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Before beginning your estate planning, take a step back and look at the big picture of what you expect it to achieve.

Estate planning is more than just creating a Last Will and Testament.

Having a clear understanding of what you want your estate plan to accomplish helps create focused goals that align with your personal wishes.

Some common estate planning goals include:

• Ensuring financial support for your family
• Choosing the beneficiaries of your estate
• Naming guardians for any dependants and having a financial plan for their support
• Dictating the future management of a business
• Leaving your assets to a charity
• Requesting specific funeral arrangements, senior care, or health care preferences
• Specifying your preferences in the case of a medical emergency or incapacitation

Understanding and maintaining your goals throughout your preparations helps you achieve the outcome you want.

Prior to deciding how you’ll distribute your assets, you’ll need to know what you’re working with. Document all your assets and liabilities in order to determine how much of your estate you can leave to your loved ones.

Create a list of your liabilities

Liabilities are money you owe to another party. Your assets are used to clear any outstanding liabilities before they can be passed on to loved ones. As such, it is important to keep your debt in mind when anticipating how much you can leave to others.

Liabilities can include:

• Credit card balances
• Student loans
• Vehicle loans
• Mortgages
• Home equity lines of credit

Create a list of your assets

Assets are anything you own that has financial value. In your estate plan, you can leave your assets to family, friends, groups, and charities for after you pass away.

Compile a list of your tangible and intangible assets and weigh them against your liabilities.

Tangible assets include material things, such as:

• Land
• Houses and other real estate
• Vehicles (e.g., boats, cars, and motorcycles)
• Personal valuables (e.g., books, jewelry, tools, and household furnishings)
• Collectibles (e.g., art, coins, stamps, trading cards, and antiques)

Intangible assets include non-material things that you can’t touch or hold, such as:

• Bonds, stocks, and mutual funds
• Checking and saving accounts
• Retirement plans
• Life insurance
• Businesses owned

Give special consideration to assets like aircraft, alcohol, boats, firearms, livestock, and pets if you intend to leave them to someone. Any transfer of these kinds of assets will need to follow our government’s laws.

You should also make a note of anything you wish to give to a beneficiary specifically. This helps ensure it won’t be sold to cover any outstanding debts you may have.

Calculate your networth

After creating a list, subtract your total liabilities from the full value of your assets. The remainder is what you have left to distribute amongst your loved ones, also called beneficiaries, in your Will.

Remember that this number can change based on payments you make, assets you sell, or debts you accumulate.

By knowing where you stand financially, you’ll have an accurate view of your residual estate.

A Will allows you to control and communicate how to distribute your estate after you pass away. It’s the document in your estate plan with the most authority, and the segment of the court system that handles Wills and estates uses your Will as a guide when settling your estate.

A Will is also the document you need to appoint a guardian for your minor children, set instructions for your mortal remains, set aside money to care for any pets you leave behind, and leave assets for your beneficiaries. You can also leave instructions stating if you want a testamentary trust to be set up and your assets transferred to it after your passing.

Why is a Will important?

A Will ensures control of your estate stays in your hands and that your wishes are met after you pass away. You can use a Will to specify which of your assets go to family, friends, groups, and charities. It also ensures your minor children end up in the care of a guardian of your choosing, rather than a relative picked by the state.

If you die without leaving a valid will, your estate will devolve according to the Intestate Succession Act, 1987 (Act 81 of 1987) without considering your family circumstances.

What’s an executor and why are they important?

Choosing the right executor for your Will is a challenging but essential decision because they bear a lot of responsibility on your behalf.

An executor is the person who ensures the requests or terms within your Last Will and Testament are carried out precisely as you wish. They’ll often oversee your funeral arranngements as well.

Your executor will:

• Distribute your property and assets to your beneficiaries
• Arrange for debt repayment
• Recover money other parties owe you
• File necessary forms
• File your final tax return
• Act on behalf of your business interests
• Arrange for the correct parties to receive any charitable donations or gifts
• Handle the arrangements regarding your memorial service, remains, etc.

