Estate Duty on Share Portfolios, Unit Trusts & Crypto

Unlike real estate, share portfolios and unit trusts are highly liquid. This makes them incredibly useful for Executors who need cash to settle estate debts. However, this liquidity comes with its own set of complex tax rules, particularly regarding Capital Gains Tax, crypto compliance, and foreign jurisdictions.

Local Investments: The CGT Deemed Disposal

If you own shares on the JSE, Exchange Traded Funds (ETFs), or local Unit Trusts, they are valued at their market closing price on the date of your death and added to your Gross Estate.

But before Estate Duty is calculated, SARS wants its Capital Gains Tax. Death triggers a "deemed disposal." SARS treats the portfolio as if you sold all your shares on the day you died. If your portfolio has grown significantly since you first invested, the estate must pay CGT on that profit.

The Brokerage Account Freeze

On paper, an equity portfolio provides excellent liquidity to settle the taxes calculated above. However, the administrative reality in South Africa is far more difficult.

Upon notification of death, institutions like Allan Gray, Coronation, and major banks immediately freeze all investment accounts. They will not allow the sale of shares or the withdrawal of funds until the Master of the High Court formally appoints an Executor.

The Trap: If you allow a major bank to act as your executor, your heirs are left without access to the "liquid" portfolio for over a year, while still having to pay monthly property maintenance and municipal rates out of their own pockets.

Cryptocurrency: The Digital Asset Minefield

SARS treats cryptocurrencies (Bitcoin, Ethereum, etc.) identically to share portfolios. They must be declared in the Liquidation and Distribution (L&D) account, and they are subject to both CGT and Estate Duty.

However, the administration of crypto is a minefield for Executors:

• Local Exchanges (Luno, VALR): They will freeze the account immediately upon death. The Executor must undergo a rigorous, specialized FICA process to prove their authority before the exchange will liquidate the crypto into ZAR for the estate.
• Cold Storage (Hardware Wallets): If your crypto is held on a Ledger or Trezor and you have not securely passed on your seed phrase, that wealth is permanently destroyed upon your death. The Executor cannot recover it, but SARS may still attempt to tax the estate if they find a record of the purchase.

Need more details on Crypto Inheritance? Read our full guide on Securing Cryptocurrency & Digital Assets in a South African Estate.

The Danger of Offshore Shares (Situs Tax)

Many South Africans use platforms like EasyEquities USD or direct international brokers to buy shares in US companies (like Apple or Tesla) or UK companies.

If you hold these shares in your own name, you fall into the jurisdiction of Situs Tax (the Latin word for "position" or "site"). The US and the UK charge inheritance tax based on where the asset is situated, regardless of where you live.

• United States: Non-US residents only get a $60,000 exemption. Any US shares you hold above $60,000 can be taxed by the IRS at rates up to 40% when you die.
• United Kingdom: The UK has a higher threshold (£325,000), but amounts above that are also taxed at 40%.

Calculate Your Exact Situs Tax Exposure Here

How to Protect Your Offshore Wealth

If you are building a sizable offshore portfolio, you should avoid holding foreign situs assets directly in your own name. Common estate planning structures include:

• Using Offshore Endowment Wrappers: Products offered by companies like Allan Gray or Glacier package your investments inside a life insurance wrapper. This bypasses foreign situs tax entirely and allows you to nominate beneficiaries directly, saving on Executor fees.
• Investing via Feeder Funds: Buying a local ZAR-denominated unit trust that feeds into an offshore fund (e.g., a local S&P 500 ETF) means the asset is situated in South Africa. You avoid Situs tax completely, though standard SA Estate Duty still applies.