Whether your estate has enough cash to cover duty, debts, and costs, or needs life cover.
Life cover for shortfall
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Estate duty
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Total cash needs
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Liquid assets
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Your breakdown
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The asset-rich, cash-poor problem
Plenty of South Africans die wealthy on paper and broke in the bank. Their wealth is locked in a paid-off house, a small business, or a share portfolio, while the estate has very little cash. The trouble is that the executor cannot hand heirs a house until the estate's bills are settled, and those bills, the debts, the estate duty, and the executor's fee, all have to be paid in cash. If there is not enough cash, something has to be sold, often in a hurry and at a poor price. This calculator measures that gap. It adds up what the estate must pay in cash, compares it to the liquid assets you actually have, and tells you the shortfall, which is the amount of life cover that would plug the hole.
The three cash demands an estate faces
The tool builds the cash requirement from three pieces. First are the liabilities: the bond, car finance, credit cards, and any other debt that must be repaid. Second is estate duty, which the calculator estimates by taking the estate value, subtracting liabilities, the spouse bequest, and the section 4A abatement of R3,500,000, then applying the base rate of 20 percent to the dutiable amount. Third are executor and other costs, which covers the executor's fee, Master's fees, advertising, and similar winding-up expenses. The abatement and the duty rate are the calculator's working assumptions and should be confirmed with SARS, the South African Revenue Service, but the structure, debts plus duty plus costs equals the cash you need, is stable and the right way to think about it.
An R8 million estate with only R600,000 in cash
Picture an estate worth R8,000,000, mostly a home and investments, with R1,500,000 of liabilities, R250,000 of executor and other costs, and R600,000 of genuinely liquid assets, and nothing left to a spouse. The calculator works the dutiable amount as R8,000,000 less R1,500,000 less the R3,500,000 abatement, which is R3,000,000, and applies 20 percent to get R600,000 of estate duty. Cash needs are the R1,500,000 of debt plus the R600,000 of duty plus the R250,000 of costs, which is R2,350,000. Against R600,000 of liquid assets, the shortfall is R1,750,000. That is the life cover, paid into the estate, that would let heirs keep the house rather than sell it to raise cash.
Why life cover is the usual fix
A life policy paid into the estate, or to a beneficiary tasked with covering these costs, arrives as cash exactly when the estate needs it. That is what makes it the standard answer to a liquidity shortfall: it converts a future cash crunch into a known premium today. There is a wrinkle worth flagging. If the policy pays into the estate, the proceeds usually form part of the gross estate and can themselves attract estate duty, which slightly increases the cover you need. The calculator sizes the shortfall before that feedback loop, so treat its figure as a sensible starting point and let an adviser gross it up for the duty on the policy itself.
Common mistakes when judging liquidity
The biggest error is counting the family home or a business as liquid. They are not. Liquid means cash, money market funds, and assets you could realise in weeks without a fire sale. Another trap is forgetting that a surviving spouse who inherits everything defers both the duty and much of the liquidity problem to the second death, so the cover need can be smaller while a spouse is alive and larger afterwards. Use the spouse field to see that effect. This tool gives you a clear-headed number to take to a financial planner, but the duty estimate uses the calculator's assumed rate and abatement, so confirm the live figures with SARS before you set your cover.
How much is the executor's fee, and can I reduce it?
The executor's fee is regulated at a maximum tariff, commonly cited as 3.5 percent of the gross estate value plus VAT, with a separate fee on income collected after death. It is negotiable, and many people agree a reduced rate with a professional executor in advance or nominate a trusted person. Lowering this fee directly cuts the cash your estate needs, so it is worth raising the figure used in the costs field to match what your executor will actually charge.
If I leave everything to my spouse, do I still need liquidity?
You need less, but not zero. A bequest to a spouse defers estate duty and the spouse inherits the assets, yet immediate debts and the executor's fee still have to be paid in cash during the winding-up. So even a spouse-only will leaves some short-term liquidity requirement, and the larger problem simply shifts to the second death when the abatement and spouse deduction no longer apply.