Estate Planning in South Africa

These are the most essential points to remember in estate planning:
1. Review/Update your will:
First and foremost you will need to draw up a will. Dying intestate could leave the children devastated. Then don’t toss it in a cupboard and forget about it – it needs to be regularly reviewed. Also ensure that your family knows where to find your Will when you aren’t around to show them.

2. Appointing guardians for minor children:
Another important issue in estate planning that is often overlooked by parents; who will raise your children in the eventuality of a simultaneous death.  Your nominated guardian should be stipulated in your Will.

3. Review beneficiaries:
As your family situation changes over the course of a lifetime, you may need to change the names of beneficiaries not only in your Will but also in life insurance policies and other documents that list beneficiaries, such as trust deeds and group life funds.

4. Appointing trustees for minor children:
Remember in your estate planning that trustees administer monies inherited by young children, or heirs who are not capable of doing so – i.e. minor children (i.e. under 18 years) – as a minor child’s cash inheritance must be paid over to the Master of the Supreme Court’s Guardian Fund for safekeeping.

5. Record-keeping:
It is a traumatic time for the surviving family when someone passes away. Don’t exacerbate this by not letting loved ones know where they can find important documents, keys to safety deposit boxes, financial statements and other necessary information.   Create a list and give it to someone you trust.

6. Donations:
In terms of current legislation, a person is allowed to donate up to R100,000 each tax year, free of donations tax, to children, trusts or other persons. This can have the effect of significantly reducing estate taxes.

7. Estate taxes:
There are various ways to limit the taxes payable on your estate (such as estate duty and capital gains tax), which you should with your financial advisor.

8. Liquidity: 
One of the most common problems in winding up an estate is the situation where there is insufficient cash to settle the estate’s  liabilities, such as mortgage bonds, vehicle finance, taxes and winding-up costs, executor’s fees and conveyancing costs. So in your estate planning perhaps you should consider life insurance is an easy and affordable way to provide estate liquidity.