We often hear of stories where a celebrity has passed on without an estate plan that can help their loved ones know who should get which asset or what should happen after they have passed on.
Estate planning is a way in which you can have control over what happens to your assets and final wishes once you die.
It is can also remove confusion or in fighting amongst your loved ones so that the right people end up with the right things. Yet too many South Africans – 70% of the working population – do not have an estate plan in place. Here is how estate planning can help secure the financial future of the people that matter the most to you in life.
What is estate planning?
In short, estate planning forms a part of financial planning. It is the process of crafting legal documents and having a process in place on what you would like to happen to your assets, children or last wishes to your loved ones upon your death. It also can help you find ways in which your estate duties (a type of inheritance tax) is minimized so that your loved ones are not affected by it. Furthermore, it gives you the power to protect younger beneficiaries’ inheritance. It goes beyond just having a will, but it helps you order every policy or contract you may have that can affect your loved ones after you die.
How does life insurance fit in?
Life insurance is crucial for anyone who wants to improve and protect their loved one's financial future. Should you already have a policy in place, it will form part of your estate planning to make sure that your beneficiaries get the payout that comes from your policy. It also prevents a situation where no one knows about your policy which can leave it to going unclaimed.
Having your life cover policy included in your estate planning is a safety measure that anyone should take, however, it is important to keep in mind that there are certain fees that could affect your loved ones such as an executor fee which can be as much as 3.5%. Speaking to a financial planner can help you wrap your mind around how you can go about protecting your loved ones without them being heavily affected by tax.
The best time is now
Leaving things to the last minute can often come back to haunt us. The best time to start planning is now, even if it means starting with taking out a life cover policy and then moving on to having a will in place. It doesn't matter what type of policies you have or how big or small the assets you have accumulated are. Estate planning is a way in which you can make sure that there will be no fighting or confusion amongst your loved ones when you die. It also gives you peace of mind knowing that no matter what happens to you, the people you care about the most will be taken care of.
