Did you know that more than 70% of South Africa’s working population don’t have wills? It’s understandable because for most of us, estate planning is synonymous with retirement – that far-off problem you will consider later in life. After all, why worry about your estate when you’re paying a bond, saving for your children’s education, or when you only have a few assets?
According to Paula Walker (CA) SA, a Director and Advisory Partner at the Consolidated Wealth Group, planning for your estate should be one of your priorities, especially if you spent most of your life working hard for your family.
“Estate planning is all about the disbursement of your assets after you die. Most people name their spouse and / or children as beneficiaries, and for good reason. By planning your estate, you are not only securing their financial future, you are also ensuring that you ease their burden during a very painful time,” Paula explains.
The fact is, there’s a lot more to estate planning than meets the eye. Here are five things that you may not know about estate planning.
- Estate Planning is for everyone
The reality is that estate planning is something that everyone should do. By taking steps now, you can keep everyone in your life safe, happy and well-cared for, long after you’ve left this world. There’s no minimum amount of assets that make planning an estate worth it and those with limited assets can often afford to lose the least. So it’s important to plan your estate effectively so that you can pass it on in the most cost effective manner.
- Make sure you have a Will
At its most basic, a will is a legal document that goes into effect when you pass away. It gives you the opportunity to plan your estate according to your wishes and ensures that the process through which your assets are distributed to your beneficiaries is simple and painless. From the disbursement of investments, savings accounts, and selling of your property, a will also covers a range of other issues including distribution of sentimental items and even coming up with the money to pay for your funeral.
- If you don’t plan, it may cost your loved one’s
If you pass away without an estate plan, your assets will be distributed according to state probate laws, without any input as to what you would have preferred. You don’t control what percentage of your estate each beneficiary will receive, much less which beneficiaries will inherit at all. In addition, if you become disabled without an estate plan and you are unable to conduct business due to your incapacity, only a court appointee can sign for you regarding assets in your name.
- It’s important to update your beneficiaries
Divorce, remarriage, children, grandchildren, adoptions and other changes can alter the structure of your family and assets. It is imperative to be well planned, particularly where minor children may be beneficiaries. Make it a rule to check the beneficiaries of your life insurance, will, retirement savings and financial products every few years. Even if you haven’t experienced a major life change recently, it’s good to check where everything stands. In addition, beneficiary designations are often not kept up to date or are just inaccurate. Naming the wrong beneficiary can lead to having to pay more executor fees and taxes so regular checks will help you sort out this out.
- You can always change your Estate Plan
If you plan your estate now, you can always make changes later. If you want to choose or add a new beneficiary, give different amounts of assets to each beneficiary or even add new family members as time goes on, you can do that. Nothing is set in stone.
If you want to truly understand the benefits of planning your estate, it is advisable to work with a financial planner who is familiar with this field. With their education and experience, they will make the process easy for you. This way, you can plan for your estate in an efficient way and ensure that you make the best decisions for your family.