Why the higher CGT exclusion won’t prevent deceased estate delays

When a client dies, SARS doesn’t “close the file”. Any outstanding tax returns, assessments, or unpaid tax become a priority claim against the deceased estate, and unresolved tax affairs remain one of the biggest reasons estates get stuck in administration.

Adv. Sankie Morata CFP®, Chief Executive Officer of Sanlam Trust, says advisers should use the start of the new tax year as a trigger for a more holistic annual review, not only of investments and risk cover, but also of tax compliance, record-keeping, and estate liquidity.

“An executor can’t distribute assets until SARS is satisfied that the deceased’s tax affairs are fully resolved,” Morata explains. “If there are skipped returns, gaps in provisional tax compliance, or missing records, the executor has to go back and fix those issues before the estate can move forward.”

Against this backdrop, David Thomson, Former Senior Legal Adviser at Sanlam Trust, notes that the 2026 National Budget proposed increasing the tax-exempt capital gain for deceased estates from R300 000 to R440 000 in the year of death. “This is welcome relief to taxpayers,” Thomson says, “but it doesn’t change the fundamentals: the deceased’s income tax, and where relevant, the VAT returns of their business, are still critical.”

The will doesn’t create the tax problem; it reveals it
For many advisers, the will-signing moment is treated as the end of the planning journey. In practice, it’s often the point where the real work begins.

Will-drafting frequently reveals capital gains tax (CGT) exposures and estate liquidity gaps that were not fully visible during the initial financial planning phase. That’s because the will is where asset distribution becomes specific, and tax outcomes, timing, and liquidity requirements become measurable.

As a result, advisers should formally “close the loop” once the will is finalised by revisiting the financial plan, quantifying CGT at death, assessing estate liquidity, and stress-testing the likely impact on heirs.

Why CGT and liquidity matter in deceased estates
CGT can arise at death because certain assets are treated as if they were disposed of at market value on the date of death (a deemed disposal). Even with exclusions and relief measures, the estate may still face a tax bill that must be settled before assets can be transferred.

In many estates, the issue isn’t only the tax amount, but also the liquidity timing. A client can be “wealthy on paper” and still leave an estate that needs cash urgently to settle taxes, costs of administration, and other claims.

Post-will planning questions advisers should ask
Once the will is completed, advisers should revisit the financial plan and test:

• What CGT is triggered at death based on the actual asset distribution set out in the will?
• Does the estate have enough cash or liquid assets to fund CGT, estate duty (where applicable), and administration costs?
• Are heirs unintentionally forced into asset sales to fund estate liabilities?
• Do beneficiary nominations (for life policies, retirement funds, etc.) still align with the estate strategy?
• Are there opportunities to reduce or defer CGT and improve liquidity through restructuring, timing of disposals, use of spousal rollovers where appropriate, or trust/ownership planning (subject to advice and suitability)?

This step is often missed, and it’s where adviser value is most tangible.

Practical adviser action points for the new tax year
Morata encourages advisers to build an annual “estate administration readiness” check into their client review process:

• Confirm personal tax compliance status (and where relevant, provisional tax).
• For business-owner clients, confirm whether any entities linked to the client (including dormant companies) have up-to-date filings and VAT/PAYE compliance where applicable.
• Ensure the client has an updated will and a clear, accessible record set (asset list, liabilities, policy schedules, tax practitioner details, and key documents).
• Run a high-level death tax and liquidity estimate, and test whether the estate can fund expected liabilities without distress sales.

“Planning is an act of love,” Morata says. “It’s not enough to build wealth — we have to protect the transfer of that wealth. When tax compliance and estate liquidity are left unaddressed, families pay the price in delays, stress, and sometimes forced sales.”