In its simplest form, a Will may be defined as a legal document in which you set out how your possessions are to be distributed after you die. Married couples often choose to draw up joint Wills, while some prefer to have separate Wills.
Estate planning is the process of anticipating and arranging for the disposal of an estate during a person’s life. Estate planning typically attempts to eliminate uncertainties over the administration of the estate and maximise the value of the estate by reducing taxes and other expenses.
However, the ultimate goal of estate planning is determined by specific goals and may be as simple or complex as your needs dictate.
A comprehensive estate plan must address issues such as:
- Protection and management of beneficiaries’ inheritances to ensure that assets are not squandered or misappropriated.
- Fair distribution of assets. This could be extremely important if you have your own business. You might, for example, wish to leave the business to those children who show a business aptitude and other assets of equivalent value to those who don’t.
- The types and ownership of personal assets can be structured in such a way that the effect of Estate Duty and other taxes on the estate and, by extension, on the inheritances of family members, is minimised.
- Succession planning to ensure that your business continues to run smoothly.
- Adequate liquidity in the estate to meet commitments during the winding-up period.
- Establishment of living trust structures to protect assets and address Estate Duty.
To achieve your financial and estate planning objectives, you can draw up your plans to maximise the value of your accumulated assets, both during your lifetime and as a legacy to your heirs. Your Will is the first step in putting this plan together. (Content : ABSA Trust)