Page 22 - Waterfall Issue 8 2021
P. 22

Waterfall News

        WHy Risk iT?





            DIY estate planning can cost you




                   By Gerhardt Meyer CFP®, Strategic Technical Manager, PSG Wealth



        With online solutions popping up on your newsfeed

        and promising to crank out an estate plan in under

        30 minutes, you may be tempted to do-it-yourself

        (DIY). After all, you will be avoiding all the costs that

        come with professional assistance, right? Well, going

        the DIY route might cost you more than you think.                       Gerhardt Meyer


        m        any people mistakenly view   wills but, in the process, caused a lot of   situs. In the uK, this results in tax at a

                                            unintended harm and hardship. A poorly
                 estate planning as being
                                                                                rate of 40% for assets over the value of
                 confined to the wealthy.
                 In reality, it is important   drafted will, where the wording used   £325 000, and in the uS, tax at a rate
                                            is unclear or ambiguous, often leads
                                                                                of up to 40% for assets over $60 000.
        for everyone and essential to ensure   to disputes, court actions, unnecessary
        that your loved ones are looked after   delays, and additional costs to the estate.   Should your uS situs assets amount
        and that your estate is transferred   This can easily be avoided if you enlist   to more than $60 000, there will be an
        without unintended consequences.    the help of a professional to draft your   obligation to report the assets to the
        Estate planning is not a ‘one size fits all’   will, ensuring that the language used   Internal Revenue Service (IRS). The cost
        exercise. There are various risks involved,   clearly expresses your wishes and the   of making the necessary filings through
        especially when you attempt to do it   formalities are strictly adhered to.   a uS lawyer is approximately $5 000.
        yourself. Here are some risks to consider.
                                            FAiLURE To UnDERsTAnD               WHy pRoFEssionAL HELp
        LEGAL REQUiREmEnTs                  TAX LAWs AnD                        CoUnTs
        mATTER                              impLiCATions                        South Africa has signed double taxation
        For a will to be valid, the testator (who   Estate planning is, of course, about more   agreements with various countries,
        the will belongs to) must be over the age   than the will itself and is becoming   including the uK and the uS. These are
        of 16 years. The will must be in writing   more complex, with many clients   complex treaties and understanding
        (typed or handwritten) with each page,   externalising assets due to our volatile   the practical tax administration
        including the last page, signed by the   economic and political environment,   practices can be daunting.
        testator and two competent witnesses   making DIY estate planning even riskier.
        who are 14 years of age or older. It is also                            It is often believed that having a
        important to note that any person who   When you undertake estate planning,   single worldwide will is sufficient to
        signs a will as a witness (and the spouse   you should consider who your   deal with South African and offshore
        of any witness) will be disqualified   beneficiaries are and what their needs   assets, but this is not always true,
        from inheriting under that will.    may be, as well as the overall liquidity   depending on the type and location,
                                            of your estate. Assets held in foreign   as well as the value of these assets.
        AmBiGUiTy LEADs                     jurisdictions can have tax and other cost
        To UninTEnDED                       implications, which differ from South   Given the various risks involved in DIY
        ConsEQUEnCEs                        African assets that need to be catered   estate planning and the potentially
        The importance of having a valid,   for. If you, for example, hold assets in the   tragic impact it can have on the
        executable will cannot be over-     uK or the uS, these assets are subject   people you love, it is best to consult a
        emphasised. We have all heard stories   to inheritance tax and/or Federal Estate   professional to ensure peace of mind
        of people who have drafted their own   Tax (FET) under the legal concept of   and a proper estate plan to match.


        20  Waterfall Issue 8   2021
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