Protect your legacy with estate planning

1. Estate planning overview

What is estate planning?

Estate planning is about deciding – deliberately and clearly – what happens to everything you care and provide for, after you're gone. For some people, it means leaving financial security for their children. For others, it’s protecting family assets, supporting causes they care about, or ensuring loved ones are not left with unnecessary complexity during an already emotional time.    

Estate planning is often misunderstood as simply being about drafting a Will. While a Will is an important component, it is only one part of a comprehensive estate plan. Factors such as your marital regime, capital gains tax (CGT), and any outstanding tax obligations to SARS should also be considered to help ensure the efficient administration and winding up of your estate..

Why is estate planning important?

Without a valid Will and a comprehensive estate plan in place, South African law will determine how your assets are distributed, which may not align with your wishes. In addition, a poorly structured estate can lead to avoidable taxes, delays in administering the estate, and added stress for your loved ones during an already difficult time.

Many estates also lack sufficient liquidity to settle debts and expenses when they arise. This can place financial pressure on dependants who may suddenly need access to funds for their ongoing living expenses and financial commitments.

We can assist with the following key components of the estate planning process, either individually or as part of an integrated estate plan, depending on your needs:

• Will drafting and safekeeping
  Drafting a legally sound Will that accurately reflects your wishes, together with the secure safekeeping of your Will.
• Trusts
  PHelping protect and preserve assets for minor children, dependants with special needs, or future generations.
• Estate duty planning
  Structuring your estate to minimise tax liabilities and improve the efficiency of wealth transfer.
• Beneficiary nominations
  Ensuring that your life insurance policies and retirement fund benefits are aligned with your wishes and intended beneficiaries.
• Executor and trustee services
  Connecting you with the appropriate specialists to assist with the administration and management of your estate and trusts.

When should I review my estate plan?  

A well-structured estate plan can benefit anyone with assets. However, if you're continuing to build your wealth through assets such as property, vehicles, boats, jewellery, art or other valuable possessions, it's important to review your estate plan regularly with a qualified advisor.

Your estate plan should be reviewed at least annually to ensure it remains aligned with your financial position and personal circumstances. This provides an opportunity to update your plan for changes in income, new asset acquisitions, the disposal of assets, or shifts in your financial circumstances.

You can also make changes if you part with assets or experience a knock to your income.

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2. Financial planning

What role does financial planning play in estate planning?

Estate planning works best when it forms part of a broader financial plan.

A financial advisor can help you assess your assets, liabilities and future goals, while identifying appropriate solutions to help preserve and transfer your wealth effectively.

3. Taxes and estate planning

What is estate duty and why does it matter in estate planning?

Estate duty is a tax levied on the dutiable value of your estate when you pass away. It is paid by your estate before assets are distributed to your heirs and beneficiaries. In South Arica, estate duty is charged at 20% of your estate up to R30 million, and 25% above R30 million. The first R3.5 million of an estate’s dutiable value is exempt from estate duty. This means that if you have, for example, R5 million in assets or cash to leave behind for loved ones, your estate will owe the government 20% of R1.5 million (amount above the threshold) before your beneficiaries can receive their inheritances..

Even if estate duty is not payable, your loved ones will have to inform SARS that you have passed away. Copies of the following documents must be sent to SARS:

• Death certificate or death notice
• ID of the deceased
• Letters of executorship (J238) (if applicable)
• Letter of authority (J170 in cases where your estate is less than R250 000)
• Certified copy of the executor’s identity document (if applicable)
• Power of attorney (if applicable)
• The name, address and contact details of your executor or representative/s
• Your last Will
• An up-to-date inventory of your assets
• Any liquidation and distribution accounts (if available or applicable)

Once SARS has coded your profile as a deceased estate, the receiver will issue applicable letters to your estate’s executor, advising him or her of what further steps need to be taken. Any applicable estate duty is payable to SARS within 1 year of the date of death, or 30 days from date of assessment, if the assessment is issued within one year of date of death.

What is capital gains tax (CGT) and why does it matter in estate planning? 

Capital gain arises when your assets are disposed of and the proceeds exceed the base cost. So, if you bought assets (like a house or collectable item) that are sold for more than what you paid, your estate will pay a tax on that gain before any proceeds are distributed to your heirs.

From an international perspective, a foreign country also has the authority to levy taxes on you if you own property situated within its boundaries. This means your estate, which holds offshore property, may also be subject to estate duty in terms of the tax law of that country – resulting in double taxation.

4. Wills and estate planning

Why do I need a Will?

It’s often said that you can’t anticipate what life has in store for you, but you can make sure that your loved ones are taken care of when you are no longer around.

Drafting a professional Will can ensure that upon your death, your wishes are carried out.

A properly drafted Will ensures that possessions of monetary and sentimental value are protected and distributed appropriately.

What happens if I don’t have a Will at the time of my death?

A Will allows you to nominate a trusted executor, appoint heirs of your choice and even nominate guardians for your minor children.

Ultimately, a Will is the foundation of any estate plan. In the case of someone dying without a Will, the Master of the High Court will appoint an executor since no-one would have been nominated.

One of an executor's first responsibilities is to locate your Will. If a valid Will cannot be found, your estate may need to be administered as though did not have a Will, Passing away without a Will in place means your estate will be administered under the Intestate Succession Act, Act 81 of 1987.

Passing away without a Will in place means your estate will be administered under the Intestate Succession Act, Act 81 of 1987.

Note that if you have no living relatives and your assets have not been claimed by a legitimate heir upon your death after 30 years, your estate may be forfeited to the government.

5. Executors

What is an executor?

An executor is someone you select in your Will to carry out the instructions set out in your Will and help to handle the winding up of your estate. 

How do you appoint an executor?
Understanding the role of an executor can help you make an informed decision. You have the option to approach your bank to assist with the executorship function, should you not be ready to choose someone in your family to take on this important role.

6. Guardians

How do I appoint guardians for minors?

If you’re a parent with young children (under the age of 18), it’s advised that you appoint someone to act as their guardian in your Will.

In most instances, the surviving parent is automatically the child's guardian, but you should always nominate a guardian or a substitute guardian in the event of the surviving parent passing away.

Legal experts agree that careful consideration must be given to appoint someone who is willing and able to provide the same level of love and care for the child as you would have done yourself. This may be a close family member or another trusted individual.

7. Trusts and estate planning

What role can a trust play in your estate plan?

Trusts are widely regarded as an effective estate planning approach to protecting your assets, preserving wealth across generations, and providing continuity of financial support and protection for your loved ones.

We offer a range of tailored trust solutions to assist in meeting your wealth preservation objectives:

• Testamentary Trusts: Established upon death and works to protect the interests of minors and other dependents who are not able to manage their own financial affairs.
• Inter Vivos Trusts: Created during your lifetime and is designed to help provide protection of the family wealth across generations.
• Settlement Trusts: Set up to receive and manage proceeds from sources such as policies, divorce settlements, the Road Accident Fund, and any other lumpsum payments received.