19 April 2022
How to make sure your loved ones are taken care of and your legacy honoured
We are all familiar with the saying that you can’t take anything with you when you die. Naked, you enter the earth and naked you leave. Whilst this is true, you leave behind a wealth of memories, care and hope in and with your loved ones who get to honour your legacy while crafting theirs. And it is only natural to wonder whether your children will be OK when you die.
Consider for a moment the dedication with which you have established the life and living you currently enjoy, the work ethics adopted, the assets accumulated, the lessons and values shared with your children and the hopes you’ve harboured for their futures. Through proper estate planning you can protect your assets and ensure a well-managed and structured generational wealth transfer to your successors; allowing you to leave the legacy of your choosing.
Although it is never too late to implement an estate planning strategy, the sooner, the better. Or if you have an existing plan, is it a true reflection of the legacy you wish to leave behind, and has it been optimally structured to minimise tax liability and wealth transfer? Contrary to what many people think, estate planning is not restricted to the distribution of your assets when you die. However, that is an aspect of estate planning.
Of course, everybody is different, so each estate requires a different approach.
Understanding Estates and Estate Planning
Before we embark on a journey to learn how to protect your heirs and your estate, let’s fully understand what we mean by estate and estate planning.
Let’s take a look at estate planning, what is it, why you need it, what you need to do to ensure your kids are well taken care of and whether it’s best to get professional help with estate planning.
What is an Estate?
An estate comprises the sum of all assets and liabilities that you accumulate during your life and are left behind when you die
What, then, is Estate Planning?
Estate planning involves creating a plan of action, which you then manage to do two main things.
Firstly you need to protect your assets and grow them during your lifetime.
Secondly, you need to cater to effective and maximal distribution to account for your family’s needs
Why You Need To Plan Your Estate
The best way to justify estate planning is to look at the alternative in which you have amassed significant assets and pass on with no estate planning. Not a pretty sight at all.
One of the essential tools in estate planning is the will. A will is a legal document that prescribes your wishes regarding the distribution of your property. It may also prescribe how any minor children are dealt with. Those wishes may not be carried out if you die without a will.
Let’s assume you die without a will. This is called dying “intestate.” In South Africa, your estate will be divided up amongst your surviving spouse, children, parents and siblings according to a set formula in the Intestate Succession Act.
You will have had no say in how your wealth is distributed. The disadvantages of this cannot be understated. Indeed, you want to prioritise specific individuals, and you may even wish to exclude others from benefitting. The only way to do this is to have a will.
One of the most important considerations, when people die intestate is that there is no apparent provision for survivors to have access to cash for daily living and expenses. In addition, it takes a long time to wind up an estate. Unfortunately, winding up an intestate estate is no exception. Often, beneficiaries struggle to survive whilst waiting for the estate to be wound up finally.
Your will can make provision for access to capital whilst the estate is being wound up.
Estate planning does not only make provision for dealing with your assets when you die. However, the intestate example clearly illustrates how important it is to do estate planning in South Africa
Why You Need To Plan Your Estate
As you can see from the example above, the most important thing you can do immediately is get a will drafted for you.
In this way, if something unexpected happens, you have peace of mind knowing that your assets will go to your intended beneficiaries.
Once this is done and you’ve checked the box, you can move on to planning other aspects of your estate.
This broader strategy would include how to invest your money, what structures are the best to minimise taxes and other considerations that are all really important.
Your estate planning needs to be customised to your exact situation. No two people have the same needs, assets, and familial considerations.
Should You Get Help Planning Your Estate?
There is no doubt that professional assistance is worth every penny when you plan your estate.
There is no substitute for experience.
Estate planning is immersed in a sea of regulation, tax and legal implications. There are sophisticated mechanisms that can maximise your assets and minimise your taxes.
Choose whom you use to advise you wisely. Experience, integrity, confidentiality and professionalism are all qualities you should consider.
It is best to take a long term view on estate planning. As your circumstances change, so should your estate planning.
Should You Get Help Planning Your Estate?
Start with a will [1]. Then move on to planning your estate with professional help, and you will make sure that your loved ones are well taken care of when you pass on.
[1] Our long-standing collaboration with Livingston Leandy Inc. offers PWM Wealth’s clients a will drafting that is free of charge with the provisio that both companies are named as co-executors.
A further benefit is a negotiated fee of up to a maximum of 2.5% plus VAT, whereas standard fees are calculated at 3.5% of the estate’s assets (excluding VAT).
For more information, you can contact your Wealth Manager or send an email to enquiries@pwm-wealth.com
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PWM is a boutique wealth management company in South Africa providing bespoke investment services to affluent individuals
We provide independent, expert advice on local and offshore investment funds, portfolios and structures. We have access to a vast, customizable range of investment options from across the global market. As a result clients benefit by receiving the most appropriate advice and solutions for their varying and specific needs. Our business operates within a highly regulated environment therefore ensuring that the highest professional standards are maintained while keeping the best interests of our clients in mind. For this reason systems have been put in place to ensure full compliance with all regulatory requirements.
Disclaimer: The research report has been prepared for information purposes and does not constitute an offer. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and the company accepts no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this report
