Understanding Estate Planning
Estate planning is essentially about legacy planning and making provisions for one’s loved ones in the very unfortunate event of or after the passing away of the breadwinner. It focuses on drafting a comprehensive plan for the distrubition of your assets amongs loved ones and it remains a very crucial financial duty and obligation.
We owe it to ourseleves and family to ensure that we have a plan in place that will provide for an amicable distribution of assets in the event of the death of the breadwinner for these specific reasons.
- It’s reported than 70%+ of South Africans often die without a having a valid will in place, with 90% not even planning for the unexpted costs associated with a dying.
- The very significant and yet stark reality is that life can be very unpredictable in many ways. Nevertheless, your will still remains the most important piece of paper you will ever sign torwards taking the responsibility of making the necessary provisiosn for your loved one in the event of your death.
It therefor remains evident that estate planning must be considered as an integral part of the home buying process for the simple reason that buying a home is considered as part of the family’s wealth creation process. Wealth creation in it’s own involves acquisition of assets, which are often an invloved segment of the family’s legacy building process to protect the future of our loved ones. In this process of legacy building it’s equally important also that it must seamlessly involve making the requisite provision for a structured manner and means by which these same assets can be equitable distributed amongst the beneficiaries and one’s loved ones in the event of your death in accordance with the testator’s predetermines desires (will). This process is done through a document called a will.
some of the Key Componets Invloved
and considerations in Legacy Building
Properties
Vehicles
Cash Resrves
Beneficiaries
- Estate Planning: offers the freedom and priviledge to choose before hand how your assets will be distributed amongst your loved oned in the event of your death.
- Family Protection: very critical if you are married or have been married several times, have children in your current or previous relationships or marriages, have people that are dependent on you financially. This will signficantly help to protect them from any undue legal hassles or financial burdens that may be grough ubout by an uforseen death of the breadwinner.
- Estate Cost Implication: It is equally important to note that your estate will be subject to various cost elements, such as estate duty due to the South African Receiver of Revenue (SARS), executor fees, attorney fees may be included . The estate also needs to ensure that there is sufficient liquidity in it to cover all the necessary estate unwiding cost without causing any undue incovenience or disadvantage to the beneficiaries that may lead to selling off os assets to cover costs, thereof leaving very little for distribution to them.
It can’t be further emphasized that a Will is not the only component of in the estate planning process. It simply constitues one elements of many factors to be considered, these may include Capital Gains Tax, marriage regimes that may affect the devolving and distribution of the estate, Income Tax that may be due to SARS, cost attributed to the process of Master of the High Court Fees for the handling and appointment of the Execetor for estate amongst others.
Thus with all these various elements to be considered, quite key and critical to all is the availability of sufficient Liquidity for the estate in order to be able to settle all its debts without disadvantaging its beneficiaries.