WHY YOU NEED ESTATE AND LEGACY PLANNING
The concept of planning for, or even discussing death, is dauting for most of us, but if this past year – and recent mortality statistics – has taught us anything, it is that life can be unpredictable and that it’s always wise to have our affairs in order in case of any unexpected events.
The reality is that South Africa has endured roughly 158 000 “excess deaths” over the past year, between May 2020 and May 2021, when compared to previous years, according to mortality data just released by the SA Medical Research Council (SAMRC). Ultimately, more families have had to deal with unexpected loss – and with illnesses like Covid-19 often taking their toll so quickly, it can leave little time for patients to get their affairs in order.
South Africa is bracing for the third wave of the Covid-19 pandemic with the new B.1.6.17 variant, which has been wreaking havoc in India, likely to do the rounds now that four or more cases of the variant have been confirmed in the country.
TIME TO THINK ABOUT YOUR LEGACY
One might be tempted to think of estate planning as depressing, but it is in fact incredibly empowering and liberating, and a powerful act of love in service of the people you care about the most. Asking ourselves what legacy we wish to leave behind should our death be closer than we expected, and ensuring that your legacy is implemented, is one of the biggest favours we can do for ourselves and our families.
Says Hilary Dudley, Managing Director of Fiduciary services at Wealth Management Specialists, Citadel, “There is so much uncertainty in life, but you can create some form of certainty for your death – and peace of mind for your loved ones – by considering your estate planning as part of your financial planning.”
Key to achieving this is partnering with estate and legacy planning experts who are always abreast of changes or laws, regulations and tax rules, amongst other things, and can adapt your plans accordingly and regularly. Adds Dudley, “it’s our job to consider the next generation and create a solution that is relevant and realistic to your lifestyle and family.”
HERE ARE SOME KEY ELEMENTS TO CONSIDER
NO WILL/OLD WILL/VAGUE WILL?
South African law recognises that everyone’s Will should reflect their true wishes, but there is only so much the courts can do to assist when a document is contested. Having a professional fiduciary advisor draft your Will ensures that your wishes are communicated using the correct legal terminology so there is little room for misinterpretation. Perhaps a second-time father dies before updating his Will to include the name of his younger child – this is unlikely to be an issue if the Will refers to the child who was alive at the time the Will was prepared and any children born thereafter.
If you die without a Will, your estate will be distributed in terms of the provisions of the Intestate Succession Act 81 of 1987. This means that your estate will be divided up among various of your blood relatives in certain proportions in accordance with the rules laid out in the Act. This can be an unnecessary stress on the family, for example as an executor is not nominated in a Will and must be nominated by family members, which could be the cause of delays and possibly disputes. The heirs who receive your estate in terms of the Act may not be in accordance with your wishes.
Says Dudley, “It’s not enough to simply draft and sign a Will once and then forget about it. It’s essential that your Will is as up to date as possible, taking into account changes in your or your family’s personal circumstances and using clear language that cannot be misinterpreted. Do not overlook the various tax consequences of death.”
FORGOT ABOUT TAX?
Since planning for death can be overwhelming, people can forget about the tax implications involved, in addition to the potential estate duty liability. When someone dies, the executor of the estate will need to ascertain if the estate is liable for capital gains tax (CGT), value added tax (VAT) and/or income tax. Many people do not realise that death triggers a deemed disposal for CGT and, depending on who is the heir in the estate, CGT may be payable. This could have serious ramifications on the inheritance available to heirs.
FIVE SIMPLE STEPS TO GET YOUR AFFAIRS IN ORDER
- Draw up a thorough Will which clearly sets out your wishes wherein you nominate your executor and ensure that it is properly executed in line with the required legal formalities.
- Enlist the help of fiduciary and wealth management experts to assist you to outline and plan your estate and financial legacy and keep it up to date.
- Keep all important documents in a safe place and ensure your next of kin knows where they are located and who to contact when you die.
- An expert fiduciary advisor will notify you of any legal changes affecting your planning and assist with making necessary adjustments to ensure you are always compliant and that your plan remains effective.
- Aim to re-read your Will once a year and update it if necessary.
Planning ahead is key to succeeding, not only in life, but in death too – knowing that your loved ones do not have to jump through numerous hoops to wrap up your estate while simultaneously grieving. If the above process seems overwhelming, consider entrusting it to expert advisors who will help you to ensure your affairs are in order, offering you peace of mind in knowing that you have planned for uncertainty.
Hilary Dudley, Fiduciary Managing Director, Citadel