BLUECHIPFINANCIAL
BLUECHIPFINANCIAL PLANNING | Estate planningSecuring a legacyThe need for a comprehensive and up-to-date estate plan cannot be overstated. The true architect ofenduring wealth is investing in high-quality companies whose value grows and compounds over time.Awell-thought-out estate plan helps prevent disputesand conflicts among family members by clearlyoutlining your intentions regarding the distributionof your assets. “Estate planning documents, such aswills, codicils, trust deeds and living wills are used to carefullyexpress your wishes and to map the process to be followed whenyou die, ensuring the smooth transfer of wealth. They are alsoparticularly useful for complex family structures,” says GarethLange, a wealth manager at Private Client Holdings.Why is estate planning important?Provides for dependants. Dependants include minor children,elderly parents or disabled family members.Minimises taxes. Strategic estate planning can minimise thetax liabilities associated with transferring assets to your heirs,potentially saving your beneficiaries significant sums of money.Protects assets. Estate planning protects your assets fromcreditors, lawsuits and other legal claims.Estate liquidity. Estate liquidity is critical to cover estate costsand liabilities without affecting the financial inheritance intendedfor your beneficiaries. “It’s important to note that SARS and yourcreditors are paid first during estate administration. If there isinsufficient liquidity, your beneficiaries may be forced to sellsome of your assets to pay off debts,” cautions Lange.Beneficiary nomination. Nominations should be regularlyupdated as your personal and financial circumstances evolve.It’s important to understand how beneficiary nomination worksfor each type of policy and investment.Appropriate structuring of growth assets. Long-term growthassets are placed in the proper investment vehicles.Efficient estate administration. Avoids unnecessary delays.Considerations• Individuals with foreign assets should consider a foreign willas well. Most countries have their own laws regardingsuccession and the drafting of wills.• In terms of the Estate Duty Act, if the deceased was a SouthAfrican resident at the time of death, their worldwide assetsare included for the purpose of calculating estate duty.• Marital regimes or life partnerships have consequences whenit comes to estate planning.What estate planning tools are available?Testamentary trust. These are employed where children underthe age of 18 lack contractual capacity (and) or are not capableof inheriting directly, for example, someone with special needs.Inter vivos trust (living trust). This tool reduces your estateduty liabilities by pegging the value of assets in your personalestate and allowing the growth of the assets to take place in thetrust. This trust is established during your lifetime to manage andprotect assets for your beneficiaries.Donations. Donations are used to reduce the value of yourestate (R100 000 annual exemption). Donations betweenspouses are exempt from donations tax, while donations tocertain public benefit organisations are also exempt, subject tocertain thresholds.Section 4q deductions. No estate duty is payable on bequeststo your spouse, including proceeds from a domestic life policy.Bequests. A cash legacy may be bequeathed to a beneficiary inyour will, but you must ensure that there is sufficient liquidity inthe estate to honour the bequest.Insurance policies. Proceeds of domestic life policies can beexcluded for estate duty purposes or may be deductible inexamples such as life policies or key-person and buy-and-sellassurances in favour of a spouse.Living annuities. These excellent succession planning toolsdon’t attract estate duty or executor fees. Beneficiaries have theoption of transferring the living annuity into their own name,taking it as a lump sum or a combination of the two with almostimmediate access.Your estate plan should be reviewed at least once every threeto five years or whenever significant life events occur, such asmarriage, divorce, births and deaths of family members as wellas significant changes in yourfinancial circumstances orrelocation to another countryor jurisdiction with differentestate planning laws.“Given the complexity ofrobust estate planning, and asestate planning laws evolve,it’s critical for your estate planto remain compliant withcurrent legal requirementsto maximise benefits for yourbeneficiaries. This is whereprofessional advice plays animportant role in developingand maintaining a robustestate plan that secures yourlegacy,” says Lange. Gareth Lange, Wealth Manager,Private Client Holdings46Private Client Holdings is an authorised financial services provider (licence #613). Private Client Holdings has taken care to ensure that all the information provided herein is true and accurateand will therefore not be held responsible for any inaccuracies in the information herein. The above content does not constitute advice and the reader should contact the author for any relatedconcerns. Private Client Holdings shall not be responsible and disclaims all loss, liability or expense of any nature whatsoever which may be attributable (directly, indirectly or consequentially) tothe use of the information provided.
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