Wills And Estate Planning

Estate planning falls is a vital portion of any financial planning

. However, there is the preconception that all that estate planning boils down to is a will; although a will is an important aspect of estate planning it is not the only component to consider. An estate is and inventory of both your assets and liabilities (the things you own and owe). Therefore estate planning involves the correct management of assets within your estate to ensure that all your liabilities are settled without putting strain on your next of kin. Proper estate planning will ensure that your assets are properly distributed to settle outstanding liabilities once you pass away. The more complex your estate is, the greater the need will be have professional help in putting your plan in order. There are four main phases of estate planning.

The first phase of estate planning is to establish exactly what your assets and liabilities are. When dealing with assets in financial planning they can include traditional property and deemed property. Traditional property can be split into non moveable property such as a house and moveable property such as furniture and a car. Traditional property also incorporeal assets like stocks ad unit trusts and bonds. Deemed property, on the other hand, is an expected lump sum payment through a retirement fund of a life insurance policy. Estate planning for a large estate is best done by estate planning professionals in order for them to document all your property.

Drawing up a list of you liabilities should include any current debts as well as any foreseeable debts you can expect to pay. These liabilities can include your outstanding mortgage or the college fees of your dependant. When drawing up this list, it is also important that you consider tax commitments as part of you liabilities.

Creating this inventory while you are still alive is fundamental if you want to save your dependants from trying to document each and every asset and liability you own. The other benefit is that it allows you to do taxation planning and make the necessary adjustments if need be. Good planning of you estate will ensure that you are only paying the required taxes, in that way leaving as much benefit as possible to your dependants. Inheritance tax can claim a large portion of what your dependants are entitled to. By bringing a professional estate planner on board you can be advised on the best way to optimize your estate for taxation. Creating an inventory is also of value in helping to determine the value of life insurance that you require in order to settle your personal liabilities upon your death.

The second phase in estate planning is creating a will. This is the part of estate planning that people are more familiar with and it is an important part of estate planning. If you die before having made a will (known as dying intestate) the net assets will be divided between your relative using a formula determined by the state; this is only after paying all of you liabilities. The state does not recognise family relationships that may have led you to give more to one dependant than another.

For example, a spouse from whom the deceased is separated but not divorced can claim their share of the estate leaving little to the relatives, individuals and institutions that you may have indented to share your estate with. Having a will reduces the chance of something like this happening and places you in control of your estate.

As circumstances change in your life so you will need to revise you will from then initial document. Your marital status may change and the number of dependants may change too or you may want to include a friend or relative that you had not included in the initial will. The preparation and execution of your will can be handled by a qualified lawyer or accountant or any of the major South African banks for a fee of about R250.

Make sure your will clearly identifies the person that will carry out your will on your passing i.e. the executor of your estate. If you are married, you must factor the possibility that you and your spouse could die at the same time or with a very small time difference. Have a guardian identified in your will in case this happens who will be charged with managing your children's finances before they grow up.

by: Carl Drotsky

POST COMMENT

Renting In A Retirement Facility Vs. Staying In A Mortgaged Home Built-in Appliances- A Kitchen Must-have To China From Ireland: Take A China Holiday From Ireland And Bring The Far East Home Consider Conserving Space With A Mini Kitchen Club Chair Has A Sense Of History And Style Create Delicious Meals With Your Own Mini Kitchen Get Organised With Kitchen Storage Pieces Find The Right Kitchen Trolley Metroflats.com Announces Dragon*con 2010 Promotional Campaign The Rooms In Luxury Homes One Can Enjoy Kitchen Storage - All Kinds Of Options Maximise Minimalist Kitchen Space All In One Mini Kitchen Mini Kitchen - How Beneficial Are They?