From the estate hub: The importance of estate planning.

What is estate planning?

Meyerowitz (Authority on this subject) defines estate planning as the management, protection and arrangement of a person’s estate assets in such a way that he himself and his beneficiaries, during his lifetime, and his beneficiaries after his death, are assured of the optimum and continued utilisation thereof. What he means by this statement is that each person should fully enjoy their assets, to have his assets protected upon his death and that it is transferred to the maximum to his heirs.

How is it achieved?

The successful administration of an estate begins by the execution of a valid, as well as a practical executable will. The only way to execute a valid will is to comply with the validity requirements as set out in the Wills Act 7 of 1953.  Section 2 (1) (a) of the Wills Act provides that the testator of the will must sign every page. The testator must sign in the presence of two witnesses, who also will have to sign on each page in each other’s presence, including the testator.

The validity of a will may be influenced by undue influence, coercion, an error, age, illness or mental disability. The two witnesses, who signs the will with the testator, must be older than 16 years and must not be named as heirs or executor of the estate.

Article 4 of the Will Act provides the following:

“Every person older than 16 years may draw up a will unless, at the time of the execution of the will, the person is mentally incapable of understanding the nature and extent of his actions. The burden of proof of mental incapacity rests on the person who alleges it.”

A valid will must be feasible, if not it will lead to a very frustrating and delayed administration process. A practical executable will, will be achieved through proper estate planning. The true meaning of estate planning may differ from estate planner to estate planner. Some estate planners focus on estate duty and how to reduce it to the minimum, while others focus on the liquidity of the deceased estate. Liquidity refers to the cash available to pay the administrative costs and liabilities of the deceased estate. A good estate planner will take both aspects into account. If there is not enough liquidity in the estate to cover the costs as mentioned above, the administration process may be delayed and the heirs may be affected. If the problem arises and the estate is in possession of any assets, the assets may be sold to pay the estate’s debt.

A valid will is not the only requirement for proper estate planning, but it’s a good start.

“To know that you don’t know, is more than many others know” – George Bernard Shaw.  You are welcome to meet with our team to ensure that you are informed about effective estate planning.  Contact our Estate & Trust Manager or any of our directors.