Thought of the Week | What is Estate Planning?

A question frequently asked by our clients is: How can I arrange my assets to the best advantage? This question is especially prevalent for our clients who are selling, buying and investing in assets, whether it is immovable property, foreign property, capital investments or shares in companies.

Estate planning, in short, refers to arranging your assets in a way that protects the assets as well as avoids the paying of unnecessary Estate Duty or other taxes. As the term suggests, there is a proactive step involved – you must plan with the options available to you when buying or selling assets.

This of course doesn’t just involve tax benefits, but the estate planning must also allow for the estate planner to still be able to enjoy their estate whilst having access thereto; thus a type of retirement plan to provide for future capital.

During estate planning, flexibility is of the utmost importance because circumstances can change and so does the law. The most important objectives when wanting to plan your estate should be the following:

  • Minimise taxes to be paid – this includes Estate Duty, Donations Tax, Income Tax, Capital Gains Tax and Foreign taxes.
  • Ensure that you do not create unnecessary complications for your loved ones in the future when having to finalise your estate or having to access funds for maintenance.
  • Ensure that the estate remains liquid with the necessary cash flow for payment of property transfer expenses, attorney and other costs involved. This will alleviate financial and emotional stress for your loved ones.
  • Structure your assets in such a way that you do not have to sell off assets in order to settle other obligations.
  • Provide the necessary income and capital for your dependents.
  • Ensure that your estate provides you with capital for your retirement.

There are various estate planning techniques available to ensure that you meet the above objectives. Contact our STBB Estates department estates@stbb.co.za for more information.

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