“Estate planning concerns the distribution of monetary and material assets from one generation to the next. This concrete plan is put in place during your lifetime to ensure that your final wishes are honoured by your loved ones.”
An estate includes any real estate, bank accounts, life insurance policies, personal property such as vehicles, jewelry and artwork. It also includes any stock and other securities you may have accumulated.
“Estate planning deals with the flow of assets from one generation to the next and the plans that need to be put in place to ensure, firstly, that your wishes with regards to your assets are fulfilled and, secondly, that it is done in a manner that is as efficient as possible.”
As only those assets you own directly are involved in the wishes expressed in you will, estate planning also needs to deal with and take into consideration those assets you have amassed in any trust and through life cover and pension funds.
An Estate plan deals with both the assets that need to be transferred to your heirs and the assets you will receive as an heir. Included in the process are:
- Your will
- Your trust
- Your life cover
- Your pension and annuity funds
- Your business
“All these must be dealt with in a succession plan that is integrated and well documented.”
How can Estate Planning work for you?
Besides giving direction as to your wishes for the allocation of your assets on your death, estate planning can also help you achieve a number of things:
- It makes you think about and decide who will get your assets when you are deceased
- It reduces the tax to be paid; that is if the transfer of your assets is properly directed
- With an estate plan in place your assets can be distributed faster and more efficient, reducing the legal costs incurred to your beneficiaries
- One can avoid the time and costs associated with the probate process by utilizing estate planning devices such as living trusts and ‘payable on death’ bank accounts
- Estate planning allows you to appoint guardians for minor children in the events that both you and your partner die simultaneously or are both taken seriously ill and are, therefore, unable to administer the wishes of the estate plan
- Through your estate plan you can also appoint trustees who will manage assets for minor children or heirs who are unable to undertake this management themselves. It is important to note that trustees and guardians are not the same and need to be appointed separately. Trustees manage funds and guardians are responsible for taking care of minor children or dependents
In essences, estate planning is an undertaking which has application in life and not just in death. Consider it a life plan which outlines how you want your assets to be managed both while you are alive and on your death. It is the cornerstone of your financial wealth planning.