securing the future, protecting the future, protecting loved onesDeath is never easy. Your loved ones are tasked with the job of rebuilding their lives, while burdened with the financial stress that so often accompanies tragic loss. It is essential that you have a plan in place to provide for your family and others that are dependent on you in the event of your death.

The best place to begin is drafting your Will. There are many sites that have the standard template available for download or you can seek out the help of an attorney, bank or financial advisor. In all cases, it is important that your Will is signed and witnessed correctly. It is important that you familiarize yourself with the rules surrounding estate planning and any claims processes associated with various investments.

Tax-free investments

Tax-free investments (TFIs) have a number of advantages. You can save approximately $2200/year and pay no taxes on capital gains, interest, and dividends. Some TFIs have estate-planning benefits since they are structured as a life policy (however there is not usually a life insurance component). A life policy TFI allows you to nominate your beneficiaries when you open an account. They get the proceeds of your investments once the product provider is notified of your demise and there are no executor’s fees.


Endowments are best suited to investors with a marginal income tax rate higher than 30%. This complex product is a useful estate-planning tool. As the investor in the product, you are called the policyholder. As the policyholder, you get to make various nominations. You can define who is ‘life assured’, this is the person on whose life the policy will be issued. This can be you or you can nominate someone else. The endowment ends when the last person on the life assured list dies. Like TFIs, endowments do not usually have a life insurance component.

As the policyholder, you can also nominate beneficiaries who will receive the investment once the last life assured person dies. The money is paid out directly. There are no executor’s fees to be paid, but it forms part of the estate in the calculation of the estate duty. Executor’s fees may apply if no beneficiaries are listed and the investment is paid out to the estate.

Retirement products

Retirement annuities, pension and provident funds and preservation funds are governed by the Pension Funds Act. This Act states that the retirements fund’s trustees are responsible for the allocation of any benefits if you die before retirement. While they will take your nominations into account, they are required to identify and locate your dependents and determine how the benefit will be distributed. This process may take as long as a year to complete.

Living annuity 

If you are invested in an official retirement product, when retire you will have the option of transferring all or part of your retirement benefit to a product that will pay you a pension in retirement, such as a guaranteed or living life annuity. Living annuities allow you to leave your investment to beneficiaries, while guaranteed life annuities stop when you die.

Unit trusts

A unit trust does not require any beneficiaries. The investments proceeds go to your estate once upon death and may be subject to estate duty. An estate valued at more than $256000 is charged a 20% duty by SARS. Your estate’s executor will distribute all of your assets, which includes any unit trust investments, according to the provisions stated in your Will.

Tips for estate planning

  1. Ensure that you Will is up to date. Your Will allows you to decide how your assets are distributed when you die. If there is no Will then the interstate laws of succession apply.
  2. Update all your beneficiaries. Keep your TFI, endowment and living annuity beneficiaries up to date. This ensures that the intended parties receive payment of their benefits.
  3. Keep your retirement fund’s nominees up to date.
  4. Think about your immediate needs and plan for them. Funeral costs may require money that your loved ones do not have access to.
  5. Share your plan with your loved ones. Talk to the people involved. Your dependents, beneficiaries, and nominees need to know about any administrative requirements to ensure that the entire process runs as smooth as possible.

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