Wills, Trusts & Estate Planning

Estate planning, simply put, is the process of arranging and managing your assets during your lifetime so that when you die, your estate is transferred in accordance with your wishes. Effective estate planning can ensure that estate duty, taxes and other costs associated with death are minimised as far as possible, and it can make extending your legacy to multiple generations easier. Estate planning is also aimed at protecting the beneficiaries of your estate, particularly where there are special needs involved.

Estate planning entails the legacy you would like to leave through your Will, as well as considering the establishment of Trusts and the needs of your beneficiaries, be they majors or of minor age. The estate planning process generally starts with the drafting of your Will.

A Will is a document which determines the distribution of your estate. Everyone over the age of 16 may draft a Will and it’s important to keep your Will up-to-date, particularly following a life stage change. These life stage events include a change in your marital status and the birth or death of an heir, such as the birth of a child or grandchild. You should also update your Will if your asset base increases or decrease. For example, if you purchased a new home, changed jobs or retired.

Everyone should have a Will, irrespective of their asset value, as it allows them to leave a legacy in line with their wishes. You work a lifetime to build an asset base with specific meaning and sentiment. A Will allows you to determine who will benefit from it and in what proportion. It avoids your asset base being passed down in terms of the Law of Intestate Succession (dying without a Will in place). It allows your investments to be placed with an investment house for minor beneficiaries to maximise capital growth, rather than monies being placed in the Guardian’s Fund. Having a Will in place generally reduces the timeframe attached to the estate administration process and makes it easier.

We encourage people to try and keep their wishes simple rather than “ruling from the grave”. Specific inheritances, your marital status, maintenance or divorce obligations, age of beneficiaries, donations and business succession planning are some of the areas for consideration. In addition, you need to be mindful of the costs associated with death. Some costs include the following:

• Executor fees
• Taxes, including capital gains tax (CGT), income tax, VAT and estate duty
• Claims against your estate, accrual claims and the settlement of liabilities
• Property conveyancing fees, bond cancellation costs, Master’s fees, postages and petties, and advertising costs
• Insurance costs while your estate is being administered and licencing fees

The administration of an estate is often a complicated matter. The executor plays an important role in ensuring that the estate is transferred in accordance with your wishes and that the administration process is undertaken in line with the Estate Act, 66 of 1965 (as amended). The process needs to be handled with empathy, efficiency and professionalism and in the shortest possible time.

You may appoint an executor of your choice. However, this appointment needs to be ratified by the Master of the High Court at death. The Master needs to be comfortable that the appointed executor has the necessary skills and knowledge to administer your estate. The executor needs to be able to attend to the legal, accounting and related aspects of the administration process.

There are risks attached to the administration process and the executor carries the accountability for this process, acting as your representative in ensuring your estate is distributed in accordance with your wishes, while also acting legally and in good faith.

The estate administration process entails the following four stages:

1) A preliminary investigation and accumulation of information following death and an interview with the family to complete documentation required to report the estate. The lodgement of the documentation to the Master of the High Court and acceptance of the executor appointment.

2) Collection of all information to allow for tax return submission, including CGT, income tax, VAT and any other personal taxes.

3) Preparation of the formal liquidation and distribution account and collation of supporting documentation required to lodge the liquidation and distribution account with the Master of the High Court. The required statutory advertisements, once approval is obtained from the Master of the High Court, also need to be prepared for placement in terms of the statutory advertising requirements.

4) Transfer of assets to be distributed and the lodgement of property transfer deeds to effect transfer thereof. The residue of the estate also needs to be transferred to the residual beneficiaries.