Why women should take charge of their estate planning
Too few women are taking action early enough to secure the futures of their families ...
Only one-quarter of women in SA have developed an estate plan and even fewer have created an investment plan for assets generated from the eventual sale of their business, according to CEB research.
With more women taking leadership and ownership roles in businesses, it is equally concerning that less than one-third of women report having a formal succession plan in place for their business, compared to 42% of men.
Estate Planning for Women
"Women generally live about six years longer than men, but they are increasingly also playing a far more prominent role in the modern workplace. Women therefore need to begin estate planning far earlier than they are doing now. They are becoming professionals and owners – but are also more likely than men to die single. There is an enormous need to tailor solutions that deliver far better inter-generational outcomes," says Kobus van Schalkwyk, Head Corporate Development, Standard Trust Limited.
A growing role in business
- The Boston Consulting Group says while one billion women now participate in the global workforce, this is expected to increase to 1.2 billion over the next five years. But according to recent CEB analysis, nearly three-quarters of men over age 65 are married compared to less than half of women.
- A 2015 poll of more than 9 500 women in the G20 countries found that work-family balance was the top work-related issue for women, flagged as such by 44% of the respondents.
- "Women are very concerned about protecting their children and families but are becoming more worried than before that they may not have enough in retirement for themselves either. Women want children to be empowered to take charge of their own destinies, but they are also concerned that if their husbands predecease them that they will not have enough left over in retirement," says van Schalkwyk.
Secure your family’s future
- Unsatisfactory outcomes can be avoided by having the correct estate planning structure in place.
- "A crucial leg in the process is financial planning, but this can get very technical due to the myriad policies and investments the modern professional person or owner has in place. The plan must therefore be holistic, as missing out just one factor could see it all fall flat," explains van Schalkwyk.
- Succession planning is often forgotten about too – with potential dire consequences for the longevity of entities and futures of beneficiaries.
- "A female owner may be doing very well in her business today, but if someone has not been assigned and trained to take over, or if there is no key man policy and the business gets liquidated once the owner dies, the family suffers as a result," explains Mr van Schalkwyk.
If you have children
- Inter-generational planning is crucial by, for instance ensuring guardians are appointed for minor children and separate trustees manage estate funds.
- "Maintenance, education and general wellbeing of children are paramount and this must be very carefully planned for," says van Schalkwyk. Drafting a will is the way to ensure a person has a voice after death and decisions are not left to mere speculation.
Get a will
- "A will is a crucial tool to ensuring all your requirements are met and children and legacies are properly administered. For instance, you have an opportunity in terms of a will to formulate a testamentary trust – if you don’t then inheritances of minor children may, for example, have to be deposited into the Guardian’s Fund leaving an asset with no capital growth potential," says van Schalkwyk.
- "Proper planning is complex – so always keep practicalities in mind. For instance, it is no use placing your house in trust but then you don’t make provision for other costs like the admin costs to finalise an estate and burial instructions. Property may have to be sold to pay for those costs, if there is not sufficient liquidity in the estate," says van Schalkwyk.
Seek the advice of professionals
- There is very little doubt that women need to ensure they have a holistic estate plan in place early enough to safeguard their business and family interests. To do this they need to consult with trusted experts to get estate planning right and build a better tomorrow.
- "This message is more important than ever for women who may be divorced, widowed, or are professionals with a growing number of assets to administer. It is imperative women today focus far more than they ever thought necessary on managing, growing and protecting what is most important to them," van Schalkwyk says.