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Life is known for its uncertainty, and as Benjamin Franklin famously quoted “…in this world, nothing is certain except death and taxes”. Our entire lives are spent accumulating wealth and saving for our futures, or the futures of our dependents. Many individuals overlook specific estate planning necessities such as updating your will, or for that matter having a will in place – and reviewing them regularly, especially when circumstances change – this can lead to tedious and unintended complications for your loved ones.


Essentially, the main purpose of estate planning is to ensure the correct structuring of your affairs and management of assets in co-ordination with the following objectives:

  • Protection of assets
  • Protection of business interest
  •  Proper facilitation of the executor/s of the estate
  •  Flexibility to ensure that future adjustments necessitated by changing financial needs and circumstances can be made
  • Minimising and efficiency of Tax

When drafting an estate plan with your financial advisor, the following factors will play an important role:

An updated Will

An updated will is one of the most important factors of any estate plan. Your will allows you to clearly state your wishes and ensures the proper protection and distribution of your assets.

Marital Regime

Your marital status and regime will have an impact on the distribution of assets at your death. Depending on the marital regime you and your spouse entered upon, the division of assets could create liquidity problems.

“For example, if you were married out of community, as some claims are usually payable in cash, this could lead to your surviving spouse receiving more than you intended, thereby negatively impacting the bequests intended for other beneficiaries.” – Fay Nkosi 

Estate Duty and Donations Tax

Both duty tax and donations tax broadly provide for the same outcome but have different impacts on not only your estate but your heirs as well, and it would be prudent to bear in mind the difference when drawing up an estate plan with your adviser. With the incorporation of a donations strategy into your estate planning, you could, for example, essentially pay estate duty ‘in advance’ to benefit your heirs.

Capital Gains Tax (CGT)

You will be deemed to transfer your assets to your estate at your death, which will have CGT implications. The annual exclusion in the year of death is R300 000. You qualify for a primary residence exemption of R2 million, and R1.8 million on small business assets or an interest in a small business if certain requirements are met.

Any bequests to a surviving spouse will be treated as a transfer at base cost for CGT purposes. This is referred to as a rollover. This means that no CGT liability will arise when assets are bequeathed to a spouse.


When drafting your estate plan you are required to ensure provisional liquidity to compensate for liabilities and taxes, to reduce the risk of having to dispose of assets.

The following assets can be taken into account to determine the liquidity in your estate:

  • Cash
  • Liquid investments
  • Life insurance whereby the estate is the nominated beneficiary.

*Life insurance is one way of providing money to be paid into your estate to ensure liquidity. Domestic life policies are deemed property in your estate.*

” If you have nominated private individuals as beneficiaries, the proceeds will be paid to these beneficiaries directly but will be dutiable in your estate, with the executor being able to claim a proportionate part of estate duty from the nominated beneficiaries.” _Fay Nkosi _


Estate planning is not a once-off event, continuous review and updates should be made, especially in the midst of change, for example, in the event of:

– Divorce
– Emigration
– The addition of dependants
– Acquiring offshore assets
– Disability
– Retirement.

Comprehensive estate planning enables you to structure your affairs according to your wishes and in line with your objectives, leaving you with peace of mind. Estate planning is complex and therefore it is crucial to utilize and obtain professional guidance and advice, ultimately preventing any unintended complications.

*Exerts of the article written by _Fay Nkosi _Read the original article here