95 - All you need to know about bequests, marriage in community of property, capital gains tax and more
Question 1
Will stocks and shares owned by one of the partners in a marriage in community of property be liable for capital gains tax (CGT) only when the second spouse dies?
Answer
It depends on who they are bequeathed to.
If they are bequeathed to the surviving spouse, the CGT will only be payable on the death of the surviving spouse.
If they are bequeathed to anyone else then the full value of the bequest will attract CGT, which will have to be paid when the estate of the first spouse is wound up. The same holds for any estate duty on this transaction.
Question 2
If a couple is married in community of property, when one spouse dies does their share of the house they both own have to be sold to the surviving spouse? If so, what would the price be?
Answer
It is not necessary to sell the deceased’s share of the house to the surviving spouse. You may bequeath this to your spouse. Any estate duty and CGT will only become payable upon the death of the surviving spouse.
Question 3
I have a live-in partner. Will our relationship be treated as a marriage in community of property?
Answer
It is important that you specify that your union is a permanent one. This can be done by mentioning it in your will or through a separate agreement. If your union is regarded as permanent then you will get the many CGT and estate duty benefits that married people enjoy.
The default marital regime in South Africa is community of property, so unless you have drawn up an alternative agreement, your assets will be disposed of as if it were a community of property marriage.
Question 4
I would like to bequeath my car to my grandson. Will this attract CGT?
Answer
A car is considered to be a personal asset and therefore would not be subject to CGT on disposal. You should, under normal circumstances, not have to pay CGT when it is bequeathed. As with most tax issues, there are circumstances that could result in a different outcome, so it is always advisable to chat to a tax practitioner about your specific circumstances.