Most South Africans think estate planning means writing a will. It does not. A will is one piece of a broader plan that covers what happens to your assets, your dependents and your business interests when you die or become incapacitated. Without that broader plan in place, your family inherits not just your estate but the legal complications that come with it.
This article explains what estate planning actually involves and when a basic will is enough. It also covers the situations where you need a specialist attorney rather than a bank, an insurer or a generic online service.
What Estate Planning Actually Covers
Estate planning is the structured process of deciding what happens to your assets and your affairs both during your lifetime and after your death. It typically includes a valid will, but it also covers questions of trust structures, life insurance and how your estate will be administered through the Master of the High Court.
For business owners, estate planning extends to what happens to your shareholding and the continuity of the business itself. For parents of minor children, it covers guardianship and how assets will be held for their benefit until they reach maturity.
The goal is twofold. First, to ensure your assets go where you want them to go. Second, to minimise the cost and the time it takes to wind up your estate after your death, while keeping the tax burden as low as possible.
What Happens If You Die Without a Plan
When you die without a valid will in South Africa, your estate is distributed according to the Intestate Succession Act 81 of 1987. The Act sets out a fixed order of inheritance based on your relationship to surviving family members, with no regard for your actual wishes.
Intestate distribution is rarely what people would have chosen. Spouses inherit alongside children rather than in priority, and long-term partners who were never married inherit nothing. Step-children and informally adopted children have no claim under the Act.
The Master of the High Court appoints an executor where there is no will, and the process takes longer than it would have if a will had named one. The cost is also higher. An executor appointed by the Master typically charges the maximum prescribed fee of 3.5% plus VAT on the gross value of the estate, where a will-appointed executor can negotiate a lower rate. On a R5 million estate, that difference alone is more than R200,000 that could have stayed with the family.
When a Basic Will Is Enough
For people with straightforward affairs, a properly drafted will is often sufficient. If you own a home, a car and a few investment accounts and want everything to go to a spouse or to children equally, a will signed and witnessed correctly under the Wills Act will achieve that.
The legal requirements for a valid will in South Africa are specific. The will must be in writing, and you must sign it in the presence of two competent witnesses who are at least 14 years old and not beneficiaries under the will. The witnesses must sign at the same time, in your presence and in the presence of each other. Errors in execution are one of the main reasons wills are challenged or declared invalid.
A basic will is not enough where your circumstances are more complex than a single straightforward distribution.
When You Need an Estate Planning Attorney
There are situations where a will alone is not sufficient and where the advice of a specialist attorney becomes valuable.
Where you have minor children, your will needs to address guardianship and how their inheritance will be held until they are old enough to manage it. A testamentary trust or another protective structure usually makes more sense than a lump sum paid to a young adult.
Where you own a business, your estate plan needs to cover what happens to your shareholding, who has the authority to operate the business in the period before the estate is wound up, and how value will be realised for your heirs. Shareholders’ agreements and buy-and-sell arrangements often need to be aligned with your will.
Where your estate exceeds the estate duty abatement, structuring becomes important. South African estate duty is currently 20% on dutiable estates above R3.5 million, rising to 25% above R30 million. Section 4(q) of the Estate Duty Act allows the unused portion of one spouse’s abatement to roll over to the survivor, giving a married couple up to R7 million in combined abatement. Without proper planning, much of this benefit can be lost.
Other situations call for specialist input. Assets held in more than one country, blended family arrangements and complex trust structures all create interactions that need to be designed by someone who works with them daily.
Trusts and When They Make Sense
A trust is a separate legal entity that holds assets for the benefit of named beneficiaries. In South African estate planning, trusts are most commonly used to protect minor beneficiaries, to hold business interests and to manage estate duty exposure on growth assets.
An inter vivos trust is set up during your lifetime and can hold assets that grow in value outside your personal estate. A testamentary trust is created in your will and only comes into existence on your death. Each option has its own tax consequences and its own ongoing costs to maintain.
Trusts are not always the right answer. The tax treatment of trusts in South Africa has tightened significantly in recent years, and a trust that made sense ten years ago may now be a more expensive structure than holding the assets in your personal name. An estate planning attorney advises on whether a trust adds value in your specific situation, and if so, how it should be structured.
The Cost of Getting It Wrong
Estate administration costs scale with the complexity of the estate and the quality of the planning. A well-planned estate with a valid will, a competent executor and clear instructions can be wound up in under a year at a predictable cost. A poorly planned estate can take years to wind up and can cost the family a substantial percentage of what they were meant to inherit.
The main costs are the executor’s fee, estate duty where applicable, capital gains tax triggered by the death, advertising costs and Master’s office fees. Disputes between heirs add legal costs and delay distribution. Where a will is challenged or declared invalid, the legal fees can run into the hundreds of thousands.
Most of these costs are reducible through proper planning. The executor’s fee can be negotiated down in the will itself. Estate duty can be reduced through the use of section 4(q), liquidity planning and where appropriate, trust structures. Capital gains tax exposure can be mitigated by understanding which assets trigger CGT on death and which qualify for the spousal rollover.
The Most Common Estate Planning Mistakes
The biggest mistake South Africans make in estate planning is not having a plan at all. Roughly seven in ten adults die without a valid will in place, leaving their families to deal with intestate succession at the worst possible time.
The second biggest mistake is having a will but never updating it. A will drafted before a marriage may no longer reflect what the testator would actually have wanted at the time of their death. Major life events such as a divorce, the birth of a child or the acquisition of significant assets should always trigger a review.
Other common mistakes include naming an executor who does not actually have the time or capacity to serve, signing a will incorrectly so that it fails the formal validity test, and assuming that the bank or insurer holding your investments will handle the estate properly.
Banks and insurers typically appoint themselves as executor and charge the maximum prescribed fee. They are not motivated to advise you on whether their approach is the best one for your estate. An attorney with no commercial interest in being appointed gives independent advice.
How Schoeman Borman Can Help
Estate planning sits at the intersection of family law, tax law and commercial law. The right plan depends on the specifics of your situation. At Schoeman Borman, our attorneys assist with drafting wills, structuring trusts, advising on estate duty and capital gains tax exposure, and administering estates after a death.
We work with you to design a plan that reflects your actual circumstances, rather than fitting you into a generic template. Where business interests are involved, we coordinate the estate plan with the corporate and shareholder structure of the business. Where children are involved, we advise on the protective structures that hold their inheritance until they are old enough to manage it.
Our experience across estate planning, family law and commercial law means we can address the full picture, rather than just the document in front of us.
We have branches in Pretoria and Nelspruit and assist clients across Gauteng and Mpumalanga. No matter where you are in the process, we handle every matter with the same care and attention.
Contact us to book a consultation and discuss your estate planning needs.