Estate and tax planning can help protect your family


Death isn’t a topic that anyone wants to dwell on, but it’s a reality that we can’t avoid. While we may not have any control over how and when it happens, we do have control over how we plan for it, and how it affects our loved ones.

One of your most important priorities is to ensure that those you love are taken care of when you pass away. But it will take careful planning to ensure they truly benefit from your wealth.


6 tips for effective estate and tax planning 

1.    Make sure you have a valid will

A will is arguably the most important document you need to have. It reflects your current wishes and will become your voice when you no longer have one. Ironically, this is also often the most neglected document. The saying ‘where there’s a will, there’s a way’ usually refers to a different meaning of ‘will’, but in fact, when it comes to estate planning, it applies. Having a valid will can save your family from added heartache and frustration when you die.

2.    Make provision to cover the costs of dying

On your death, there are various costs that will need to be settled:

  • Immediate expenses that your family will need to cover, such as funeral costs.
  • Outstanding debt and liabilities – for example, any amounts still owing on your home loan.
  • Taxes – for example, estate duty and capital gains tax.
  • Estate administration fees – for example, executor fees.

Make sure that there is sufficient cash in your estate to cover these costs, otherwise your executor may have to sell assets to pay them. Reporting an estate and getting letters of executorship can take a few months, so if your family is financially dependent on you, it’s important to take steps to ensure they have access to cash. There are different ways to do this, including these 2 options:

  • Take out a life insurance policy
    A life insurance policy does not form part of the estate administration if you nominate beneficiaries, and the proceeds pay out to your beneficiaries immediately.
  • Set up separate emergency accounts
    Set up accounts in your loved ones’ names and make regular deposits into these accounts so that they will have immediate access to cash.

3.    Invest in a retirement annuity (RA)

An RA is a highly tax-efficient investment vehicle – both during your lifetime and after your death. Your RA contributions are tax-deductible (up to certain limits), and your returns are tax-free. On death, no estate duty will be payable on the tax-deductible contributions, but excess contributions will be subject to estate duty. Your beneficiaries can be paid the proceeds immediately, and there are no executor fees. What’s more, your beneficiaries have the option to take a cash lump sum or receive an annuity (a yearly income).

4.    Structuring your wealth optimally

There are different ways to structure the legal ownership of your South African and international assets during and after your lifetime. These include the following:

  • Sole name – owning the asset in your name only.  
  • Joint name (applies to tangible assets only, for example, fixed property) – co-owning the asset with someone else.
  • Multiple names (international assets only) – co-owning the asset with more than 1 person.
  • Trust – setting up a trust and placing the asset in the trust.
  • Company – registering a company and holding shares in the company in your personal capacity.
  • Trust and company – setting up a trust and using the trust to fund a company through a loan or issuing shares, with the trust as the shareholder.

These ownership options all have different estate- and tax-planning consequences. The ownership structure determines, for example, how your assets will be distributed after your death, and whether you can make provision for your dependants. To make an informed decision about which ownership option may be best for you, it’s essential to understand the impact of each and to get professional advice.


There are ways to ensure that your family and the people you love benefit from your wealth the way you intended after you pass away


5.     Consider setting up a trust

A trust is a useful estate-planning tool that can help protect your assets after your lifetime for your beneficiaries. By creating a trust, you give someone else – namely the trustees – the power to manage your assets on your behalf to the benefit of your beneficiaries. Different trusts have different purposes, benefits and limitations, so it is important to ask an expert what type of trust (if any) is appropriate for your specific needs and circumstances. For example, a testamentary trust is created in your will and only comes into existence after your death. It is often used to protect the interests and inheritance of minors or vulnerable family members. So, if you have small children, a testamentary trust can provide for their financial needs.

6.    Plan for significant life events

Planning for significant life events helps ensure that your finances and assets are structured optimally for these events and their impact.

Whether these events are predictable and within your control, like getting married, or unpredictable and out of your control, such as being in an accident and becoming incapacitated, putting the right plans in place can help ensure you and your loved ones make the most of your assets the way you intended, whatever happens.

Estate and tax planning can be complex, and personalisation is key
As demonstrated above, there are ways to ensure that your family and the people you love benefit from your wealth the way you intended after you pass away. However, the different legal ownership structures and their tax implications are complex, and what may be a good option for someone else, may not be appropriate for you. Getting expert advice is therefore in your and your family’s best interest. 


Important documents


Want to know more?

Here’s what to do:

  • Contact your wealth manager.
  • Find out more about our fiduciary offering. 
  • If you’re not a client yet and want to find out more about how we can help you, we would love to hear from you. You can contact us on 0800 111 263 or complete an online contact form.