Estate Planning: don’t put your feet up too quickly  

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The problem with retirement is that there is a lot to do. You have to think about what you will do; where you will live; how you will manage. But then there’s the problem of your assets. While gathering these assets through a well-planned life, which comes highly recommended, there is the matter of what will become of these assets if you are no longer able to manage them, or if you die.

Once you add up ownership and possession, you may find you are worth more than you thought, and there are a number of things to do. If you’re a canny investor, you should have already established a good relationship with a reputable financial advisor and estate planner. Retirement is the time when you should make sure every i is dotted and every t crossed.

Understanding estate planning

  • Estate planning entails creating and collating all the documents and processes required to ensure your loved ones and beneficiaries will be taken care of.
  • Estate planning is important for everyone, but particularly crucial if you are married, have been married multiple times, have children from different relationships, or support people financially. Estate planning is the mechanism that protects your family from legal hassles and financial uncertainty after your death.
  • Estate planning essentially sees you structuring your finances and assets in a way that ensures estate duties are minimised, that there is sufficient liquidity to meet your estate’s financial obligations upon your death, and that inheritances are protected and efficiently distributed among your younger beneficiaries.
  • Estate planning is not just about a making a Will. It is in fact, a summation of your entire life: your career, marriage agreements, children, your asset amalgamation, your investment portfolio, your properties – not to mention a fair recording of any taxes you may owe to SARS. When all this information is noted and easily to hand, it will speed up and facilitate the winding up of the estate, removing the bulk of the headache from your inheritors’ shoulders.

When to begin

 As soon as you can. When you begin to assemble assets and commitments such as a home, savings, a spouse, and children, you should avail yourself of an experienced, reputable financial planner to assist in not only drawing up a Will, but also to advise on investments, income growth, and asset acquisitions such as houses, cars, boats, jewellery or art.

Estate planning should, in fact, take place once a year, when you meet with your Financial Planner and review your circumstances and goals, detailing how you would prefer your assets to be dispensed should you pass away. In reality your wealth profile can change continually: you may get divorced, or lose your job. These unexpected events impact on your estate planning, so keeping an eye on your changing situation is vital.

 Key issues to take care of:

Update your Will:
Dying and leaving a Will that is out of date – or worse no Will at all – is a huge headache for the people that you leave behind, not to mention the winding up of your estate. Write a Will, review it regularly, and ensure your family knows where to find it.

Make a Living Will:
This is an advance document reflecting your wishes with regard to the medical care you would or would not want should you lose the physical or mental capacity to communicate your wishes. It may be the only written evidence of your wishes in these circumstances.

Review beneficiaries:
Relationships may change over time, and over the course of a lifetime, you might wish to change the names of beneficiaries in not only your Will, but also in any life insurance policies and other documents that may list beneficiaries, such as trust deeds and group life funds.

Take care of minor children:

A guardian: This must be stipulated in your Will. It is an issue is often overlooked by parents, especially as a surviving parent remains guardian in the event of the death of the other parent. However, couples should always stipulate a guardian for their children to cover the eventuality of their simultaneous death. Make sure you take time and special consideration when deciding who will take guardianship of your children in the event of your death.

A trustee: You may also appoint a trustee for minor children in your Will. Trustees are appointed to administer monies inherited by young children, or heirs who are not capable of doing so. As such, they are not the same as guardians. The appointment of trustees is crucial for inheritances by minor children (under 18 years) as no provision means a minor child’s cash inheritance will be paid over to the Master of the High Court’s Guardians Fund. Not the ideal circumstance.

Create a list of important documents and where to find them:

It is always a traumatic time for the surviving family when someone passes away. For this reason it makes sense to inform your family of where they can find all the important documents relating to your life and death – such as your Will and all supporting documentation, keys to safety deposit boxes, financial statements, and other necessary information.

Ensure enough cash is available for debts, accounts, bonds, costs
A common problem when winding up an estate, is finding there is not sufficient funding to settle the estate’s debts, such as: mortgage bonds, vehicle finance, taxes and winding-up costs which include executor’s fees and conveyancing costs. In such a situation, your family may be forced to sell the family home to pay the outstanding costs of your life and death. Life insurance is probably the easiest and most affordable way to provide estate liquidity.

Offshore assets and investments
If you should have offshore assets it means that you essentially have a foreign estate which must be administered or wound up when you die. Each country has its own legislation dealing with inheritance and the signing of Wills. Your South African Will won’t necessarily meet with the legal requirements of the country where your other assets are situated. A separate Will dealing only with those foreign assets is a solution.

Reduce tax where you can

  • Estate planning helps you to limit the taxation on your estate, and therefore ensures that a greater amount of money will be left for your family.
  • You can rest assured that your heirs will not have to pay tax on their inheritance. In South Africa, there is no tax payable by a person who receives an inheritance because the capital gains tax (CGT), where applicable, is usually paid by the estate.
  • In terms of current legislation, a person is allowed to donate up to R100,000 free of tax each year, to children, trusts or other persons. There is no limit on the amount that spouses may donate to one another tax free. By making donations, a large estate can be reduced to avoid significant estate taxes.


Empfin Solutions – the team that keeps your team happy

We’re an Old Mutual franchise with our primary focus on the three main areas of concern in everybody’s financial planning:

  • Your Company Benefits – advising on, and servicing umbrella pension and provident funds.
  • Your Personal Financial Planning and Provision – Estate planning, Wealth Creation and Retirement Planning.
  • Your Assets – motor and household insurance.

Always striving to be a trusted partner in facilitating financial solutions for organisations and individuals, our dedicated team of fully accredited, experienced professionals have a passion for satisfying customer needs and providing a truly client-centric service.

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