Most estate planning mistakes only become apparent after death, when it is too late to correct them. An outdated will, insufficient liquidity, or a poorly structured bequest can lead to unnecessary tax consequences, delays, family conflict, and even the forced sale of valuable assets. Here are ten of the most common estate planning mistakes South Africans should avoid.

1. Dying without a valid will
If you die without a valid will, your estate will be distributed in accordance with the Intestate Succession Act 81 of 1987, rather than according to your personal wishes. This may lead to unintended consequences, particularly for stepchildren and blended families. A properly drafted will also lets  you  nominate an executor and make suitable provision for minor beneficiaries, matters that may otherwise be left uncertain or beyond your control.

2. Using an outdated will
A will drafted years ago may no longer reflect your family structure, assets or intentions. Marriage, divorce, the birth of children, the death of a beneficiary, the sale of property or the establishment of new business ventures should trigger a review of your entire estate plan. An outdated will may remain technically valid, but it could result in your estate being distributed in a manner that no longer reflects your wishes.

3. Failing to comply with the signing formalities
A carefully designed estate plan can unravel if the will is not executed correctly or does not comply with the formalities prescribed by the Wills Act 7 of 1953. Wills should therefore be prepared and signed under professional supervision, particularly where the testator is elderly, ill or physically unable to sign in the usual manner.

4. Treating the will as the entire estate plan
A will governs only those assets and rights that can devolve under it. Retirement-fund death benefits, trust assets and certain insurance proceeds may be dealt with under legislation, contractual arrangements, beneficiary nominations or the applicable ownership structure. Business interests owned by the deceased will ordinarily form part of the estate, although shareholders’ agreements, partnership agreements, or buy-and-sell arrangements may also regulate their transfer or disposal. Effective estate planning therefore requires careful coordination of your will, matrimonial property regime, beneficiary nominations, business agreements, and asset-holding structures.

5. Ignoring estate liquidity
Many estates look wealthy on paper but lack sufficient cash to settle debts, taxes, administration expenses, and cash legacies. In that case, the executor may have to sell a property, business interest or investment that the deceased intended a beneficiary to retain. The Fiduciary Institute of Southern Africa reports that more than 30% of deceased estates lack sufficient cash for their obligations. Life cover can help meet the estate’s liquidity needs, but the policy's ownership, beneficiary nomination, and intended purpose must be carefully structured.

6. Underestimating tax on death
Death may trigger capital gains tax as a result of the deemed disposal of certain assets, subject to applicable exclusions and rollover provisions. Estate duty may also be payable at 20% on the first R30 million of the estate’s dutiable amount and at 25% on the portion exceeding R30 million. A basic abatement of R3.5 million and other permissible deductions may apply. 

Tax planning should form part of your estate plan during your lifetime. Once the estate-administration process begins, it is generally too late to restructure your affairs or take advantage of available planning opportunities.

7. Appointing the wrong executor
The will should nominate a suitably experienced and trustworthy executor and grant that person the necessary powers to administer the estate efficiently. Where a family member is nominated, provision can be made for that person to appoint or obtain assistance from an experienced estate-administration professional.

8. Leaving assets directly to minor children
Minor children cannot manage inherited assets themselves. Without suitable provisions, money intended for a child may be administered through the Guardian’s Fund or under another arrangement that does not match the parent’s original intentions. A testamentary trust can provide controlled management, appoint trustees, and regulate how funds may be used for education, maintenance, and other needs. 

9. Overlooking offshore and digital assets
South Africans increasingly hold foreign investments, overseas property, cryptocurrency, online businesses and digital accounts. These assets may create foreign succession, probate, tax and reporting complications. Crypto assets are also regarded as movable incorporeal property for South African estate duty purposes.

Maintain an updated asset register and obtain specialist advice before using separate wills in different jurisdictions. Poorly coordinated wills may unintentionally revoke or conflict with one another.

10. Failing to organise essential information
Even a well-drafted will cannot prevent delays if the executor cannot locate the original document, title deeds, policy information, tax records, company documents or details of liabilities.  Keep a secure estate file containing your original will, asset and liability schedule, marriage documents, trust and company records, insurance details, adviser information, and instructions for accessing digital records. Do not place passwords directly in the will, as the document may become accessible during the administration process.

Estate planning is not a once-off exercise reserved for the wealthy or elderly. It is an ongoing legal and financial process that should be reviewed following every significant personal or financial change. Proper planning during your lifetime usually costs little compared with the taxes, delays, forced asset sales, and family conflict an inadequate plan may cause. Consult an estate planning attorney today to review your affairs and ensure your estate avoids these ten common mistakes. 

 

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