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A handful of easy tips when planning your estate

Consider a last will and testament, beneficiaries, estate liquidity, record-keeping and taxes.

Death is not something we like to think about, yet it’s the one thing no one can escape. As Benjamin Franklin said in 1789: “…in this world nothing can be said to be certain, except death and taxes.” Unfortunately, as death is a certainty, it makes sense to ensure your loved ones are cared for when you’re no longer around to take care of them.

When planning your estate, you need to consider the following five things:

Last will and testament

Ensure you have a legitimate last will and testament. Ask yourself these questions:

  • Is your will up-to-date?
  • Are your wishes expressed clearly in your will?
  • Does the will comply with the required legal requirements, such as was it signed in the presence of two witnesses? Are the witnesses fit to sign as witnesses? Is the will dated on the last page? etc.
  • Have you appointed guardians for minor children?
  • Are there alternative provisions for the inheritances of minor children such as a testamentary trust?
  • Is there an alternative provision for beneficiaries should any one of them pre-decease you?
  • Are there heirs in case the family all die simultaneously?
  • Have you agreed on a fixed executor fee or a sliding scale where the executor fees decline as the estate increases? Remember that executor fees are negotiable.

Beneficiaries

Ensure the beneficiaries of your life policies are up-to-date or that you have nominated beneficiaries. If you forget to nominate a beneficiary on your life policy, the proceeds accrue to your estate and incur unnecessary executor fees. It often happens that beneficiaries are not updated on life policies such as after a divorce.

Estate liquidity

A common mistake when doing estate planning is not doing an estate liquidity calculation. This could result in the deceased estate not having adequate cash to settle estate expenses and debts. This, in turn, could lead to the executor being forced to sell estate assets, often at values below the market value, to generate cash for the mentioned expenses. This shortfall could easily be addressed by leaving a portion of the life policy proceeds to the estate by way of a beneficiary nomination.

Record-keeping

There are few things as traumatic as a grieving spouse being left to deal with a disorganised estate. Ensure all documentation is kept in one place, preferably in a single file. This file should include details such as:

  • The will;
  • A list of assets and liabilities;
  • A list of bank accounts along with passwords;
  • Usernames and passwords to all social media profiles;
  • Names and contact details of important people to notify in the event of your death, such as the names of your financial planner, attorney, tax practitioner and broker.
  • Important documents such as your birth certificate, marriage certificate, home loan, title deeds and car registrations.

It is sensible to build a personal file containing important documents. An estate directory should be used for this to ensure you have not forgotten anything important.

Taxes

By utilising the services of a certified financial planner (CFP) and structuring your estate plan optimally, you could avoid unnecessary taxes such as estate duty and capital gains tax. Paying a professional fee for this service may save you a considerable amount in taxes after death, which means more money is available for your loved ones.

To summarise: By doing some proactive estate planning, you will ensure your wishes are carried out, the loved ones are taken care of and the process of winding up your estate is done with the least hassle.

ADVISOR PROFILE

Martin de Kock

Ascor® Independent Wealth Managers

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