A Guide to Estate Planning

The book of Isaiah, in particular Chapter 38 verse 1, the prophet Isaiah says to Hezekiah “This is what the Lord says: ‘Put your house in order because you are going to die, you will not recover.’”

It is a wise instruction that one must put their house in order before they depart from this earth. After all, death is certain amongst all people. Even Ahithopel who committed suicide simply because his advice had not been followed, still had the decency to put his house in order before committing suicide.

Sadly, a lot of us today do not plan for a tomorrow that we are absent from. Estate planning must be done by all, no matter how rich or poor. Others may wonder what estate planning is. In terms of the Blacks Dictionary, estate planning is the process of setting up instructions for estate asset disbursement to heirs at the owner/author’s death.

Another legal dictionary, Wex, states that it is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death. Put simply, estate planning is preparing for the management and/distribution of one’s assets in the event of death.

Estate planning must not be confused with estate administration as the latter is mostly to do with the distribution of the assets of an estate after one has passed on. Examples of estate planning include the use of wills, family trusts and donating assets amongst others.  There are many advantages associated with estate planning, some of which are listed below:

• Reduction in taxes

If done correctly, estate planning can lead to lower taxes being payable by an estate. For example, one can donate their house to their child (and retain the right to live there until their death!!) thereby avoiding paying estate duty on that property as it would have ceased to be an asset of the deceased person. Please note that there is a difference between avoiding and evading tax, the latter is illegal. • Minimises conflict and potential litigation

Where one has set out a clear estate plan, the risk of conflict amongst the beneficiaries is greatly minimised as the beneficiaries to an estate are well-defined in terms of their description and the proportion or extent to which they are to benefit would be stated. Whilst even when estate planning has been done, there may still be disputes, the magnitude of such is reduced. • Control over the management and distribution of the estate

One is able to appoint those who will manage the estate and further set out how their property is to be distributed. In instances where estate planning has not been done, the estate assets may end up falling in the wrong hands where the beneficiaries are deprived of any access to it. • Less stress for the owner

Where one’s house in order, they are generally peaceful. It is a sad situation where potential beneficiaries/heirs fight over one’s assets when they are still alive and this only stresses the owner of the estate. However, if one puts a good estate plan in place, such situations may be avoided.  Generally, our culture discourages one from making arrangements in anticipation of one’s death as it is believed to invite undesirable consequences. However, estate planning is very important as outlined above. Even Ahithopel knew better when it came to estate planning!!!!

What follows is a series of the various methods of estate planning, stay tuned!!!!!