Estate Planning: Why Having a Will Matters More Than You Think

Why is it that when we speak about estate planning, the mood shifts and we tend to get this knot in our stomach? Most of us fear death so much that we avoid planning for the inevitable. Unfortunately, by doing so, it often creates chaos and, in many instances, financial stress for the loved ones left behind.

Talking about estate planning does not need to be a stressful conversation. Better yet, it can leave you feeling more confident about how you plan to provide for your loved ones in the future.

Why Is It Necessary to Have a Will, and What Is an Estate?

An estate is the total collection of everything a person owned and owed up until the date of their death — assets, property, money, investments, and debts — that must be legally managed and distributed once they pass away. It becomes a legal entity overseen by an executor to ensure debts are settled and assets are fairly transferred to heirs or beneficiaries.

Your Will is the legal document that appoints a specific executor to handle your estate. It states who the heirs are, how much they should inherit, and any other wishes you may have regarding the distribution of your assets.

If you do not have a Will, you will pass away intestate, and the distribution of your assets will take place according to the Intestate Succession Act 81 of 1987.

So, You Have a Valid Will. What Does This Mean for Your Estate Plan?

Estate planning involves looking at all your assets, liabilities, and policies, and calculating what costs would need to be settled by your estate — for example, executor’s fees, estate duty, and capital gains tax. The heirs nominated in your Will would then inherit the assets or funds after all costs have been settled in the estate, according to the nominated percentages.

What is important for everyone to keep in mind is that, in most instances, we may have life cover that pays out to our spouses and/or children, but we do not always have nearly enough liquidity to settle the costs within our estates. This is where estate planning specifically helps by showing you what costs need to be settled, as well as how best to structure your policies and investments for an optimal outcome.

Estate Planning as a Wealth Creation Tool

Estate planning becomes a highly effective tool for wealth creation — planning not just for yourself, but for generations to come. It allows you to have important discussions around the impact of your trust, business assets, loan accounts, or even the nomination of beneficiaries on your policies and investments.

It is a key part of financial planning, leaving you with peace of mind knowing that you have planned well for your loved ones.

Written by Charney Botes

Practice Specialist | Deon Schoeman and Associates