Estate planning is an integral component of financial planning and management, particularly for individuals with high-value assets such as art, yachts, and other high-value passion investments. These assets require careful consideration when it comes to estate planning. This is especially true for South African citizens who own assets in foreign jurisdictions.
Alfie Bester, Director at Legacy Fiduciary Services, explains, “Estate planning is not just about distributing assets to your beneficiaries when you pass away. It’s about protecting your assets and ensuring that they are passed on to your beneficiaries in the most tax-efficient and streamlined manner possible.”
To effectively structure your estate, it is essential to consider the laws and regulations in both South Africa and any foreign jurisdiction where you own assets. This will ensure that your assets are protected and that your beneficiaries receive their inheritance without any unnecessary delays or additional costs.
Here are a few steps that you can take to ensure that your high-value assets are protected:
Create a will
A will is a legal document that outlines how you wish to distribute your assets when you pass away. It is essential to have a will, particularly if you have high-value assets, as this will ensure that your assets are distributed according to your wishes. It’s important to keep your will up-to-date and to review it regularly, particularly if your circumstances change. Consideration must also be given to whether it is necessary to have a will in each jurisdiction where your assets are located, the provisions of which must not cancel any other will in other jurisdictions.
Consider setting up a trust (inter vivos or testamentary)
A trust is a legal arrangement enabling you as a founder to transfer ownership of certain of your assets to the trustees, who will hold and manage the assets in the best interests of the beneficiaries. Under our law, the founder can also be a trustee and a beneficiary. Establishing a trust can assist with the protection of assets. Your death also does not delay the eventual distribution or use and enjoyment of assets by the beneficiaries.
Cashflow analyses as part of your estate planning
Determining the extent of liquidity required by your executors to settle possible estate duty, creditors’ claims, cash legacies and administration costs are essential, requiring regular review to cater for changing circumstances. Planning now may well prevent the forced sale of assets on your death to cater for the above.
The analysis of shareholders’ agreements and associated buy and sell agreements are also critical in the overall planning process. The shareholders can take out suitable life cover to provide the requisite cash flow and, if structured correctly, enjoy estate duty relief.
Seek professional advice
Estate planning can be a complex process, particularly if you have high-value assets in multiple jurisdictions. It is important to seek professional advice from a suitably qualified professional.
Alfie Bester, Director at Legacy Fiduciary Services, concludes, “At Legacy Fiduciary Services, we understand the importance of estate planning and we are committed to helping our clients to protect their assets and ensure that their beneficiaries receive their inheritance in the most tax-efficient and streamlined manner possible.”