Estate Planning

The purpose of sucession planning is to ensure that the wishes of a client are carried out and that a client’s chosen beneficiaries benefit on the death of that client in a mnner that is in accordance with their intentions.  Estate planning, which embraces succession planning, is directed at planning around the death of a client and seeks to ensure that succession takes place in a way that minimises taxes and costs, and adequately protects the inherited assets.

The need for a client to have a valid will is also obvious if a client wishes are to be known and implemented.  Furthermore, a client may have decided to make use of “a trust” during their lifetime as part of an estate duty plan., or a client might want to form a testamentary trust on their death.  We must be aware of the requirements necessary for the formation of both an inter vivos and a testamentary trust, and have some knowledge of the provisions of the Trust Property Control Act.

The primary objective of estate planning is to produce a cost-effective plan that is in accordance with what a client, after relevant consultation, wants to achieve.  All of the client’s relevant personal circumstances must be taken into account in considering a plan that is relevant for the client.  The wishes and desires of the client must, therefore be properly incorporated into any trust that the client has established and also the will of the client.  An estate plan must be seen as a plan that caters for the needs of the client while that person is alive, as well as catering for the needs of those whom they wish to benefit on their death.

Most importantly, an estate plan must be commercially sound.  Commercial soundness must always be the overriding guiding principle in any plan, whether estate duty, capital gains tax or income tax is sought to be minimised.

In short we put the client in the centre of the planning process.  Estate planning also should not be seen in isolation from retirement and other planning of a client’s affairs.  All of the needs of a client should be taken into account.  For example we should put the appropriate cover in place in the even of illness or disability and. where applicable, take out business assurance.   We would also take into account the client’s group benefits, as well as savings and investments.

Source: The South African FINANCIAL PLANNING HANDBOOK 2010