If we learnt one thing from the Covid-19 pandemic is that life is short!
That is why it is important to act now and get your affairs in order, starting with an estate plan.
What is “estate planning”
Estate planning, simply put, is the process of arranging and managing your assets during your lifetime so that when you die, your estate is transferred in accordance with your wishes.
Why is estate planning necessary?
Estate planning is crucial if you are married, have been married multiple times, have children from different relationships, have minor or special needs children or support people financially. A comprehensive estate plan will allow the protection of your loved ones from legal issues and financial uncertainty after your death.
In addition, far too many estates have insufficient cash resources that is required to settle the debts of the estate, which can result in severe financial hardship for your dependants and undue delays to finalize the estate.
Main elements of an estate plan
There are two main elements to any good estate plan. These elements include a Will and a Trust.
There is a general misperception that estate planning is simply about “making a Will”. A Will is only one component of a comprehensive estate plan. Matters such as your marital status, maintenance orders in divorce, liquidity, taxes (upon death for example CGT and estate duty) must be considered in your estate plan to ensure that the process of winding up the estate is smooth.
Factors to consider when implementing your estate plan
Factors you need to consider include:
- Ensuring that the structuring of the assets in your estate and your Will are synchronised to make the execution of your wishes feasible;
- Providing for your minor children;
- Providing for children or other family members with special needs;
- Providing for sufficient liquidity in your estate after death;
- Providing for the taxes payable during life and at death, including income tax, capital gains tax and estate duty;
- The nomination of an executor and ensuring that such executor is granted the powers necessary to fulfil the role properly;
- Business succession planning
Make sure you have a Will in place
A proper and well executed Last Will and Testament is the cornerstone of every estate plan.
Digital estate plans
One of the biggest differences in the estate planning needs of older people and the younger generation is the form their estate plans take. Millennials grew up with computers, mobile devices, and the Internet, their lives inexorably intertwined with the world of digital information. As a result, they’re more likely to own digital assets.
With a digital estate plan, you get to decide how all your digital assets — such as your social media accounts, personal photos, and online bank accounts — are handled should you die.
A digital estate plan lists all the important digital assets you have and details who gets to access them, how to access them, and what happens to them after you die.
As your list of digital assets grows and changes, so must your plan. For example, if you update the password on your online bank account, you’ll have to make sure your digital estate plan reflects that change.
The same goes if you change your mind about what you want to happen to your assets, who you want to manage them, or anything else.
Bear in mind that many digital assets, such as social media accounts, have specific rules or procedures you must follow if you want to pass control of them after you die. Not only do you have to take these processes into account when you create your plan, but you also must update your plan if these rules change.
Contact Wim Visser at Pather and Pather Attorneys Inc to secure your estate planning consultation.