Estate planning is more than just drafting a will—it’s about ensuring your loved ones are protected and your assets are distributed according to your wishes. Failing to plan properly can lead to unnecessary complications, financial hardship, and emotional distress for those left behind. Here are six key things you should know about estate planning:

1. Dying without a Will creates chaos

The laws of intestacy distribute an estate when someone dies without a valid will, often disregarding their wishes. This can lead to unintended beneficiaries, disputes among family members, and unnecessary legal hurdles. Failing to create a will causes uncertainty and stress for your loved ones, but proper planning can prevent these issues.

2. Your Will has legal limits

While you have the freedom to distribute your assets as you see fit, certain legal restrictions apply. A will cannot include provisions that are illegal, overly vague, or impossible to fulfill. Additionally, if you fail to provide for a dependent spouse, they may have a legal right to claim maintenance from your estate. Understanding these limitations ensures that your will is both enforceable and fair to your loved ones.

3. Your debt doesn’t disappear

Debt follows you beyond the grave. If your estate lacks the liquidity to cover outstanding debts, the executor must sell assets, such as property or investments, to settle them. When liabilities exceed assets, creditors declare the estate insolvent and take priority over intended inheritances.

4. Death triggers capital gains tax

When you pass away, your estate is subject to capital gains tax (CGT) on any unrealized profits from your assets. Your executor must declare and settle these tax obligations, which are treated as liabilities within the estate. While CGT isn’t subject to estate duty, it can significantly impact the value of your estate, making tax-efficient planning essential.

5. Retirement funds are distributed differently

Unlike other assets, your retirement fund benefits don’t automatically form part of your estate. Instead, they are distributed according to Section 37C of the Pension Funds Act. The fund trustees are responsible for allocating these benefits among your financial dependents, which may not align with your personal wishes. Additionally, the process can take up to 12 months, so if your family relies on these funds, alternative financial arrangements should be considered.

6. Solvency doesn’t guarantee liquidity

A solvent estate means your assets exceed your liabilities, but if those assets are tied up in property or other illiquid investments, your executor may struggle to access cash to settle debts and expenses. This could result in the forced sale of assets intended for your heirs. Ensuring sufficient liquidity in your estate can prevent financial strain and delays for your loved ones.

Final thoughts

Estate planning is about more than just having a will—it’s about ensuring your financial affairs are in order to protect your loved ones from unnecessary hardship. By addressing these key considerations, you can create an estate plan that minimizes legal complications, financial burdens, and emotional distress for those you leave behind. If you haven’t already, now is the time to review your estate plan and make the necessary arrangements for the future.