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Newsletter 34

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Newsletter 34
Dear Colleague
  
A smile is a gift to someone.
Share your smile with the world.
It is the beginning of peace,
a symbol of friendship.
 
With the anxiety and pressure of election day now something of the past, we can focus on all things positive.  We hope for changes that will be beneficial to all the citizens of South Africa. 
 
To emphasize the importance of staying positive may sound like a cliché, but the physical and mental benefits of a positive mindset have been demonstrated by multiple scientific studies.  It improves one’s mood and reduces among other things, the risk of depression and stress-related disorders. Therefore, be encouraged to focus on the positive, however small. Focus on the present and turn negative self-talk into positive self-talk.  When you wake up, look in the mirror and say:
 
 “Today is going to be an awesome day!”
 
 
WHAT HAPPENS IF THE TESTATOR AND THE EXECUTOR DIE SUMILTANEOUSLY?
 
Read more on this subject in the next edition.
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USING A WILL TO CEMENT LONG-TERM CLIENT RELATIONSHIPS
 
The drafting of a Will is a very personal experience.  Personal information must be divulged and clients must discuss their own circumstances and wishes regarding their personal belongings, even their financial situation. 
 
While drafting and advising a person on a Will, it not only has the potential to protect precious family relationships and save money but can establish a critical advice-relationship between an intermediary and a client. According to David Thomson, Senior Legal Advisor at Sanlam Trust, there are few client interactions as profound in gaining personal information about a client as the drafting of a Will and therein lies the opportunity to cement a long-term client relationship.
 
The experience with Wills is that the contents of some have split families, turned siblings against each other and have led to the wasting of inheritance money on unnecessary court battles. A Will should be drafted in such a manner as to avoid inheritance battles. It is no secret that a well thought through Will plays a major part in anyone’s financial planning. A poorly drafted Will can cause disputes and unimaginable trauma in a time of great sorrow for loved ones left behind.
 
During these discussions where a client must express what they would like to have happen to their possessions after their death and instructions are taken to draft a Will, you as an intermediary have an opportunity to establish the foundation for a long-term relationship with your client.  Not only that, you also have the opportunity to build lasting trust. Thomson explains that these opportunities could further lend itself for discussion on the client’s investment and insurance portfolio – “Thé discussion”.
 
You can use the Will-discussion to prepare the ground for proper estate planning. Thomson says that the most likely solution from an estate planning exercise is pure life cover, to ensure liquidity within the estate to pay executor’s fees, estate duty, debt, capital gains tax and other taxes. This is also a perfect opportunity for you to discuss the possible need for an inter vivos trust and to clearly explain the difference between an inter vivos and a testamentary trust. You will do well to also advise your clients on the returning of the original signed Will for safe custody, like we have emphasized regularly in our newsletters.  It offers them peace of mind to know this document is filed safely.
 
This is also a good time to explain EFBOE’s role as executor and to inform your client that appointing a family member or friend without the necessary expertise, might not be the best decision. Clients don’t always understand the responsibilities of an executor and the effort it takes to finalise an estate, or how time-consuming it can be. In addition, these are factors to consider that might be complicated for the layman.  Clients with loved ones living overseas will have questions about foreign inheritances and exchange control. The exemption from estate duty on retirement funds is also an important aspect of estate planning.
 
Thomson says: “Clients will generally welcome a simple calculation showing their potential exposure to estate duty and capital gains tax and whether they have the means to pay for these expenses and taxes. Most intermediaries have access to a liquidity calculator or software to help them calculate this. The importance of having enough cash available to the estate and the trust set up to, for example, look after minor children, should not be underestimated. Funds may have to be provided for a lot longer than the client initially believes - experience has shown that to be the case quite often. Proper estate planning will give you a much better idea of how to address these concerns.”
 
Any debts and liabilities of a client should be settled when they pass away. There are a variety of insurance solutions for this.
 
The aim is, however, not to overwhelm a client.  The priority should be to prepare the Will and get it duly signed and witnessed.  Some of the other important issues can be prioritised for a follow-up meeting. Thomson says that once an estate analysis and plan has been compiled, most of the work has been done and it can conveniently be used as base to update regularly with updated client information.
 
Source:  David Thomson, Senior Legal Advisor at Sanlam Trust
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BAD FENG SHUI FOR NINA WANG
 
Nina Wang was a property developer and Chinachem owner, the richest woman in Asia.  She passed away in 2007.  According to her Will, her multi-billion-dollar fortune of roughly $10.6 billion went to charity, but her feng shui consultant, Tony Chan, had other plans.
 
According to The Wall Street Journal, he miraculously produced another Will upon Wang’s death.  In it she bequeathed her entire estate to him.  Unfortunately for Chan, he was found guilty by the Hong Kong courts in 2014 of forging the Will.  His only inheritance was a 12-year sentence behind bars.  He filed an appeal Application in 2015 which was unsuccessful. Most likely, Chan didn’t like the feng shui in prison.
 
Until next time!
The “Let’s Talk EFBOE Team
 


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