E ST AT E PL ANNING WHY E ST AT E PL ANNING...BE CAUSE L - - PowerPoint PPT Presentation

E ST AT E PL ANNING

WHY E ST AT E PL ANNING...BE CAUSE L IF E HAPPE NS!

BI RT H

CHI L DRE N BUSI NE SS ST RUCT URE S DI VORCE I NSOL VE NCY E MI GRAT I ON RE T I RE ME NT DI SABI L I T Y MARRI AGE OF F SHORE CURRE NT ST RUCT URE S

WHAT IS E ST AT E PL ANNING

 What is it all about ?

1.

Pre se rve , inc re a se a nd pro te c t the e sta te pla nne r’ s a sse ts

2.

E nsure the mo st e ffe c tive a nd b e ne fic ia l distrib utio n the re o f to b e ne fic ia rie s a c c o rding to pla nne r’ s wishe s  Common misc onc e ption:

T ha t it re vo lve s so le ly a ro und the ma king o f a L a st Will a nd T e sta me nt OR T ha t it is pure ly to re duc e e sta te duty



I t is NOT a o nc e -a nd-fo r-a ll a c tivity

 I

t is a lso NOT a ONE

• SI

ZE

• F

I T S-AL L a c tivity

 I

t is a stra te g ic e xe rc ise , whic h invo lve c o mmitme nt fro m a ll the pa rtie s invo lve d.

WHO SHOUL D BE INVOL VE D ?

 A T

E AM:

̶

T he E sta te Pla nne r

̶

T he c lie nt’ s spo use

̶

Ac c o unta nt/ Audito r

̶

Atto rne y/ L e g a l Advise r/ F iduc ia ry Spe c ia list

̶

F ina nc ia l Advise r

AIMS OF E ST AT E PL ANNING

 T

• a c hie ve e ffic ie nt de c e a se d e sta te a dministra tio n

 T

• a ppo int he irs o f c ho ic e a nd distrib ute a sse ts a c c o rding to the c lie nt’ s wishe s

 T

• pro vide liq uidity

 T

• pro vide fo r de pe nda nts a nd pro te c t mino r b e ne fic ia rie s / b e ne fic ia rie s with spe c ia l ne e ds

 T

• minimise impa c t o f ta xe s o n the e sta te

 T

• pro vide fo r future g ro wth o utside the pla nne r’ s e sta te

 T

• de a l with b usine ss inte re sts e ffe c tive ly

 T

• pro vide fo r c lie nt / fa mily’ s uniq ue c irc umsta nc e s

 T

• ta ke a c c o unt o f o ffsho re a sse ts (if a pplic a b le )

 T

• de c ide whe the r c lie nt wa nts a living will

 Minimise c o sts  E

nsure tha t the pla n is pra c tic a l, le g a l a nd e ffic ie nt

E ST AT E PL ANNING – IMPORT ANT CONSIDE RAT IONS



Ac c e pt tha t E sta te Pla nning is a c o mple x ma tte r with ma ny pitfa lls.

 I

t sho uld a lso a lwa ys b e re me mb e re d tha t e sta te duty is a ta x, a nd a s suc h is sub je c t to c ha ng e a nd mo dific a tio n, like a ny o the r ta x.

 E

sta te pla n must b e fle xib le to me e t the ne e ds o f c ha ng ing time s.

RE CE NT T AX CHANGE S T HAT COUL D AF F E CT A CL IE NT ’S E ST AT E PL AN

 VATinc re a se fro m 14% - 15%  Ma ximum E XE CUT ORS F E E inc re a se fro m 3.99% - 4.03% (if VAT

re g iste re d)

 E ST AT E DUT Y inc re a se fo r dutia b le e sta te s above R30m fro m 20% - 25%  DONAT IONS T AX inc re a se fo r do na tio ns above R30m fro m 20% - 25%

̶

do natio ns tax fre e inte r-spo usal do natio ns still availab le

̶

R100 000 annual e xe mptio n still availab le DUT IABL E E ST AT E E ST AT E DUT Y RAT E R 0 – R 30 000 000

20% fo r e ve ry R 1

R 30 000 001 and above

R 6 000 000 + 25% o f the va lue o f the e sta te a b o ve R 30 000 000

T OOL S F OR E ST AT E PL ANNING – T HE L AST WIL L AND T E ST AME NT

 One o f the mo st impo rta nt to o ls  Sho uld b e re vie we d a nd upda te d o n a re g ula r b a sis  Advisa b le to c o nsult a spe c ia list whe n dra fting a will  Pre ve nt I

nte sta te Suc c e ssio n (dying witho ut a will)

 No will – will de la y the winding up pro c e ss, c re a ting ha rdship fo r the fa mily.  T

he Ma ste r ma y re q uire the e xe c uto r to pro vide se c urity – whic h I f yo u ma y c re a te a n unne c e ssa ry c o st fo r the e sta te , furthe r de la y in ha ving to ra ise the se c urity.

