Building Wealth That Outlives You: Estate Planning for the Modern South African Family

Feel free to reach out to PSG Wealth Adviser  Stefan van Rooyen  directly.

Common Estate Planning Gaps in South Africa

Many families only start thinking about estate planning too late — often when it's no longer a proactive conversation. Here are a few areas where even high earners make costly mistakes:

• No valid will: A will is the foundation of any estate plan. Without one, your estate will be distributed according to the Intestate Succession Act, which may not reflect your wishes.
• Not planning for liquidity: When you pass away, your estate may face administrative costs, taxes and debts. Without liquid assets, heirs might be forced to sell off property or investments.
• Unclear guardianship instructions: For parents, naming legal guardians in your will is crucial. Without it, the courts will appoint who looks after your children, without guidance from you.
• Outdated beneficiary nominations: Retirement funds and life insurance policies on which beneficiaries are nominated bypass your estate — make sure your beneficiary nominations are current.

Over a cup of coffee, I could share some ‘cautionary tales’ where overlooked beneficiary nominations led to clients unnecessarily paying extra in taxes and executor’s fees – all of which could have been minimised with proper planning.

Using Trusts, Donations and Wills Strategically

A well-structured estate plan goes beyond just drafting a will. For more complex estates or families with minor children, using trusts can be a powerful tool:

• Testamentary trusts are set up in your will and only come into effect after your death. This can be used to ensure that assets are managed on behalf of children until they reach a suitable age. They are especially useful for protecting minor children or dependants who are not ready to manage an inheritance on their own. You can specify how the money should be used — for education, living expenses, or milestones — giving you some control over how your legacy supports your loved ones.
• Inter vivos (living) trusts are created while you’re still alive. These trusts allow you to move certain assets out of your personal estate. This can help protect them from creditors, simplify the transfer process after death, and reduce estate duty. They’re often used for long-term wealth preservation and can continue to benefit your family across generations.
• Donations of assets during your lifetime can help reduce estate duty and support family needs. For instance, donations to your spouse are entirely exempt from donations tax, and contributions towards a child’s maintenance may also qualify for exemptions -provided they are deemed reasonable by SARS. Additionally, the first R100,000 of property donated each year by a natural person is exempt from donations tax.
• A Last Will and Testament is the backbone for every succession plan. It can be used in tandem with trusts to clearly define your intentions, distribute assets efficiently, and avoid family disputes.

How to Minimise Estate Duty and Capital Gains Tax (CGT)

Estate duty and capital gains tax can significantly reduce the inheritance your loved ones receive — but with strategic planning, the impact can be reduced:

• Make use of the R3.5 million estate duty abatement: This is tax-free and can be doubled for spouses, provided planning is aligned.
• Use trusts to ‘peg’ asset growth: Growth within a trust can limit CGT and estate duty over time.
• Structure your investments tax-efficiently: For example, retirement funds (pension funds, provident funds, retirement annuities, preservation funds) and living annuities fall outside your estate and are exempt from estate duty (get those beneficiary nominations right!).
• Consider life cover for liquidity: Life insurance proceeds can help settle taxes and fees without needing to liquidate income-producing assets.

Wills, Trusts & Peace of Mind

Estate planning is not a one-off task — it’s a living, breathing part of your financial journey. The goal isn’t just to pass on wealth, but to pass it on wisely — with intention, clarity and care. As a certified financial planner, I help clients build estate plans that reflect both their financial goals and family values.

At Paarl Cecilia Square Stockbroking, we’re here to walk the journey with you. If you’d like personal guidance or have questions about wills, trusts, or any part of your estate plan, let’s have a conversation. Together, we can ensure that your wealth serves generations to come.