Key issues in estate planning– part one

JUGGIE GOVENDER

EAST COAST FINANCIAL SERVICES (PTY) LTD – FSP 44760

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.

WITHOUT A WILL, THERE ISN’T A WAY

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.

Make sure that your will is valid — it must be signed by two independent witnesses who do not stand to inherit from the will or any family members. 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. You can name as the executor your spouse or someone close to you whom you can trust, however this does not mean that he or she has to wind up your estate. They may have to appoint an attorney or trust company to assist with the winding up of the estate.

It is advisable to have individual wills, rather than a joint will, for married clients. 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. You should discuss this with the person who draws up your will.

ROLLING OVER THE ESTATE DUTY ABATEMENT

Each person’s estate is entitled to an exemption or abatement from estate duty on assets up to R3.5 million.

Legislation was changed to allow the estate of the second-dying spouse to use any portion of the exemption that the estate of the first-dying spouse did not utilise.

This means that if the first-dying spouse left all his or her assets to his or her spouse, and therefore did not use any portion of the R3.5-million exemption, the exemption will roll over to the surviving spouse, and his or her estate will enjoy an exemption of R7 million on his or her death.

PART TWO TO FOLLOW IN NEXT EDITION

This article is an excerpt from Personal Finance by Laura Du Pleez.

You could contact me on 083 399 3905, my office on 032 944 3051 or e-mail me on juggieg@telkomsa.net for an appointment or further information and any other financial advice.

Disclaimer

The information is only intended to be of a general nature and should not be relied upon by any part without obtaining full details from a licenced financial service provider.

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