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Rather Leave Tax Planning to the Experts

By David Thomson, 9 February 2021

If you think that tax planning is technical, you’re right.

With this in mind, David Thomson, Senior Legal Adviser at Sanlam Trust, says nothing beats good advice when it comes to your options. So, do ask your best friend or cousin how to go about it... provided he or she is a qualified financial adviser who knows the tax regime and understands how regulations can affect your estate.

The COVID-19 pandemic and lockdown have resulted in thousands of job losses due to retrenchments, as well as the collapse of many businesses, so consumers need good advice now more than ever. More than 70% of working South Africans do not have a will which compounds the confusion and uncertainty brought about by lockdown, Thomson adds.

“For many people, their life expectancy has been cut tragically short due to COVID-19. Putting off executing a will and engaging in estate planning is short-sighted. Every day we hear of people who have passed away due to COVID-19 which significantly aggravates the situation for those who are already vulnerable, in poor health, obese or with so-called ‘comorbidities’. The time to act is now,” says Thomson.

Below, Thomson shares some important questions your financial adviser should be asking you to establish how to structure your estate in the most effective manner.

Questions Your Financial Adviser Should Ask

  • Are you married and, if so, is it in community of property or not? Or, if you are recently divorced, have you changed your will and beneficiary nomination on all your policies to reflect your current needs and wants?
  • Do you have children and other dependants who rely on you for financial support, and have you considered guardians for your minor children if you have any?
  • Can you give me a copy of your last will and testament? If no will exists, ask your financial adviser to prepare one for you. Failure to have a will means failure to plan from day one.
  • Have you considered a trust for special needs or disabled beneficiaries?
  • Have you considered whether you will have enough liquidity at date of death to ensure the proper finalisation of your will?
  • What is your taxable income and income tax rate?
  • What are your total assets and debt (both long- and short-term debt)? Your financial adviser should also obtain your insurance portfolio and beneficiary nominations.
  • Are you a member of a retirement fund, when do you intend to retire and what will you need as far as income is concerned at that time? Your financial adviser should acquire the details of the type of fund and the benefits in monetary terms. They should also ensure that your nomination forms are up to date as your circumstances might have changed.
  • Are you planning to emigrate?
  • Your adviser will discuss your lifestyle preference and attitude towards tax to ensure this is considered when offering advice.

Tax and Regulatory Changes

Retirement funds, which include pension, provident and preservation funds, all provide tax-exempt ‘roll-up’ which means taxpayers enjoy tax-exempt growth in their portfolio and have the right to deduct certain contributions for tax purposes. Endowment plans also provide tax-exempt proceeds on the maturity of the investment. Thomson advises that the best way to protect your estate from the taxman is to ensure that you file your tax returns on time to avoid penalties and interest.

Your financial adviser will also be aware of any tax and regulatory changes which could affect your estate. Thomson advises that considering the fiscal shortfall the government of South Africa finds itself in, there may possibly be an increase this year in the rates of estate duty, donations tax and capital gains tax as recommended by the Davis Tax Committee. “We anxiously await the Minister’s Budget Speech in February,” he adds.

Get Expert Advice

“Effective tax decisions must give rise to effective estate planning – which means that your estate actually passes to the people you want to benefit and not into a structure that your heirs find costly and burdensome,” concludes Thomson.


Sanlam Life Insurance is a licensed financial service provider.
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