When meeting new clients, I often ask, “What would happen today if you had passed away last night?” The usual response is, “I have a signed Will, so I’m covered.”

But Estate Planning is about far more than simply signing a Will. We believe that your Will is purely the implementation of your Estate Plan.

A Will Is Only the Starting Point

I still remember my very first Will. It was offered to me at no cost in my first job in banking after qualifying as a CA. At the time, my greatest assets were Jerry, my Jack Russell x Dachshund, and my new Audi. I also made a few cash bequests to family members. Looking back, my liquidity was minimal at that stage. I remember sitting at the boardroom table with the lawyer, answering his list of questions, yet not once was I asked for my personal balance sheet. My company pension fund and the person I had nominated as my beneficiary did not feature in the conversation at all.

Not knowing any better at that stage, I signed my Will.

Putting Numbers to Your Wishes

Since becoming a CFP® 10 years ago, I have had the privilege of seeing firsthand the value of proper Estate Planning and the difference it has made in my clients’ lives.

Its true value is often seen at the most difficult time, when a client passes away, and the planning they put in place helps provide clarity, support, and peace of mind for the spouse, partner, and family left behind.

I often sum up my approach to clients by saying, “Let’s put numbers to your wishes.” It is simple but effective.

Together, we look at each asset and liability on your balance sheet and talk through what would happen in practical terms should something happen to you.

Will vs Non-Will Assets

Will assets are the assets governed by your signed Will. These are the assets that your nominated Executor deals with. You can leave these assets to specific heirs in your Will. One common misconception is that all Will assets must be liquidated. By “putting numbers to your wishes”, we can determine how much liquidity the deceased estate actually needs. This often means that some assets can remain invested in the market, even though they are frozen in the estate and temporarily inaccessible.

It is also helpful to understand what may be left in the estate after costs and taxes have been settled, so that the residue clause in your Will reflects your intentions clearly.

Non-Will assets are beneficiary-nominated assets over which your Will has no authority, provided a valid beneficiary nomination is in place.

Examples include your retirement funds and your living annuity (pension). It is worth reviewing who your nominated beneficiaries are on these assets and keeping those nominations up to date as life changes.

It is also helpful to understand that, when it comes to retirement funds, the Pension Funds Act applies. This means the trustees first need to identify your financial dependants before considering your nominated beneficiaries, and that process can take time. Knowing this creates an opportunity to prepare a Letter of Wishes explaining, for example, that your nominated beneficiary is your only financial dependant. While the trustees must still do their own investigation, this gives them valuable context.

Because this process can take time, it is so important to ensure that the spouse or partner you live with has cash and investments in their own name to help carry them through while the trustees complete their investigations.

Fortunately for retired clients, a living annuity falls outside the scope of the Pension Funds Act. In practice, this means that the person you nominate as your beneficiary will usually receive the living annuity relatively quickly, often within a month or so. It can also be very helpful to nominate an alternative beneficiary. For example, if you and your spouse pass away at the same time, or your spouse passes shortly after you, that alternative nomination can take effect and bypass the deceased estate.

These are often difficult conversations to have, but they can make an enormous difference when it matters most.

Estate Duty and Tax Planning

As the saying goes, the only certainties in life are death and taxes. Estate Duty brings those two realities together.

One valuable Estate Duty planning tool is to leave your estate to your spouse, which can exempt your net estate from Estate Duty when you pass away. The challenge, however, is one of timing, because when the surviving spouse later passes away, SARS will still collect Estate Duty at that stage.

There are also planning strategies that may help reduce future Estate Duty, including the careful use of trusts, donations, retirement structures and beneficiary nominations. These strategies depend on your personal circumstances and should be considered with your financial planner and tax adviser.

Fortunately, certain non-Will assets, such as retirement funds and living annuities, do not attract Estate Duty.

What About Capital Gains Tax?

Although all assets left to a surviving spouse enjoy rollover relief from Capital Gains Tax, it can still be worth considering whether to use the Capital Gains Tax death exclusion, recently increased to R440,000. This can effectively reset the base cost of Will assets that are liquidated in the estate and passed onto the surviving spouse, which may help reduce the Capital Gains Tax payable when that spouse later passes away.

Practical Steps That Make Life Easier for Your Family

Granting a General Power of Attorney to your spouse or adult children can be incredibly helpful should you ever become physically unwell while still retaining mental capacity. It is worth noting, however, that South African banks will generally only accept their own Special Power of Attorney for bank accounts, so it is important to have this arranged where needed.

I also encourage clients to review and update their digital estate template each year so that online usernames, PINs, and passwords remain current and are stored safely with recent copies of their Will and General Power of Attorney. 

Another simple but valuable step is to keep an up-to-date monthly spending plan that shows how household bills are paid, whether by debit order or EFT. Should the unexpected happen, this can make it so much easier for a surviving spouse or adult children to navigate an already difficult transition with some practical financial guidance in place. 

A Letter of Wishes can also be a thoughtful and meaningful way to communicate your intentions around sentimental items. It gives your family clearer guidance and can help prevent misunderstandings or conflict at an emotional time.

Estate Planning is about the big things, but also the smaller details that can prove so meaningful when a loved one passes away. The overall aim is to have a well-considered Estate Plan that makes an already difficult time a little less stressful for those you leave behind.

Want to learn more?
In this episode of Life Chapters, Money Choices, Maryanne Leicher joins Michael Avery and Kim Potgieter to discuss why a Will is only one piece of a comprehensive Estate Plan, and the practical steps that can help protect your loved ones when it matters most.

Listen Here – A Will is Not Enough