Many people believe that estate planning begins and ends with the signing of a will. While a valid and properly drafted will is essential, it is not a complete estate plan on its own. A will only deals with certain assets and instructions after death, and must be considered together with the client’s trusts, companies, loan accounts, insurance policies, retirement funds, shareholder agreements, family circumstances and tax position. Without this integrated approach, even a well-drafted will may fail to achieve the client’s intended outcome.
A will provide certainty, reduces confusion and gives the executor formal guidance to administer the estate. However, it cannot operate effectively if it conflicts with the broader legal and financial structures in place. Estate planning should therefore not be seen as a once-off signing exercise, but as a coordinated process that ensures all documents, structures and tax considerations work together.
This is especially important where assets are held in trusts or companies. A client may assume that an asset will be dealt with under their will when it is, in fact, owned by a trust or company. A will cannot bequeath what the testator does not personally own. In such cases, the trust deed, trustee appointments, company documents and control structures become critical.
The same applies to business interests. A person may leave shares in a company to a spouse or child, but the company’s memorandum of incorporation or shareholders’ agreement may contain restrictions on transfer, pre-emptive rights or buy-and-sell provisions. If these documents are not aligned with the will, the estate may face delays, disputes and uncertainty when stability is most needed.
Loan accounts are another often overlooked issue. A trust or company may owe money to the individual, and although the underlying assets may fall outside the estate, the loan claim itself may still form part of the deceased’s estate. This can affect estate duty, liquidity and the financial position of heirs. If not properly planned for, the estate may be more complex or less liquid than expected.
Retirement funds also require separate attention. Many people assume that retirement benefits will be distributed according to their will, but this is not always the case. In South Africa, retirement fund death benefits are generally governed by section 37C of the Pension Funds Act 24 of 1956, under which trustees must consider dependents and nominees and allocate benefits fairly. Updated beneficiary nominations are therefore important, even though they may not be binding on the trustees.
Life policies must also be integrated into the estate plan. A policy may be payable to a nominated beneficiary, the estate or a trust, and each option has different consequences. A direct payment to a beneficiary may provide quick financial support, while payment to the estate may assist with estate duty, debts, executor’s fees and administration costs. The correct structure depends on the client’s circumstances and objectives.
Liquidity is often the difference between a plan that works and one that fails. An estate may be wealthy on paper but cash-poor in practice, especially where it consists mainly of property, farms, shares or business interests. If there is insufficient cash to pay debts, taxes and administration costs, assets may have to be sold under pressure. Proper planning identifies these risks in advance and provides practical funding solutions.
Tax planning is equally important. Estate duty, capital gains tax and income tax consequences may arise during the administration of a deceased estate. A will should be drafted with these consequences in mind, but tax planning cannot be done through the will alone. It requires a review of ownership structures, asset values, debt, insurance, trusts and business succession arrangements.
Family circumstances must also be considered. A client’s marital regime, accrual claim, maintenance obligations, divorce order, minor children, blended family or dependent relatives may all affect the estate plan. A simple will may not prevent disputes if the broader family and financial realities have not been addressed.
A comprehensive estate plan should therefore include a review of the will, trust deeds, company documents, shareholder agreements, loan accounts, retirement fund nominations, life policies, matrimonial property regime, tax exposure and liquidity needs. It should also consider who will have practical control after death, how dependents will be supported and whether the executor will have enough information to administer the estate efficiently.
The danger is not that people sign wills. The danger is that they stop there. A will is a cornerstone document, but it is not the entire structure. If the surrounding documents and arrangements are inconsistent, outdated or incomplete, the estate plan may fail to achieve what the client intended.
The message is clear: a will is essential, but it should not be the end of the estate-planning process. Effective estate planning requires an integrated and coordinated approach that brings together the client’s legal documents, financial structures, tax position and family circumstances. When these elements are properly aligned, the estate can be administered with greater clarity, efficiency and certainty.
Disclaimer: This article is the personal opinion/view of the author(s) and does not necessarily present the views of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever, and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken based on this content without further written confirmation by the author(s).