In section 3(3)(d) of the Estate Duty Act 45 of 1955 (the Act) the legislature introduced the concept "competent to dispose", described in section 3(5) of The Act as a "power". If the deceased was "competent to dispose" property for his own benefit or that of his estate, section 3(3)(d) deems that property to be property of the estate. In order to determine when property may be deemed property of the deceased estate it is necessary to analyse the meaning of section 3(3)(d) as read with section 3(5) of the Act. An analysis of section 3(3)(d) of the Act indicates that it may be applied to those with a legal right to dispose of property for their own benefit or for the benefit of their estates. This interpretation is based on the meaning of "competent to dispose", and "power" as derived form the analysis. / Private Law / LL.M.

In section 3(3)(d) of the Estate Duty Act 45 of 1955 (the Act) the legislature introduced the concept "competent to dispose", described in section 3(5) of The Act as a "power". If the deceased was "competent to dispose" property for his own benefit or that of his estate, section 3(3)(d) deems that property to be property of the estate. In order to determine when property may be deemed property of the deceased estate it is necessary to analyse the meaning of section 3(3)(d) as read with section 3(5) of the Act. An analysis of section 3(3)(d) of the Act indicates that it may be applied to those with a legal right to dispose of property for their own benefit or for the benefit of their estates. This interpretation is based on the meaning of "competent to dispose", and "power" as derived form the analysis. / Private Law / LL.M.

The purpose of this study is to determine whether a discretionary inter vivos trust is still an effective instrument for estate planning. The process of estate planning, the role the trust plays in it and the background to the trust are described. The taxability and tax saving opportunities when the trust are utilised are discussed in the light of the Estate Duty Act, 45 of 1955, the Income Tax Act, 58 of 1962 (including the Eighth Schedule thereof) and the Transfer Duty Act, 40 of 1949. The opinions of tax and legal authorities in articles and relevant case law are also discussed. The impact of the "letter of wishes" on the stipulations of the trust deed is examined. Amendments to the Income Tax Act have placed a limit on the use of a trust for estate planning through a number of anti-avoidance measures, the introduction of a capital gains tax (in the Eighth Schedule) and the imposition of a high tax rate. The increase in the deduction granted in arriving at the dutiable amount of an estate, in terms of section 4A of the Estate Duty Act, from R1 500 000 to R2 500 000 has imposed a further limit on the use of the trust as an instrument in estate planning. The research demonstrates that, notwithstanding the amendments to the Income Tax Act, the trust still is a viable instrument, mainly because the trust operates as a conduit and because of its potential use in dividing taxable income amongst a number of beneficiaries. The stipulations included in the trust deed and the "letter of wishes" (if one exists), must be thought through carefully when estate planning is done, as it can give rise to the application of the general and specific anti-avoidance provisions as included in sections 7 and 103 of this Act. The research also concludes that, in assessing the effectiveness of the trust as an instrument in tax planning, the disadvantage of paying the higher transfer duty when the immovable asset is transferred to the trust should be weighed up against the possible saving in income tax and estate duty at a later stage. It is also clear that most assets owned by the trust are tax neutral, whilst many of the amendments under discussion deal with the taxability of trust income. The quantitative considerations underlying the use of the trust as part of the estate plan, remain unchanged. The research concludes by providing a framework of quantitative and qualitative criteria that can be used by an estate planner to determine whether it will be advantageous to transfer an asset to the trust to achieve the objectives of the estate plan.

The thesis examined the current system of the taxation of wealth in South Africa with an emphasis on the taxes that apply upon the death of the taxpayer. The focus of the research was on the problems associated with estate duty, namely the issue of double taxation; the alleged cumbersome administration of the tax and the limited revenue that it brings in; it’s questionable efficacy due to extensive estate planning on the part of taxpayers while they are still alive and its lack of uniformity with other wealth taxes. An interpretative research approach was followed which involved analysing documentary data. The conclusions that were reached were that estate duty as a wealth tax in South Africa has been rendered ineffective due to the inherent problems associated with its application, namely the fact that double taxation exists, not only in the context of capital gains tax, but also in that taxpayers resent being taxed upon death after having paid income tax during their lives. The perceived unfairness that is associated with estate duty has caused the creation of a secondary industry of estate planning, with the aim of minimising estate duty, which industry has resulted in the ineffectiveness of estate duty and its limited revenue. No evidence could be found regarding the Treasury’s assertion that estate duty is a cumbersome tax to administer. The final conclusion reached was that the current estate duty regime needs to be overhauled preferably by extending the current system of capital gains tax and abolishing estate duty, with due consideration being given to the consequences associated therewith.

Trusts are subject to multiple fOl1lls of legislative regulation dealing with taxation and governance. Trusts were widely used by planners as taxavoidance shelters. Tax legislation was amended to subject trusts, other than special trusts as defined, to the highest income tax rate of forty percent, in tel1llS of section 5(2) of the Income Tax Act, 58 of 1962. The inter vivos trust is also subject to a wide range of anti-avoidance measures, including those contained in sub-sections (3) to (8) of section 7 of the Income Tax Act and Part X of the Eighth Schedule to the Act, as well as the general anti -avoidance measures in section 103. These measures impact negatively on the use of trusts for estate-planning purposes. The research objective was to evaluate the use of testamentary and inter vivos trusts for estate-planning purposes and to develop a holistic estate-planniD.g model incorporating these planning instruments. Both the testamentary trust and the inter vivos trust were evaluated against broad principles of effective estate planning and the taxes and duties applicable to them. The research also reviewed the writings of financial planners on various techniques and models used for estate planning, as wells as case studies documented in the literature. The research developed and evaluated holistic estate-planning models incorporating testamentary trusts and inter vivos trusts, respectively. By neutralizing the effects of various taxes and duties, it was demonstrated that it is possible to develop an estate plan that satisfies most of the requirements of effective estate planning.