WHOSE ESTATE IS IT ANYWAY ?

TEN KEY QUESTIONS THAT YOU SHOULD BE ASKING YOUR CLIENT

Tiny 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

divorcebusinessstructures

offshore disabilityretirement

dependentstrust structures

maritalregime

emigration insolvency

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Do you have a strategic estate plan in place?

There is nothing quite like a will for fomenting family dissention”

Van Deventer v Van Deventer SCA Case No 88/06

Do you have a signed, and up to date will in place?

Do you have a signed, and up to date will in place?

By Will● Marital Regime

– In community marriages– Accrual marriages– Permanent relationships (Mac Donald v Young)

● Limited Interests

Usufructs / fiduciary interests

YOUR ASSETS

Do you have a signed, and up to date will in place?

● 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

“A trust is a versatile business and estate planning tool and only one’s imagination limits the purposes for which trusts may be created”.

Professor W M van der Westhuizen:

Are you using the family trust effectively?

Are you using the family trust effectively?

● Some times effectively could mean terminating the trust

● Vesting the CGT gain?

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?

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 for the purchaser and the seller’s surviving family members

Are your buy-and-sell arrangements going to protect you?

1. Agreements not signed

2. Original contracts lost

3. Wrong parties

4. Fixed valuations

5. Outdated values

6. In-community marriages

7. Conflict with will

TYPICAL PROBLEMS

Are your policy beneficiary nominations up to date?

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 liquidity

CGT Calculation

Pre 2012 Budget Post 2012 Budget

Market Value R15 000 000Less:Base Cost R 8 000 000Gain R 7 000 000Less: Primary Res Ex R 1 500 000Taxable gain R 5 500 000

Market Value R15 000 000Less:Base Cost R 8 000 000Gain R 7 000 000Less: Primary Res Ex R 2 000 000Taxable gain R 5 000 000

CGT R550 000 CGT 666 500

The role of liquidity

ESTATE DUTY & LIQUIDITY

Pre 2012 Budget Post 2012 Budget

Estate R15 000 000Less:CGT R 550 000Net Estate R14 450 000Less: R 3 500 000Dutiable estate R10 950 000Estate duty R 2 190 000

Estate R15 000 000Less:CGT R 666 500Net Estate R14 333 500Less: R 3 500 000Dutiable estate R10 833 500Estate duty R 2 166 700

Liquidity R2 740 000 Liquidity R2 833 200

Retirement Fund Benefits

How will your retirement fund benefits be dealt with?

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 questions

1. 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 thoughtful

estate plan is in fact more a continuous transaction due to its complexity and

the extent of the documentation and expertise required.”

Etienne Swanepoel - Webber Wentzel

THANK YOU