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Estate Planning: What else could be wrong?

Besides the actual content of your Will, it is important to consider the effect that big decisions about your general finances, investments and property purchases have on your estate. Sometimes decisions are made without all of the facts or without completely understanding the consequences. This is where the advice of an attorney, conveyancer or estate planning and tax expert is vital. There are many attorneys in Port Elizabeth and thousands of attorneys in South Africa, but it is important to select the correct one for this job.

Here are a few problem areas to bear in mind when planning your estate:

Possible problems in respect of your home

• In average or small estates holding your residential home in a trust;
• In large estates not holding your residential home in a trust;
• Decreasing your spouse’s assets in place of yours when buying a retirement home and thereby incurring income tax at a higher rate in your name vs your spouse’s name.

In respect of your investments

• One spouse holding most of the assets in his or her name;
• Not readjusting assets so both spouses can use the estate duty rebate and Capital Gains Tax (CGT) exclusion;
• Failing to invest in Tax Free Savings Investments (TFSI).

In respect of your retirement policies and life policies

• Assuming that the nominated beneficiaries of your retirement annuity will automatically receive the income;
• Not making an informed decision in respect of the pros and cons of converting from a retirement annuity to a living annuity once you are 55 years old;
• Assuming that life policies where children are beneficiaries are exempt from estate duty;
• Leaving your living annuity to a child when leaving it to a trust or grand children could be more beneficial for your children.

In respect of your finances generally:

• Making donations in excess of the present statutory limits;
• Investing in assets overseas in a region that has higher estate duty rates than South Africa;
• Retaining a usufruct where you are the holder of a usufruct;
• Not making donations and paying donations tax where it is advantageous from an estate planning point of view;
• Not ensuring that your parent’s wills are planned adequately which could ensure that you and your estate also pay less estate duty, income tax and Capital Gains Tax;
• In wealthy estates not considering interest free loans to your children which could be secured by a pledge of shares or unit trusts;
• Not creating a trust now (as opposed to creating a trust in your will) to peg the value of your estate where this is advantageous;
• Not ensuring that all of your important original documents are kept together in a safe place and that a family member knows where to find them. Examples of important documents are title deeds, vehicle registration certificates, marriage certificate, antenuptial contract.

This list is not exhaustive, but merely to illustrate the many factors which must be considered to ensure your estate plan and will are correct.    This article is general and should not be used or relied on as legal or other professional advice. We suggest that you always contact an attorney or conveyancer with estate planning and tax knowledge for specific and detailed advice regarding your transaction as it could involve circumstances that are not considered here. Read our article on possible problems with your Will for some more insight: www.pagdens.co.za/estate-planning-wills-25-common-problems.

Each client is unique and all Wills and Estate Plans must be dealt with taking into account the client’s special circumstances. At Pagdens we offer the services of highly trained and qualified Attorneys, Notaries and Conveyancers who will be able to advise you on every aspect, including the tax implications, of your Estate Planning and Will drafting, and any conveyancing transfers or litigation stemming from you estate.

Complete the Online Will Form at www.pagdens.co.za/wills/ or contact 0415027200 to set up a consultation for us to consider your unique circumstances and advise you on the best solution for you.