Estate Planning – a necessary tool in uncertain times

The last number of years have seen the world go through dramatic changes, pandemics, environmental upheavals, wars, financial volatility and massive political uncertainty affecting every individual and country in one way or another.

South Africans have not been spared with loadshedding, escalating fuel prices and rising inflation further adding to the uncertainty. This makes it feel as if planning for the future is pointless and all you can really do is survive the now. In this article we discuss why this could be a dangerous strategy.

Most people know it is important to have a will in place. But is a basic will enough, or should there be a more encompassing plan which outlines how you would like your assets (property, shares, insurance) to be handled after you die, how you want your family to be provided for, how you want your estate divided etc. 

Without a proper estate plan in place, settling your affairs after your death could have a long-lasting and costly impact on your loved ones. Estate planning looks at each individual, their stage in life, their familial responsibilities and their wealth base. Comprehensive estate planning is therefore far wider than merely drafting a will as it involves not only planning for death but also planning for your lifetime, which includes financial planning, health planning, matrimonial property regime planning, income tax and business planning, as well as offshore and retirement planning. Importantly, estate planning is also not a once-off event, but remains a tool to be regularly updated and amended to suit the changing aspects of your life.

It often happens in difficult economic climates that many estates do not have the liquidity required to settle their debts, which in turn can burden your dependents who need to fend for themselves in the event of your untimely passing. Estate liquidity needs upon your death is an essential and critical element of estate planning because your estate must make sufficient provision for the payment of various taxes payable when you pass, such as capital gains tax and estate duty, which can have a tremendous impact on the amount of cash or assets ultimately distributed to your heirs.

Proper estate planning by an experienced planner is critical to help provide certainty when things are at their most uncertain when you pass. This will ensure that your finances and assets are correctly structured and secured/protected, estate taxes are planned for, there is liquidity to meet your financial obligations upon death, and distributions happens in accordance with your wishes.

Regardless of your financial position or age, estate planning and regular reviewing thereof is as vital a step to protecting and looking after your loved ones after your death as is putting bread on the table today. If you don’t have a financial plan or have not reviewed your will in a few years, make sure to contact a professional estate planner to help put a bespoke plan for your family in place.

November 6, 2023
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