Sur vivor / s Rule Spouse and no de sc e ndants T he spouse will inhe r it the inte state e state . De sc e ndant/ s and no spouse De sc e ndant/ s will inhe r it the inte state e state . Spouse and de sc e ndant/ s T he spouse will inhe r it a c hild’s shar e of the inte state e state or R250 000, whic he ve r is the gr e ate st. T he de sc e ndant/ s will inhe r it the balanc e , if any. Both par e nts, but no spouse or de sc e ndants T he par e nts will inhe r it in e qual shar e s. One par e nt and de sc e ndant/ s of the othe r pr e de c e ase d par e nt T he sur viving par e nt will inhe r it one - half of the e state , and the de sc e ndants of the pr e de c e ase d par e nt will inhe r it the r e maining half in e qual shar e s. T wo (2) half- br

• the r

s r e late d to the de c e ase d thr

• ugh his pr

e de c e ase d fathe r and thr e e (3) half- siste r s r e late d to the de c e ase d thr

• ugh

his pr e de c e ase d mothe r T he two half- br

• the r

s will inhe r it one - half of the inte state e state in e qual shar e s [1] and the thr e e half- siste r s will inhe r it the r e maining half of the inte state e state in e qual shar e s. Blood r e lations Blood r e lations in the ne ar e st de gr e e will inhe r it the inte state e state in e qual shar e s.

SUMMARY INT E ST AT E SUCCE SSION

VAL ID E XE CUT ION OF T HE WIL L – T HE WIL L S ACT

 A pe rso n 16 ye a rs o r o lde r tha t is me nta lly c a pa b le o f a ppre c ia ting the na ture o f his a c ts a t the

time o f sig ning the will

 Witne ss – fro m the a g e o f 14 ye a rs, pro vide d tha t he / she is no t inc o mpe te nt to g ive e vide nc e in

a c o urt o f la w

 Wha t do the y witne ss ?  MOST IMPORT ANT RE QUIRE ME NT – AL L the witne sse s and the te stator should be pr e se nt at the SAME T IME , whe n the will is signe d !!!!

NOMINAT ING T HE E XE CUT OR

 Whe re la yma n is a ppo inte d, Ma ste r re q uire s a c e rtific a te fro m a tto rne y/ a c c o unta nt tha t the y

will a ssist with the a dministra tio n o f the e sta te

 Offsho re a sse ts – e xc lude it fro m yo ur SA e sta te , a nd dra ft a will in the fo re ig n jurisdic tio n, a nd

a ppo int a n e xe c uto r in tha t jurisdic tio n

 E

xe c uto r is e ntitle d to the fo llo wing re mune ra tio n:

̶

3.5 % o f g ro ss a sse ts

̶

6 % o n inc o me a c c rue d & c o lle c te d a fte r de a th

̶

PL US VAT @ 15 %, whe re e xe c uto r is re g iste re d a s VAT ve ndo r

IMPORT ANT CONSIDE RAT IONS: MAT RIMONIAL PROPE RT Y RE GIME S

 I

n Co mmunity o f Pro pe rty



Out o f Co mmunity o f Pro pe rty



Ac c rua l Syste m



L ife Pa rtne r

DIVORCE F URT HE R CONSIDE RAT IONS

 Divo rc e o rde r

• 1. Ma inte na nc e spo use
• 2. Ma inte na nc e fo r c hildre n

Pitfa lls:

1.

No mina ting e x-spo use a s b e ne fic ia ry o n life po lic y to c o ve r ma inte na nc e o b lig a tio ns

2.

Ma ke pro visio n in Will fo r a ma inte na nc e trust

3.

I mpo rta nt tha t divo rc e o rde rs a re dra fte d c o rre c tly in te rms o f Re tire me nt Be ne fits. “Ha s to re fe r to pe nsio n inte re st”

DOME ST IC PART NE RS

DOME ST IC PART NE RS (1)  Re se a rc h sho ws tha t mo re tha n 2,5 millio n pe o ple in SA is living to g e the r.  Ma ny o f o ur la ws ha ve c ha ng e d to re mo ve disc rimina tio n o n the b a sis o f

ma rita l sta tus.

 Sinc e 2004 ma ny Co urt c a se s de a ling with this issue  De finitio n o f “spo use ” wa s wide ne d a s fo llo ws: SARS De finition

“[S]pouse ”, in r e lation to any pe r son, me ans a pe r son who is the par tne r

• f suc h pe r

son—

(a) in a marriag e o r c usto mary unio n re c o g nise d in te rms o f the laws o f the Re pub lic ; (b ) in a unio n re c o g nise d as a marriag e in ac c o rdanc e with the te ne ts o f any re lig io n; o r (c ) in a same -se x o r he te ro se xual unio n whic h the Co mmissio ne r is satisfie d is inte nde d to b e

pe r mane nt,

a nd “mar

r ie d”, “husband” or “wife ” shall be c onstr ue d ac c or dingly: Pr

• vide d that a mar

r iage or union c onte mplate d in par agr aph (b) o r (c ) shall, in the abse nc e o f pr

• o f to the c o ntr

ar y, be de e me d to be a mar r iage o r unio n witho ut c o mmunity o f pr

• pe r

ty;

DOME ST IC PART NE RS (2)

 A “spo use ” inc lude s a pe rso n who is the pa rtne r o f suc h pe rso n in a sa me -se x o r he te ro se xua l

unio n whic h the Co mmissio ne r is sa tisfie d is inte nde d to b e pe rma ne nt.

