Look after your loved ones after you've gone

Old Mutual looks at how estate planning helps to keep your family financially secure

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Estate planning and drafting a will are essential financial planning tools that enable you to play a protective role in the lives of your loved ones long after you’ve passed on. Although nobody can predict or control the future, we can all take steps to avoid unnecessary risks and uncertainties.

‘Proper estate planning empowers you to make sure your family will be able to thrive even when you’re no longer around,’ says Lizl Budhram, Head of Advice at Old Mutual. ‘Drafting a will is an important part of this. Apart from giving you the ability to determine how you want your assets to be distributed, it also enables you to structure your finances in a way that limits the impact of estate duties and other taxes. Speaking to an accredited financial adviser can be invaluable in this regard.’

Structuring your estate also involves ensuring there is sufficient liquidity to cover your financial obligations (like outstanding debts or taxes) and living expenses. ‘Legal hassles are minimised and the whole process is likely to be a lot less complicated, costly and time-consuming than if you die “intestate”, without a will,’ adds Budhram.

Are retirement annuities excluded for estate duty purposes?

Yes, retirement annuities as well as pension, provident and preservation funds and living annuities are generally not considered part of an estate. It makes good sense to factor this into your estate planning.

What is the current estate duty threshold?

Estates worth less than R3.5 million in total attract no estate duty. Any assets inherited by a surviving spouse will also be excluded from estate duty calculations.

Will your beneficiaries need to pay tax on their inheritance?

Generally, no. Only in certain instances will your heirs be required to contribute to estate duties. All taxes payable (including estate duties, capital gains tax and income tax) are usually deducted from your estate before the distribution of assets to your beneficiaries takes place.

Will you need to pay estate duties on properties you own outside South Africa?

Yes, subject to certain exclusions. You may also need to pay estate duties in the countries in which you own those properties. These estate duties will depend on the tax laws of the individual countries, and their respective arrangements with SARS. A financial adviser will be able to provide more information and guidance on this.

Will your crypto assets be included in your overall estate?

Yes, for estate duty purposes crypto assets are regarded as property and valued at the fair market value on the date of death.

Can you nominate guardians for your children in your will?

Yes, an important benefit of having a will is that it gives you the right to nominate both an executor (to execute your wishes) and a guardian, to look after your children’s best interests in case both parents pass away. The guardian you choose should ideally be a trusted and loving relative. As a parent, knowing your children will be well taken care of (physically and financially) will provide great peace of mind.

You can also set up a testamentary trust in your will to hold and administer assets on behalf of beneficiaries who are under 18 or physically or mentally challenged.Unless you appoint a guardian for children under 18, the Court will order that their inheritance be managed by the Guardian’s Fund until they turn 18. Claiming maintenance and benefits from this fund is not a straightforward process, and it is generally preferable to appoint an appropriate guardian.

Are ‘Last Will and Testament’ forms that can be accessed online or from a stationery store recognised as valid wills?

Yes, they are, provided they meet all the requirements of a valid will, including:

– The will must be dated

– It must be signed by you and two witnesses on every page, including the last page, in each other’s presence

– Neither of your witnesses (nor their spouses) may also be your heirs in terms of the will

– It must be written, typed or printed

– It must be the original will, not a copy

– You must be 16 years old or over

Be aware that having a will that is not considered valid by the Master of the High Court is the same, for all intents and purposes, as having no will. The laws governing intestate estates will apply, and your assets will be distributed according to a set formula, not according to your personal wishes. Also bear in mind that although online forms are convenient, especially if your estate is modest and straightforward, you will miss out on the expert guidance a qualified legal or financial adviser can provide.

More estate planning tips:

– Start your estate planning sooner rather than later to benefit fully from all the tax advantages of good estate planning

– Remember to update your will and notify your financial services providers when your life changes. Having a child or getting married or divorced could affect your choice of beneficiaries, while buying a new property or business will affect the size of your estate

– Make sure your insurance policies, life cover, annuities etc are also kept up-to-date

– Store the original will safely with your lawyer or bank. Speak to your financial adviser regarding secure options

For more information on estate planning and writing your will, click here

To speak to a financial adviser, call 0860 60 60 60.

Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer. Ts and Cs apply.