Every estate can deduct an abatement of R3.5 million before estate duty is worked out. Married couples get a valuable extra: what the first spouse's estate doesn't use can be added to the second spouse's.
How it works
When the first spouse dies, everything left to the surviving spouse is deducted from the estate (section 4(q) of the Estate Duty Act). So if most of the estate goes to the surviving spouse, little or none of the R3.5 million abatement is needed.
When the second spouse dies, their estate can deduct R7 million (twice R3.5 million) less whatever the first spouse's estate used. The most it can ever deduct is R7 million.
SARS's own examples
Example 1: B died in 2019 and their estate used R3 million of its abatement. A dies in 2020. A's estate can deduct R7 million less R3 million: R4 million.
Example 2: B died in September 2006, when the abatement was only R2.5 million, and used all of it. A dies in 2020. The starting point is still R7 million, so A's estate can deduct R7 million less R2.5 million: R4.5 million.
What the second estate needs
The executor of the second estate must show how much of the abatement the first estate used. SARS asks for the first spouse's estate duty return (REV267) with the estate documents. Keep the first estate's papers safe for exactly this reason.
Who counts as a spouse
The roll-over applies to a spouse as the Estate Duty Act defines it. If your relationship isn't a formal marriage, take advice about how the Act treats it.
A worked example
Thabo dies first, leaving his whole estate of R6 million to his wife, Lerato. It's all deducted, so his estate uses none of its abatement. Years later Lerato dies, leaving R12 million to their children, with R500,000 of debts. Her estate deducts R7 million (her R3.5 million plus Thabo's unused R3.5 million), leaving R4.5 million. Estate duty is 20% of R4.5 million: R900,000, instead of R1.6 million with one abatement.
Try it in our estate duty calculator: choose "Did a spouse die earlier?" and enter how much their estate used.
Why it matters in practice
Without the roll-over, a couple whose combined estate is worth R12 million could pay estate duty on R8.5 million when the second spouse dies. With it, the dutiable amount can drop by another R3.5 million, saving up to R700,000 at 20%.
Sources
This is general information, not tax, legal or financial advice.