Savings Month is here and as we see every July, many South Africans are taking the opportunity to review their savings habits and behaviours. One aspect that’s often overlooked is that your hard-earned savings gains can easily be undone by failing to pay sufficient attention to estate planning.
“Even if all your retirement goals fall into place as planned, the benefits can be easily undone through a careless estate plan,” says Willie Fourie, head of estate and trust services at PSG Wealth. “An incorrectly worded will or incorrectly used estate planning structure may result in a substantial portion of your lifetime savings going towards paying death duties and capital gains tax.”
He suggests you follow these four guidelines to keep your estate plan on track:
Avoid overly complex structures
A simple but properly drafted will is usually sufficient to ensure a speedy and cost-efficient transfer of assets to your heirs. Local and foreign trusts and companies can also be set up to house assets and make use of the benefits associated with these structures. Be aware, however, of the associated cost of maintaining them in foreign jurisdictions – especially where fees are charged in a foreign currency – as this may quickly negate any savings on estate duty or tax.