6 days Ago
By: Alex Odendaal Estate planning is often seen as something to be done later in life, but it plays a critical role in managing assets throughout one's lifetime. A well-structured estate plan ensures financial security for loved ones, minimises tax burdens, and streamlines the administration process after passing away. Without careful planning, heirs may face unnecessary financial strain and delays in accessing their inheritance.
Liquidity is a key consideration in estate planning, as it ensures that debts, taxes, and administration costs can be covered without impacting the inheritance of beneficiaries, keeping in mind that SARS and the estate's creditors are the first to be paid from a deceased estate before any remaining assets are distributed. If there is insufficient liquidity, assets such as a family home, vehicles, or investments may need to be sold to cover debts, which can leave dependants financially vulnerable. Careful liquidity planning can prevent this scenario by ensuring there are adequate funds available to settle liabilities.
Another essential aspect of estate planning is reviewing beneficiary nominations. Life events such as marriage, divorce, or the birth of children necessitate updates to beneficiary designations to ensure that assets are distributed according to one's wishes. For example, minor children cannot inherit directly under South African law, making it crucial to establish a testamentary trust in a will to manage their inheritance.
Similarly, the distribution of retirement funds is governed by Section 37C of...
Opinion.
