talk through complexity and impact one component has on another
WHOSE ESTATE IS IT ANYWAY ?TEN KEY QUESTIONS THAT YOU SHOULD BEASKING YOUR CLIENTTiny Carroll - March 2012
Agenda● Glacier Fiduciary Offering● Whose estate is it any way? – The role of wills – The role of trusts – Buy and sell agreements – Policy beneficiary nominations – Retirement fund benefits – Check yourself
Offering : Plan to implementation● estate planning report● will drafting service● administration of deceased estates● professional trustee services● testamentary trusts● inter vivos (family) trust - audits● offshore fiduciary services● business assurance solutions● tax solutions….fixed fee based service
Whose estate is it anyway?● Your assets – your will● Trust assets● Life assurance proceeds● Retirement fund benefits
Do you have a strategic estate plan in place? marital trust dependents emigration insolvency regime structures business offshore divorce retirement disability structuresBack to Main page: link
Do you have a signed, and up to date will inplace?There is nothing quite like a will for fomenting familydissention”Van Deventer v Van Deventer SCA Case No 88/06
Do you have a signed, and up to date will inplace?By Will● Marital Regime – In community marriages – Accrual marriages – Permanent relationships (Mac Donald v Young)● Limited Interests Usufructs / fiduciary interests
Do you have a signed, and up to date will inplace?● The key to the estate plan● Must express the client’s wishes● Must be valid● Must be up to date● Be careful - divorce (3 months)● Consider foreign assets.
Do you use the R3,5 Abatement to best effect?● The abatement roll-over● The type of asset● Loan accounts
Are you using the family trust effectively?“A trust is a versatile business and estate planning tool and only one’s imaginationlimits the purposes for which trusts may be created”.Professor W M van der Westhuizen:
Are you using the family trust effectively?● Some times effectively could mean terminating the trust● Vesting the CGT gain?
Is “your” family trust at risk?There needs to be evidence that such party controlled the trust,And but for the trust he would have owned the assets in his own name.Badenhorst v Badenhorst
Is “your” family trust at risk?● Trustees are obliged to give effect to the provisions of the trust deed.● Perform their duties with care skill and diligence which can be expected of a person who manages the affairs of another.● Exercise their discretion with the necessary objectivity and independence.
Are your buy-and-sell arrangements going to protect you?The purpose of buy-and-sell agreements are to create certainty both forthe purchaser and the seller’s surviving family members
Are your buy-and-sell arrangements going toprotect you?1. Agreements not signed2. Original contracts lost3. Wrong parties4. Fixed valuations5. Outdated values6. In-community marriages7. Conflict with will
Are your policy beneficiary nominations up todate?LIFE ASSURANCE:Policy Contract● May nominate anyone (in community marriages)● Can save executor’s fees● Still part of estate for estate duty● Security cessions
Is there sufficient liquidity in your estate?Liquidity is an essential element of a plan –It is not the plan
The role of liquidityCGT CalculationPre 2012 Budget Post 2012 BudgetMarket Value R15 000 000 Market Value R15 000 000Less: Less:Base Cost R 8 000 000 Base Cost R 8 000 000Gain R 7 000 000 Gain R 7 000 000Less: Less:Primary Res Ex R 1 500 000 Primary Res Ex R 2 000 000Taxable gain R 5 500 000 Taxable gain R 5 000 000CGT R550 000 CGT 666 500
The role of liquidityESTATE DUTY & LIQUIDITYPre 2012 Budget Post 2012 BudgetEstate R15 000 000 Estate R15 000 000Less: Less:CGT R 550 000 CGT R 666 500Net Estate R14 450 000 Net Estate R14 333 500Less: R 3 500 000 Less: R 3 500 000Dutiable estate R10 950 000 Dutiable estate R10 833 500Estate duty R 2 190 000 Estate duty R 2 166 700Liquidity R2 740 000 Liquidity R2 833 200
How will your retirement fund benefits be dealtwith?Saving estate duty● Maximum retirement age removed● Estate duty on lump sum removed● Tables allow for disallowed contributions● The opportunity to skip a generation● Reduce the surviving spouse’s estate duty.
Check Yourself – 10 key questions1. Do you have a strategic estate plan in place?2. Do you have a signed, and up to date will in place?3. Do you use the R3,5 Abatement to best effect?4. Is “your” family trust at risk?5. Are you using the family trust effectively?6. Are your buy-and-sell arrangements going to protect you?7. Are your policy beneficiary nominations up to date?8. How will your retirement fund benefits be dealt with?9. Is there sufficient liquidity in your estate?10. Will the family know what to do?
“A competent plan is not only about wills and trusts and the like but a thoughtfulestate plan is in fact more a continuous transaction due to its complexity andthe extent of the documentation and expertise required.” Etienne Swanepoel - Webber Wentzel