Although we do not like to think about it, dying is a part of life, so we have to always plan for it. For this reason, it is important to ensure your investments are aligned with your last wishes, and that they are as tax efficient as possible to ensure your Beneficiaries receive the maximum benefit possible.
Below is a table which shows how investments are treated when you die, including whether they will form part of your estate for estate duty purposes, or if executor fees would be payable on these investments:
As it currently stands, the first R3,500,000 of Estate Dutiable assets are excluded from Estate Duty. Bear in mind that there is Estate Duty payable on any property you own, and this exclusion can very quickly be eaten up by the value of your property/ies alone.
As has been mentioned above, certain investments may pay into your estate, and will be distributed according to your Last Will & Testament. It is therefore extremely important that you ensure that you do have a Will in place, and it is updated according to how you want your assets distributed. Dependent on the size of your estate, and your bequests to your beneficiaries, it may be a good idea to consider putting in place a life assurance policy, with the estate being the beneficiary to cover up to the full value of the estimated executor fees and estate duty payable in order to ensure your beneficiaries do meaningfully benefit from your estate according to your wishes.
Winding up an estate is a very intricate and time-consuming exercise, and this is why we always recommend appointing a professional third party to act as Executor, as opposed to a family member or friend, unless they have the required qualifications and/or experience. It is always a difficult time when a family member or close friend passes away, and if they now have the added pressure of winding up the estate, may be more than the family member or friend can bear and this may cause additional costs to be incurred and the process being prolonged. We have therefore negotiated discounted Executor fees with professional third parties, who may discount their executor fees on a sliding scale, charging as little as 0.50%, dependent on the size of the estate
If you do not have a Will, or would like to update your current Will, let us assist you in putting a valid Will in place as part of our Financial Planning offering, at no extra cost to you. We can at the same time estimate the current payable estate duty & executor fees on your estate, in order to look at the feasibility of putting insurance cover in place to negate the costs and ensure your beneficiaries do receive maximum benefit.
Gareth van der Merwe, CFP®
Director, Private Wealth Manager & Fiduciary Specialist