EBFD$411-$ ASSIGNMENT $2024$

PAGE $3$ OF $7$

Nandipha is a qualified and registered dietician. She was employed by a private hospital group in Gqeberha, but resigned when the relocation took place. Nandipha is currently practicing in her own name, as a sole proprietor. Nandipha's wish is for her practice to be sold to a former colleague should she pass away. The proceeds of this sale should then be used to provide for Thabo, Khwezi and her and Thabo's future children.

THABO AND NANDIPHA'S ASSETS, POLICIES AND GROUP LIFE COVER

$\backslash$table$[[$THABO$\text{'}$S ASSETS$],[$ASSET$,$VALUE,$\backslash$table$[[$PURCHASE$],[$PRICE$]],$COMMENTS$],[$Primary residence,$\backslash$table$[[$R$5000000],[($full value$)]],\backslash$table$[[$R$5000000],[($full value$)]],\backslash$table$[[$Registered in the names of both Thabo and Nandipha.$],[$Purchased January $2023.],[.$ Outstanding Mortgage bond: R$4900000.]]],[$Motor vehicle,$R700000,R800000,-$ Settlement amount: R$650000],[$Livestock$,R500000,,\backslash$table$[[$Thabo$\text{'}$s father presented him with five cows for his ${18}^{th}$ birthday.$],[-$ This small herd has increased to a current count of $100$ cows.$]]],[\backslash$table$[[$Collective investment$],[$scheme$]],$R$50000,$R$45000,,],[\backslash$table$[[$Pension fund $($current$],[$employer$)]],$R$62500,,$No beneficiaries appointed.$],[$NANDIPHA$\text{'}$S ASSETS$],[$Asset$,$Value,$\backslash$table$[[$Purchase$],[$price$]],$Comments$],[$Primary residence,$\backslash$table$[[$R$5000000],[($full value$)]],\backslash$table$[[$R$5000000],[($full value$)]],\backslash$table$[[-$ Registered in the names of both Thabo and Nandipha.$],[$: Purchased January $2023.],[-$ Outstanding Mortgage bond: R$4900000.]]],[$Motor vehicle,$R500000,R700000,-$ Settlement amount: R$650000],[\backslash$table$[[$Emergency fund$],[($Money Market$)]],R400000,,,],[$Flat in Gqeberha,R$500000,$R$300000,\backslash$table$[[$Nandipha purchased this flat in $2015$ with the proceeds of a damages$],[$claim that was awarded to her.$]]],[\backslash$table$[[$Business interest: Sole$],[$proprietor$]],$R$250000,R50000,$Nandipha invested R$50000$ into her business in January $2023],[$POLICIES AND GROUP LIFE COVER$],[$Policy$,$Owner,Life insured,Insured value,Comments$],[1,$Life insurance,Thabo,Thabo,$R4000000,-$ Beneficiary: Khwezi$],[2,\backslash$table$[[$Life insurance and$],[$disability cover$]],$Thabo,Thabo,R$1000000,\backslash$table$[[-$ Beneficiary: Nandipha$],[-$ Disability cover is an accelerated benefit$]]],[3,\backslash$table$[[$Life insurance and$],[$disability cover$]],$Nandipha,Nandipha,R$1000000,\backslash$table$[[-$ Beneficiary: Thabo$],[-$ Disability cover is an accelerated benefit$]]],[4,\backslash$table$[[$Unapproved group$],[$life cover$]],$Thabo,Thabo,$\backslash$table$[[5x$ annual pensionable$],[$salary for life cover$]],-$ No beneficiaries appointed$]]$

ASSUMPTIONS

SARS lists the standard value for a cow as R$40$

Thabo's marginal tax rate currently is $36\%$

Nandipha's marginal tax rate currently is $45\%$

The inflation rate is currently $7\%$ per annum.

The return on any investments made is at a rate of $8\%$ per annum.

Costs in the estate:

Administration costs: R$10000$

Transfer costs$*$ of primary residence: R$15000$

$\_$ Transfer costs ${?}^{**}$ of flat: R$10,000$

Funeral costs and last expenses: R$50000$

Transfer costs include all bond, transfer, petties, FICA and other

The executor is registered for VAT and charges prescribed fees.

Round off all rand amounts to the nearest rand $($no decimals$)$

Round off percentages to four decimals.

In the event where you are of the opinion that there is not enough information available, ensure that you indicate that you are making an assumption together with a valid reason for making such assumption.

QUESTION ONE

$30$

$1\mathrm{.}1$ Explain to Thabo and Nandipha what the current legal status of their marriage is$.$ Also discuss the options available to your clients should they want to ensure they are married out of community of property, with inclusion of the accrual system.

$1\mathrm{.}2$ During the course of the meeting with your clients, it becomes clear that they have never drafted wills. Indicate to Thabo how his estate will devolve, should he pass away today. Consider the distribution of all assets listed in the facts of the case study and possible beneficiaries in your answer. No calculations are necessary.

$1\mathrm{.}3$ For the purposes of this answer, assume Thabo drafted a valid will in which he bequeathed his entire estate to Nandipha. Calculate the estate duty payable in Thabo's estate should he pass away today. Show all calculations and motivate all assumptions.

$1\mathrm{.}4$ In order to ensure Thabo's family is taken care of should he pass away, you have recommended taking out life insurance specifically for that purpose. Thabo will nominate a family member as beneficiary to receive the proceeds of the policy. Calculate the amount that Thabo will have to be