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Estate Planning: Get the details right!

Whilst it is good and proper that we should enjoy life and make the most of every opportunity that life presents us with, it is also a fact of life that the mortality rate for all of us is still at 100%. Getting your affairs in order before you die, or otherwise referred to as estate planning, is a critical part of life. Most folk want their loved ones put through as little stress and hassle as possible after their death.

The recent and ongoing saga surrounding the winding up of the estate of Joost van der Westhuizen is a case in point. The Master of the High Court has refused to accept Joost’s will, because it had not been signed. There are strict rules of law surrounding the circumstances when a person is unable to sign his or her will, and these rules need to be followed to the letter of the law, for the will to be valid. A more detailed narrative of the predicament of Joost’s estate can be read on News 24.

More and South Africans are investing offshore and whilst this is a sensible move, offshore assets do bring a whole new realm of complexity to estate planning. Every country has its own set of rules as pertaining to how assets are treated on death, and once again these rules need to be specifically dealt with by an Executor. The lesson is to ensure that your estate plan considers all jurisdictions within which you have assets.

The marital regime under which you are married, or if not married, the laws applying to the nature of your relationship, also play a big part as to how assets on death are treated. Many South Africans are married by Ante-Nuptial contract with the so called “accrual” principle applying at the end of the marriage. This effectively means, that when the marriage ends by either death or divorce, both estates are combined and then split in terms of the contract signed. Does your will and the manner in which you want to dispose of your assets take this number crunching calculation into account?

Your will only covers assets that you own. For example, it does not cover assets owned by a pension fund or retirement annuity. In these cases, you need to give the trustees of these funds guidance by nominating a beneficiary. Likewise, assets owned by a trust or company are not yours to bequeath, and you need to consider carefully how they would be treated in the event of your death.

The tax rules surrounding an estate are also changing and courts are regularly setting legal precedent. Few folk realise that in addition to estate duty, there is the potential for a large CGT liability to be incurred at death. Does your Executor have the necessary liquidity to deal with these charges to the estate?

The moral of this article is to make sure that your will is valid, up to date and takes into account your current asset profile. If your advisor does not encourage you on a regular basis to review and update these matters, maybe you should be looking for a new advisor.

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