Estate Planning

Estate planning involves the arrangement of your assets so that they may be moved – in the most efficient way possible – to the people whom you wish to inherit your assets. It also involves ensuring that no unnecessary taxes or estate duty are payable.

In practice, what happens when you die is that all your assets are frozen. This includes your bank account. If you use your spouse’s bank account, this account will be frozen too, so each spouse should have his or her own bank account.

Although you may have appointed an executor in your will, that person will not automatically become the executor. The Master of the High Court has to appoint the executor officially, and this can take anything from one week to three months. Once appointed, the executor takes control of the administration of your estate, settles any liabilities in your estate and distributes the remainder of your assets in terms of your will.

In essence, there are four estates that one has to deal with in the estate planning process:

• A client’s personal assets (these will be dealt with in their will)
• Trust assets (These are dealt with by the trustees of the trust in terms of the powers granted in the deed)
• Contractual arrangements such as life assurance proceeds and buy-and sell agreements (to be paid out to a nominated beneficiary or to the surviving business partners)
• Retirement fund benefits. (These are regulated by the Pension Funds Act while you are a member of the fund. If you elect a living annuity after retirement you will be able to nominate a beneficiary for the living annuity proceeds).

Estate planning considers all of your financial affairs and sets structures in place to manage these most efficiently. This includes:

• wills: drafting a legally binding last will and testament to make sure that your assets are distributed according to your wishes
• trusts: forming trusts to manage your assets effectively to the benefit of your beneficiaries.
• assets restructuring: separating your business and personal interests
• buy and sell agreements: protecting partners if one partner passes away or is disabled
• succession planning: making sure that your business can continue to operate if you are no longer there to run it
• tax: considering donations tax, estate duty and capital gains tax implications
• offshore structures: evaluating if offshore structures will be to your benefit

Estate planning begins with your will.

• The first question you must ask yourself is whether your loved ones will be able to find your original will after your death. Searching for a will can delay the winding up of the estate.
• The next thing you should consider is whether your will is up to date and reflects your current wishes on how you would like your assets to be distributed on your death.
• Your will is a living document and should be reviewed whenever your circumstances change.
• Your will should be comprehensive but simple to understand.
• Although your will does not have to be dated, dating it makes it easy to identify which is your most recent will.
• Make sure that your will is valid: it must be signed by two independent witnesses who do not stand to inherit from the will.
• You should consider including special instructions in your will, such as stipulating whether you would like to be buried or cremated.
• You must name an executor in your will, and if your will establishes a testamentary trust, you should name the trustees of the trust.
• Executor’s fees is a percentage of the estate up to 3.5 percent plus VAT.
• Appointing your spouse as the executor does not mean that he or she has to wind up your estate: your spouse can appoint an agent to do so and negotiate the fee for that service.
• We suggest individual wills – rather than a joint will – to married clients. The his and hers wills can be mirrors of each other. The problem with a joint will is that when the surviving spouse dies it can take a long time to locate the original will at the Master’s office. If the original joint will cannot be found, the surviving spouse will die intestate. The assets will be divided in terms of the Intestate Succession Act, and this may not be how you wanted your assets to be split.
• If you have overseas assets, you may require a separate will for your offshore estate.

We can help you to draft your last will and testament, making sure that it meets all legal requirements. Contact Us to set up an appointment.