Financial planners in South Africa are encouraging clients to consider gifting to their families while still alive as a means of effective estate planning. This approach allows individuals to make deliberate financial decisions that can benefit their loved ones sooner rather than later. By doing so, individuals can help their children with education, deposits on homes, investments, or other meaningful financial goals during their lifetime.
According to Scott Roebert, a financial planner with 25 years of experience, gifting to family members while alive can be a great estate planning opportunity. For the 2026/27 tax year, an individual can donate up to R150,000 per year without incurring donations tax. For couples, this potentially means R300,000 per year can be gifted, assuming both individuals qualify and make their own donations.
Consider a parent with substantial assets who wants to assist their children financially. Instead of waiting until death for the children to inherit, the parent could consider gifting R150,000 a year to a child. Over several years, this can become a meaningful transfer of wealth. This approach also has the potential benefit of reducing the value of assets held personally during their lifetime, which can potentially reduce the eventual estate-duty exposure.
However, proper planning is crucial when gifting to family members while alive. Not every donation simply disappears from the estate-duty calculation. South Africa's estate-duty legislation contains provisions dealing with deemed property, including certain donations, so the timing, structure, and circumstances of the gift matter.
The bigger estate-planning principle is simple: don’t wait until death to start transferring wealth. By helping children with financial goals during their lifetime, individuals can provide benefits when they are needed most while potentially forming part of a broader strategy to manage future estate duty.
Estate planning is not simply about distributing wealth after death; it is about creating a deliberate strategy for how, when, and to whom wealth is transferred. A conversation with a qualified financial adviser and tax practitioner can help determine whether lifetime gifting is appropriate for specific circumstances.
Scott Roebert, owner of Blueprint Finance Brokers in East London, specializes in bespoke investments and retirement planning. He can be found on Facebook for those seeking to learn more about estate planning and gifting to family members while alive.
Key points
- Individuals can donate up to R150,000 per year tax-free in South Africa.
- Gifting to family members while alive can help reduce estate-duty exposure.
- Proper planning is essential when gifting to family members while alive to ensure the donation does not form part of the estate-duty calculation.