An executor should be someone you can trust, who can bear the weight of the responsibility, and who is willing to act as your representative. They’re often a spouse, friend, or relative.

There’s more to estate planning than preparing a Will for when you’re gone. Creating a Power of Attorney helps you with important matters while you’re alive or if you become critically ill or incapacitated.

A Power of Attorney is a document that gives one or more people (called an attorney-in-fact) the authority to make decisions on your behalf while acting in your best interests.

An attorney-in-fact can handle your banking, purchase or sell real estate for you, make health decisions, sign cheques from your account, and many other matters you specify.

An attorney-in-fact’s authority over your affairs comes to an end when you pass away.

A Power of Attorney is helpful for when you:

• Expect to be out of the country for extended periods of time
• Have a medical condition that affects your ability to make decisions for yourself
• Own a business and are concerned about its operation in the event of your absence
• Wish to set precise limits on the handling of your finances and property if you are ever incapacitated

Choosing your attorney-in-fact is just as important as choosing the executor of your Will. Your attorney-in-fact needs to be a mentally able adult, who is not involved in any bankruptcy proceedings when you assign power to them.

To minimize any conflicts of interest, they also can’t own or work at an extended care facility or nursing home in which you are a resident.

Most importantly, an attorney-in-fact needs to be someone you trust as they will be making important decisions on your behalf.

Organizing your documents helps the execution of your estate go more smoothly when the time comes. Gather copies of all the important documents that you may need for your estate plan.

Important documents may include:

• Marriage, divorce, and separation documents
• Adoption and birth certificates for children
• Property deeds and titles
• Business and investment share certificates

Having these documents alongside your estate planning documents can assist with proving ownership or relationship changes in the event of a dispute.

By laying out clear and legally sound estate plans and having all relevant documentation, you can help to make the process easier and less stressful for your loved ones.

Other documents and information may include:

• Personal details: Family names and employer’s contact information and any relevant family medical information
• Property: All properties or residences (e.g., address, location of keys, alarm system codes), vehicle details, and real estate details
• Health care: Family doctor’s contact information, insurance coverage, allergies, and medications
• Pet care: Dietary restrictions, medications, and schedules
• Financial information: Banking, investments, debts, subscriptions, and tax information
• Essential documents: Birth certificates, IDs, passports, all Wills, Trusts, and Power of Attorney
• Storage and access: Access to personal safes, safe deposit boxes, self-storage units, and electronic devices

Provide copies of your documents for your attorney-in-fact and representatives. You should store copies of your documents in a safe place, such as a safety deposit box or home safe. Also, don’t forget to tell your representatives the codes or combinations to access the documents.

You may also wish to include a list of passwords for your digital accounts, such as:

• Social media accounts
• Bank accounts
• Online business or real estate portfolios

Conveyancers’ bills, executor’s fees, and taxes due to the South African Revenue Services (SARS) when winding up a deceased estate can see beneficiaries come out financially short. Depending on the size and complexity of the estate, it can take a few months to years for the process to reach completion.

These are some of  the fees and taxes that you need to anticipate that your estate will be liable for on your death:

1. Executor’s fees: According to the current regulations, the maximum allowable fee that an executor can charge is 3.5% of the gross value of the assets in the estate, and in addition, the executor is also entitled to a fee on all income earned after the date of death at the current tariff of 6% (plus VAT where applicable).
2. Estate duty: Estate duty is tax levied by the South African Revenue Service (SARS) on your estate after your death. The executor is responsible for paying this estate tax to the government. It is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million. The determination of Estate Duty can be summarised as follows – All Property of the deceased person at date of death.
3. Some deceased estates may also be liable to pay these taxes: Income Tax, Donations Tax, Value Added Tax, Capital Gains Tax, Transfer Duty, etc.