Your last will and testament is one of the most important documents you will ever sign during your lifetime. Your will is an essential part of estate planning as it stipulates how you want your assets dealt with upon your death.
Your estate refers to everything you own and owe, from property and cars to investments and debts. Proper estate planning will ensure that your estate is set up in a tax-efficient way that benefits you during your lifetime and your beneficiaries after you die.
properly structured estate ensures that:
- There is enough
cash to pay outstanding debts.
- There is an
income (and capital if required) for your dependants.
- The estate is
distributed according to your wishes. Your business interests are protected.
- Taxes are
minimised (e.g. estate duty and income tax).
As it is a crucial area of financial planning, it is worth getting professional advice if you are drawing up a Will. If you do not have a valid Will, you die intestate and the laws of intestate succession apply. In other words, the law of the land designates beneficiaries according to specific kinship.
You must appoint an executor in your will. The executor is responsible for ensuring that the terms of your Will are carried out and that your estate is administered in terms of the Act. Ideally this should be a professional person or trust company, who specialises in the drafting of wills and administering deceased estates. If you do not have a Will, an executor will be appointed by the state.
A Trust can be established in your will in order to hold and administer assets on behalf of a beneficiary. Whether it makes sense to set up a Trust fund depends on the beneficiary’s circumstances and the value of the assets. Some reasons for setting up a Testamentary Trust include:
- To provide for
- To ensure that
minors’ inheritances are invested until a certain age (age of majority is 18).
- To administer
assets on behalf of immature/handicapped beneficiaries during their lifetime.