Estate Planning in South Africa – Where to Start?

It’s a common misconception that estate planning and the drafting of a will are only for older people or wealthy people. In fact, it is simply about getting your affairs in order, so the people you care about are protected if something happens to you. In other words, it’s for everyone!

If you’re not sure where to start, the good news is that estate planning does not have to be complicated. Let’s look at what a solid estate plan should include.

What is estate planning?

It involves arranging your affairs to ensure your assets, responsibilities, and wishes are managed according to your instructions. Your estate plan can apply both during your lifetime and after you pass away.

Estate planning is not only about death. It is about creating more certainty and less risk, while also protecting your loved ones, and making life easier for them if something happens to you.

Your estate plan should be reviewed at least once a year, or when big life changes happen, so that it always reflects your latest circumstances. This includes having or adopting a baby, getting married or divorced, retiring, etc.

Estate planning takes place while you are alive. Estate administration is the process that starts when you pass away.

How do you start estate planning?

Here are five basic questions to answer as you start putting together your estate plan:

1. Have you drafted your will? A valid will forms the foundation of an estate plan. It allows you to: choose your beneficiaries; nominate preferred guardians for minor children; appoint an executor; and set up a testamentary trust, if required. If you die without a will, your estate will be distributed according to the Law of Intestate Succession, which means the court decides and the outcome may not reflect your wishes.
2. Have you reviewed your beneficiary nominations? Some assets pass according to the beneficiaries named on nomination forms, rather than what is specified in your will. These include retirement funds, life insurance policies, and certain investments. Review your beneficiary nominations to make sure they reflect your current circumstances, especially after marriage, divorce, the birth of a child, or the death of a loved one. Outdated beneficiary nominations can have unintended consequences, for example an ex‑spouse or estranged relative might still inherit, whereas children or new dependants could be unintentionally excluded.
3. Should you consider a trust? Not everyone needs to create a trust in their will (known as a testamentary trust), but it can be highly effective in certain situations. For example, a testamentary trust may help protect minor children, dependants with disabilities, and vulnerable beneficiaries. Trusts can add structure and protection where direct inheritances may not be appropriate.
4. Do you have enough liquidity in your estate? Cash (‘liquidity’) is one of the most overlooked aspects of estate planning. Especially if you are what’s commonly referred to as ‘asset rich but cash poor’. Your estate may contain valuable assets such as property, but if there is not enough cash to cover administration fees, taxes, debts, and other expenses, assets may need to be sold. There are insurance products, available at affordable monthly premiums, that can help protect your estate, and your loved ones, against these costs.
5. Have you appointed an executor? Many people spend time deciding who should inherit from their estate, but not everyone thinks about who will administer their estate. Your choice of executor can have an impact on the time it takes to finalise your estate, and how long your loved ones have to wait before receiving their inheritance. Your executor will have to navigate legal, tax, property, and administrative processes. The person will also require good interpersonal and communication skills. Choosing a professional executor can reduce delays and provide families with expert support during a very difficult time.

How often should you review your estate plan?

Estate planning is not a once-off exercise. It is recommended that you review it once a year or when major life events happen, including:

• Marriage
• Divorce
• Birth of a child
• Purchase or sale of a property
• Starting or selling a business
• Significant changes in wealth

Even without major life changes, reviewing your estate plan regularly is a good idea.

Start your estate planning, today!

Procrastination is the main reason why an estimated 70% of South Africans don’t have wills. The biggest mistake is waiting for the perfect time to draft your will and then leaving it until it’s too late.

Estate planning starts with a simple decision: To get organised.

1. Draft your will.
2. Review your beneficiaries.
3. Consider whether you need a trust.
4. Ensure there is enough liquidity in your estate to cover the costs associated with passing away.
5. Appoint the right executor.

Use these five steps to build a foundation for the future that gives you and your family peace of mind.

Contact us for assistance with drafting your will and putting an estate plan in place.