Planning for something fun like your next big holiday or your dream wedding can be fun and many people willingly put many hours and a fair amount of blood, sweat and tears into these events.
However, there is something far more important to plan for and it’s never too early to start - estate planning.
In this context, the word “estate” refers to more than just a piece of land. Your estate is everything you own from your house, car, jewellery, life insurance, furniture and literally everything in between.
Estate planning is the process of deciding how each of your assets and possessions are distributed to the people (or organisations) you care about.
This includes arranging your affairs and writing up a will which clearly outlines your wishes, making sure that there is no room for misinterpretation when it comes to who the heirs to your estate will be.
In absence of estate planning, your belongings will automatically be inherited by the state and distributed according to court order.
A common misconception is that estate planning is only for retirees or those who are approaching retirement age.
However, the unfortunate reality is that death can be untimely and can happen at any stage of our lives, making it extremely important to be prepared for it.
Whether big or small, if you have assets, you should be thinking about estate planning as a matter of urgency.
A thorough and detailed estate plan will ensure that the administration of your estate is carried out in a smooth and efficient way, with no room for doubt about what your wishes are.
A will makes sure that your estate is dissolved exactly as you want it to be and assets are distributed to your heirs according to your instructions.
If you don’t have a will in place, your estate is automatically dealt with according to the law of intestate succession, which may go against your wishes.
Estate planning makes sure that your dependants are properly provided for should you pass on. In addition, it protects minor beneficiaries and prevents any of the assets from being held by the Guardian’s Fund until they reach 18 years of age.
In other words, minors will have access to the funds they need to get through life, and to pay for their education or anything else that they need, until they are old enough to earn their own income.
One of the most important parts of estate planning is ensuring there is liquidity in your estate. In other words, capital is accessible to your family and/or dependants immediately.
In addition, planning for liquidity means that there is sufficient capital available in your estate to:
Thorough and thoughtful estate planning can help you minimise the impact of tax on your estate and yes, this includes income tax, capital gains tax, estate duty and transfer duty.
Financial jargon can be intimidating and overwhelming and, in our experience, can be the reason many people shy away from financial planning as a whole.
Therefore, working with a qualified financial advisor to formulate a strategic financial plan could be the single most important contributor to achieving your goals.
Estate planning is one aspect of the overall financial planning picture, but is a crucial one, nonetheless. Our financial planners in Johannesburg can help you make sure that your estate is dealt with in a way that honours your legacy and provides for the loved ones you leave behind.
In addition, we will help you and your beneficiaries get the most out of your estate by minimising the impact of various forms of tax in a legally acceptable manner.
For more information about our financial services, or why estate planning is important, please feel free to contact us.
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