Estate planning means making a plan for everything you own which includes property, vehicles, jewelry, stocks, crypto's, intellectual property and anything of value. This includes creating your will, choosing guardians for your estate and setting things up in such a manner which will have the least amount of tax on your estate.
Get professionals involved which comprises of an accountant, an attorney, a financial advisor and your family.
The plan you are putting in place should be practical, legal and efficient.
It starts with an inventory list of all your assets and liabilities. This list should be comprehensive with account numbers, contracts, important documents, contact information and the executor of your will.
A contingency plan puts you in control of what should happen to your assets should you pass away or become incapacitated or have the need for care giving. This also allows your beneficiaries to continue with your affairs. In this process you need to anticipate various eventualities and how to address it.
Estate planning is an on-going process.
Protecting your assets is a key component in estate planning. You want to ensure your beneficiaries are provided for and that estate taxes are covered whilst minimising expenses.
Tools to your disposal includes; your last will and testament, trusts, donations, bequests, using life insurance to assist with liquidity, living annuities and tax structuring.
There is no inheritance tax in South Africa. It does exist in some other countries but here we have estate duty.
Estate duty is what the estate needs to pay and not the person who inherits. The first ZAR3.5 million of the value of an estate is exempt from estate duty. If the estate's value is more than ZAR3.5 million but less than ZAR30 million the portion exceeding it has a 20% estate duty payable by the estate and if it exceeds ZAR30 million it is 25%.
Residents of South Africa are liable for estate duty on assets held worldwide with some exceptions.
In South Africa all assets are taxable which includes real estate, vehicles, possessions, money, savings, investments and business interests.
Estate duty is paid by the executor of the estate using the funds from the estate.
Estate duty must be paid within one year from the date the person died.
It is important to bear in mind that the South African Revenue Service (SARS) and his creditors will be paid first, then the remaining balance of the estate will be paid to the heirs.
After all legal obligations are met, the executor distributes the assets to beneficiaries according to the terms of the will.