Will
June 1, 2016

Leaving a Legacy

Many people either have an out-of- date will or no will at all. This can leave your family at best, inconvenienced, and at worst suffering severe financial hardship should you pass away. Start planning today about Leaving a Legacy.

Cost of Death

In addition to the above, keep in mind that the cost of dying can eat into the legacy you leave behind. Taking into account 20% Estate Duty, a maximum of 16,4% Capital Gains Tax (assets in your estate are deemed to be disposed at death to the estate and trigger CGT subject to an ‘at death’ exclusion of R300 000), and Executor’s Fees of a maximum of 3.99%, a poorly executed estate plan can incur costs/liabilities totalling millions of Rands.

Recommendation?

We recommend you have a proper estate plan drawn up (and reviewed annually thereafter) calculating existing Estate Duty and CGT implications and then working with your financial advisor to minimise these costs. All policy beneficiaries should be checked and updated and be in line with your most recent estate Plan. The proceeds from a Retirement Annuity Fund are excluded from the estate and policies (and other assets) where a spouse is the beneficiary, or assets bequeathed to a spouse, are deductible from the estate in terms of Section 4Q of the Income Tax Act.

Options

Other than creating a trust during your lifetime (which would keep major assets outside of your estate), another way of minimizing costs is to use insurance. Capital Legacy, for example, other than doing professional wills under the guidance of your Estate Planning Specialist/Financial Advisor, have a Legacy Protection Plan which provides estate cost cover of up to R2.4million with NO medicals required.

This not only keeps one’s legacy intact for heirs but also provides much needed liquidity for the estate. A detailed Estate Liquidity Analysis is part of any professionally drawn up Estate Plan and highlights any projected shortfalls.

A will which bequeaths certain assets directly to heirs will have the wishes of the testator frustrated if there is a cash (liquidity) shortfall in which the Executor has to sell one or more of these assets to pay unquantified or unrecorded liabilities of the estate.

Leaving a Legacy

Therefore, a good Estate Plan and will, regularly updated, provide the peace of mind that you are indeed leaving the legacy you intended for your loved ones.