Reduce Estate Pain - for the rich ...

Death and taxes, we know, are two certainties in this life. Still may of us shy away from talking about and planning around our own financial affairs at death. Why should we do that anyway?

The pain for the ones that you leave behind is intense enough(even though relationships might have been far from perfect). So how do you reduce the estate pain from a financial perspective?

Let us take a certain scenario: you have assets of R254 million with R50 odd million linked to pension funds or similar products. You have shares worth R140 million, property worth R50m (including cars and furnitire etc) and R14m in cash or 'near cash' instruments. You have a spouse and independent children. Your estate duty at your death will amount to about R40m.

This immediately leads to a few problems - one of course is liquidity - say you have R140 million in shares, your executor may go ahead and sell say R40m worth of shares to cover the shortfall.

A solution may be to leave everything but about 4 million to your spouse. Now the estate duty payment is postponed to after the death of the spouse. The challenge now is that all control goes to your spouse - your money may not get to your children eventually.

Forming trusts may assist, but what pitfalls are here? Life assurance alone will not solve the problem (it may assist). Leaving money to your children will have their own challenges, particularly divorce and possible legal claims related to the work/occupation of your children.

If you want independent, objective advice that you pay for please call Hansie Louw 0861 130 000 or 082 773 4022. The investment of five interest on your estate duty you could solve many of your challenges related to your estate. You could also mail to hansie@anamcara.co.za