 F

a c to rs tha t ma y indic a te a n inte ntio n o f pe rma ne nc e inc lude :

• par

tne r s living toge the r in the same r e side nc e

• shar

ing the same postal addr e ss and bank ac c ounts

• de pe ndants or

be ne fic iar ie s of the same pe nsion fund, me dic al sc he me and insur anc e sc he me .

• Joint owne r

ship of asse ts

• T

ime pe r iod of r e lationship

• Will whe r

e the par tne r is nominate d as a be ne fic iar y  T

he a sse ssme nt o f whe the r a re la tio nship is inte nde d to la st fo r a n inde finite pe rio d, a nd is thus c o nside re d pe rma ne nt, will b e b a se d o n a re vie w o f a ll the fa c ts a nd c irc umsta nc e s a pplic a b le to the pa rtic ula r c a se .

DOME ST IC PART NE RS NOT PROT E CT E D IN F OL L OWING L E GISL AT ION (3)

 Yo u a re no t pro te c te d i.t.o the fo llo wing :  I

nte sta te Suc c e ssio n Ac t

 Ma inte na nc e o f the Surviving Spo use s Ac t  Ma ke sure tha t yo ur pa rtne r pro vide s fo r yo u thro ug h o the r me a ns / b e ne fits

DOME ST IC PART NE RS (4) - PROVIDE F OR YOUR PART NE R

̶

Dra ft a Will

• Ca te r fo r the “pa rtne r”
• E

nte r into a pro pe r c o -ha b ita tio n a g re e me nt

• tha t de a ls with the b re a kdo wn o f the re la tio nship
• L

ife Po lic y

• Pro vide ma inte na nc e fo r the “pa rtne r”

POL ICIE S: ADVANT AGE S OF BE NE F ICIARY NOMINAT IONS ON POL ICIE S

 Pr

• c e e ds c an be paid to be ne fic iar

y dir e c tly. Be ne fic ia ry do e s no t ha ve to wa it fo r the e sta te to

b e winde d up first.



I f pa ya b le to b e ne fic ia ry - saving on e xe c utor

s fe e s – 3.5 % + VAT

= NOW 4.03 %

 Pro c e e ds o f life polic y will NOT for m par t of an insolve nt de c e ase d e state, b ut will pa y to the

b e ne fic ia ry

DISADVANT AGE S OF BE NE F ICIARY NOMINAT IONS ON POL ICIE S

 I

T O Wills Ac t, if divo rc e d the n the re is a 3 mo nth pe rio d whe re if the c lie nt pa sse d a wa y, the n the e x-spo use will no t inhe rit, if the c lie nt pa ss a wa y 3 mo nths a fte r b e ing divo rc e d, a nd he didn’ t c ha ng e his will, the n the spo use will inhe rit. T hus 3 months “Pr

• te c tion” in the Wills Ac t.

 No suc h pr

• te c tion if e x- spouse is the be ne fic iar

y on the polic y. T

hus Be ne fic ia ry no mina tio ns a re no t a uto ma tic a lly c ha ng e d whe n so me o ne g e ts divo rc e d/ re ma rrie s.

DISADVANT AGE S OF BE NE F ICIARY NOMINAT IONS ON POL ICIE S

 I

f life a ssure d die s, a nd be ne fic iar

y is staying offshor e, impo rta nt to no te tha t pa yme nt o f the

pro c e e ds is no t a uto ma tic a lly e xe mpt fro m e xc ha ng e c o ntro l re g ula tio ns.

 Inhe r itanc e fr

• m the e state of a de c e ase d may be fr

e e ly tr ansfe r r e d to a non- r e side nt o n

pro duc tio n o f the L & D a c c o unt BUT if it is po lic y pro c e e ds thro ug h a b e ne fic ia ry no mina tio n, it do e s no t a uto ma tic a lly q ua lify fo r the e xc ha ng e c o ntro l e xe mptio ns. Co nditio ns ma y the n a pply tha t the b e ne fic ia ry ne e d to fo rma lly e mig ra te b e fo re the y a re re g a rde d a s no n-re side nts fo r purpo se s o f this c o nc e ssio n.

 Nominating a minor

• n a life polic y – b e c ar

e ful on divor c e. I

f the e x-spo use is the le g a l g ua rdia n

• f the mino r c hild, the g ua rdia n will ha ve po we r o ve r the pro c e e ds o f the po lic y. Avo id tha t.

Use a te sta me nta ry trust !

RE AL IT Y CHE CK… ..

 Are yo u b usy g a mb ling ………  I

s yo ur will upda te d, sig ne d c o rre c tly, pra c tic a l ?

 Ha ve yo u pla nne d fo r yo ur uniq ue c irc umsta nc e s ? Do yo u ha ve a pla n ? ?  Ma ke c o nta c t with yo ur fina nc ia l pla nne r,

a nd sta rt pla nning to da y !!

T HANK YOU