AN ESSENTIAL part of financial planning should include a strategy to protect your assets for your heirs. When you die, Sars, the courts and government all might want a piece of the pie.
Many believe that estate planning is more about avoiding estate duty, but it encompasses all the relevant values of one's assets and liabilities at a given time. From this information, an individually customised and suitable plan needs to be developed. The plan should also be flexible to ensure that future adjustments resulting from changing legislation, financial situations and or family needs, can be made.
An estate plan should take into account the will, trusts, life policies, the need for liquidity - in case of a need to pay capital gains tax, executors fees and estate duty, assets and liabilities and shares or investments as well as any surety's which may have been signed. Efficient planning will keep estate duty to a minimum.
If you do not plan properly, it could cost up to 30percent of your estate on expenses and taxes. Estate planning is often overlooked when more emphasis is placed on investment strategy and creating wealth. However, estate planning forms one of the supporting pillars of a sound financial plan.
E state planning is more about achieving the goals set during one's life and beyond. Having a will is but one part of it . Ensure that there is sufficient liquidity in the estate . A trust is not always the answer to everyone's circumstances, but before forming a trust or terminating one, talk to a professional.
l Bryan Hirsch is a director of Pioneer Financial Planning. Visit www.pioneerfinancialplanning.co.za