YOUNG ADULTS SHOULD START BUILDING THEIR FUTURE BY STARTING WITH ESTATE PLANNING AS SOON AS POSSIBLE

by Nandi Sauer


In South Africa, the new trend amongst young adults is to believe that estate planning is only for the old, rich and famous, but in fact, it is not. We believe that the sooner they start planning their estates, the better. A proper estate plan will guide them in building their estate the right way from the start. It is important to plan ahead before they are distracted by the matters that come with being old, rich and/or famous.

Wealth Masters

One of the main reasons why young people think that estate planning is only for old and rich people is due to the fact that they are of the opinion that they don't have any assets, so why should they bother with estate planning? Why should they go through the effort of setting up wills and trusts that go along with estate planning? This is certainly the wrong way of thinking, because young adults who are married, have a good job, are saving up to purchase their starter home and are planning to start a family, should definitely start planning today.

Young adults should consider the fact that they now have other people to think about and to make provision for, including spouses, children, parents or siblings and most importantly, creditors and entities such as SARS. In estate planning there are different tools that can assist you in making provision for the above mentioned people.

One of these tools includes the setting up of a Last Will and Testament. Young adults who have started a family might have a minor child to consider for at least the next 18 years of that child's life. By creating a Last Will and Testament, a guardian for this child and/or future children can be nominated to ensure that the child will be in the care of someone trustworthy if anything were to happen. By not making provision for the appointment of a guardian, a young adult is leaving the difficult decision of who will care for the child in the hands of a state entity who has never met the child, nor the family. As mentioned in numerous Times newsletters, a minor child will also not be able to inherit in his or her personal name, therefore it is important to make an alternative provision in a will, by bequeathing what was intended for the minor child, to a trust instead.

A living will is also seen as a tool for estate planning. This is a legal document that states the type of medical treatment a person would like their medical practitioner to follow if they are unable to express their wishes themselves, either because they are terminally ill or permanently unconscious. We are of the opinion that this document can play a big role for newlyweds. Should a young adult be in this situation, the spouse would have to face the difficult decision of the type of medical treatment which is best for their spouse and the new household. Taking into consideration that the parents might still be in the process of accepting the marriage and the fact that the spouse's opinion should also be taken into consideration. A living will is the best tool to assist the spouse and parents in this difficult decision.

The most important tool for estate planning for young adults will be to set up a Trust as soon as possible. As mentioned before, this trust will make provision for the inheritance of minor children when the will is drafted in such a way that an existing trust is an heir, but this is not the only benefit the trust will have for young adults.

Young adults are known for taking more risks than the older generations and they don't always realise the value of the little they do have or the assets that they will still add to their estates as time passes. To create a trust while they are still at the stage of building their estate, will ensure that the trust is in place to purchase any assets directly in the trust, and in this way, fees and transfer costs can be saved, due to the fact that assets are not first bought in their personal names and subsequently transferred to a trust, creating double the costs. The assets will then be protected from day one, where in some instances, older people only realise the protection a trust can bring when something happens in their life that places their assets at risk. Should a person be in the middle of any insolvency process, it will be too late to move assets from their personal names into a trust, because this will be seen as an act of insolvency.

They say that prevention is better than cure and we agree. For young adults to do estate planning at an early stage in their lives, they can ensure that the necessary firewalls are in place to protect their assets and make provision for their families, when they are no longer there.




 
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