset from being taxed in both countries, i.e., double taxation.
One can avoid paying situs tax on a share portfolio by investing within an endowment structure or a unit trust. The five-year restriction period attached to an endowment does not burden the investor, because direct offshore and share portfolios are seen as higher-risk investments which, as a minimum, should be invested for at least seven to 10 years. An investor is allowed one surrender and one interest-free loan during the restriction period. Investors with higher marginal tax rates also benefit from these endowments, as they are taxed according to the five-fund approach at a lower income tax and capital gains tax rate.
Even though your share portfolio currently is not close to the above-mentioned values, it should be taken into account that these investments could remain active for many years and that somewhere down the line situs tax could become applicable.
Transferring your existing share portfolio into an endowment will create a capital gains tax implication, however, it can be beneficial to make use of the (still) lower market (post-2022 dip) and the start of the new tax year. Should you sell out now, buy the same shares within the endowment structure, as well as split it between the 2022/2023 and the 2023/2024 tax year, you might lower your taxable capital gain altogether.
In addition to reducing possible estate taxes at death, you will also reduce the stress and timeline around winding up the estate, which will become quite lengthy because of the international taxes that have to be paid.
The best advice is to speak to a professional financial planner and tax consultant to make informed and thought-through decisions.
Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
