Now is the time to recheck your estate


In light of the 2018 Budget Speech, which proposed to increase tax duty from 20% to 25% on the excess duty of estates worth R30-million and more, people need to ask fundamental questions about the legacy they will leave behind.

Discovery Certified financial adviser Claire van Wyk says people need to have an understanding of how their estate will work at death. She shares a personal anecdote by way of explanation:

"We own four properties so far, with little debt and the aim is to accumulate as many as possible as part of our retirement planning. I know we're creating an estate duty problem for ourselves, as all properties are owned in our own capacity to date." I am personally exploring all options for effective estate planning.

This is where you can be proactive, Van Wyk says. There are structures available to safeguard your wealth for your spouse and children, placing assets in a trust (within legal constraints), legacy planning with your business, retirement products such as Discovery’s Retirement and Preserver Plans (exempt from Estate Duty), as well as life policies to provide more liquidity to effectually settle your estate duty debt in the event of death.

What can you do now to protect your legacy?

"If you believe you'll have a net estate exceeding R3 500 000 (R7 000 000 married couple), be proactive and begin planning the most effective way of dealing with your estate," Van Wyk advises. Ask yourself, "Am I protecting my assets in the event of my death? You do not wish a spouse or children to liquidate assets to settle estate duty or debt."  She says that people should assess their balance sheets every year and do a re-evaluation that takes into consideration the annual changes in tax laws.

Then, she says, find the most effectives vehicles within the confines of the law to limit your estate duty liability on death.

Calculating the value of your estate each year may be a daunting and intimidating task. There are many things that go into effective estate planning, especially as the goal posts may shift each year. Van Wyk says that financial planners are experienced in calculating the state duty liability. She shares more insight on the following factors:

Wealth creation and transfers

Wealth creation can be achieved by having a diverse portfolio within a diverse environment. This makes it important to keep up to date with the latest products in the market.

Stay abreast of new structures that will yield better returns, for example endowments which can lower tax in certain cases. Discovery's Endowment Plans offer an upfront boost on lump-sum investments of up to 26%; with 55% of annual administration fees, plus growth, paid back after 10 years and every five years thereafter.

Planning for retirement

Ask yourself: "How much money do I need per month when I retire, and how will I fund it?" Discovery research finds that longevity is having a significant impact on society, and in South Africa less than 6% of the population are adequately prepared for retirement.

Discovery offers flexible investment plans for the affluent with a highly competitive administration fee scale. You can get up to 100% of admin fees discounted based on your Vitality status and the term invested.

Leaving a legacy for your family

Van Wyk believes that an effectively planned estate should be "light, enjoyable, and easy to pick up and continue with" when the original creators are gone. "A legacy is something that outlives you," she adds, and therefore needs to be planned carefully.

She emphasises the importance of a well-structured, up-to-date will which contains the express wishes of the deceased. "If you get it right, an estate is a love story for your family. But if you get it wrong, it can be a terrible burden," she concludes.

So as you launch yourself into the gig economy - make sure you're financially prepared and making the most of every opportunity.

The information in this article is intended for general purposes only. If you have questions or concerns about estate planning, contact a certified financial planner.

Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider. All life assurance products are underwritten by Discovery Life Ltd. Registration number: 1966/003901/06. An authorised financial service provider and registered credit provider, NCA Reg No. NCRCP3555

Recommended for you by Discovery Invest

Funeral cover can help ease your family’s burden when they need it most

Our funeral cover includes a range of value-added options to help ensure that your family and loved ones are well taken care of.

Discovery Life’s Estate Planning Benefit

When you pass away, any money, property and belongings that you leave behind to your family will form part of your estate. Anything bequeathed to your spouse is only dutiable on their death. Your estate is taxable through an estate duty of 20% for estates below R30 million, which becomes payable on the death of the last surviving spouse, if your spouse inherited your estate.

The Estate Planning Benefit provides a lump-sum payout after both you and your spouse have passed away to protect your estate against this tax, while providing a market-first feature of allowing you to access a portion of the payment after the first death.

Learn more about the new benefit from Discovery Life here.

Discovery Life Limited. Registration number 1966/003901/06, is a registered long-term insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555.

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