While we’re in the prime of our lives, most of us don’t like to think about death and dying. But, for those who have dependents and assets, proper estate planning to take care of dependents once we’ve passed on
What is estate planning?
Certified Wealth Manager at Alexander Forbes Financial Planning Consultants, Andrew Auld explains that estate planning translates into the efficient distribution of your assets when you die and helps avoid potential liability issues and other complications.
“It’s a term for a broad range of matters, from a will, a living will, estate duty, capital gains tax, trusts for minors, maintenance or accrual claims, provision for dependents, distributing benefits after a second
marriage, to final expenses and more,” Auld elaborates.
When should you plan your estate?
Regrettably, many people postpone their estate planning until later in life, the first step should be taken as soon as you acquire any assets. This first step is drawing up your first will. “The estate planning process
continues to develop as your circumstances change, with marriage and children for example. As such, it’s advisable to consult a professional who has experience in estate planning to consider the effect of your wishes on those who inherit your assets, especially your relatives,” says Auld.
Why is estate planning necessary?
Planning ahead empowers those who take care of your affairs after your death to carry out your wishes accurately. “Having been involved for more than 20 years in assisting clients with estate planning, I have learnt to never understate the importance of the potential conflict points that can arise among the family left behind if planning
is not done thoroughly.” Auld believes this has become even more relevant with the increase in second marriages. “Don’t dent your legacy with tardy planning of your estate affairs.”
Planning is also needed to address the issue of tax. “Smart planning can help reduce the effect of taxes as well as ensure that there’s adequate cash available to settle taxes and other costs.”
What is the cost of estate planning?
There is often no specific fee charged for this service as it forms part of the holistic financial planning approach rendered by the financial services industry. “Those with large estates who have more complex needs will require more technical competencies. Good advice comes at a cost and fees are in line with those charged by professionals such as attorneys, accountants, trust companies and financial planning businesses.”
Auld cautions that the costs of improper estate planning can be immeasurable.
“Broken family relationships, financial hardship, excessive taxes, family business and partnership effects, to name a few. I have found that the comfort and peace of mind brought to a client when I walk them through the process of what happens in the event of their spouse’s death is helped by the knowledge that cash flow and access to capital are all provided for.”