Important aspects of estate planning

What is the most important aspect of estate planning for my wife and children?

Name withheld

Gerhardt Meyer, a financial adviser and the head of technical support at PSG Wealth, responds: Consideration should be given to the maintenance of your spouse, adequately providing for your children, and the overall liquidity of your estate to ensure that your wishes can be carried out as intended.

If you have minor children, it is important to protect their inheritance to avoid it being held by the Guardian’s Fund until they reach the age of majority, if you and your spouse pass away at the same time. It is crucial to appoint a guardian for them, and if use is made of a testamentary trust, careful consideration should be given to who you appoint as trustees of the trust, as they will ultimately manage your children’s inheritance until they reach majority (or the age you select for the trust to come to an end).

Working with a qualified estate planner is essential to avoid any mis-wording or unintended consequences. outstanding debt, particularly the shorter-term, high-interest rate types of debt, such as credit cards and revolving credit.

If that is not an issue (that is, you have cleared all your shortterm debt, including store cards), analyse whether your level of life, disability and critical illness cover is sufficient to meet any future hazards. Once these are addressed, consider additional investments aligned to your financial goals.

The term of any investment will determine which type of investment and asset classes should be considered.

Nothing prevents you from making additional contributions to your RA, as you will be able to benefit from such contributions at retirement.

If your expected investment term is long, you can also consider a tax-free savings account (TFSA). With a TFSA, you can contribute R3 000 a month up to R36 000 annually (with a lifetime limit of R500 000), with the benefit of not paying any tax on the returns. Any excess savings may then be allocated to a voluntary investment product in line with your risk profile and risk tolerance. I advise that you discuss your needs, allocations and fund selections with a qualified financial adviser. must be used in line with their official zoning. This includes freestanding homes, townhouses and blocks of flats. It is illegal to conduct a process or activity on a property when it is not legally zoned for that process.

The National Building Regulations do not require portable fire extinguishers in a freestanding home, so this adds to the fire risk if chemicals are stored inappropriately, particularly in an adjoining garage. Aligning to your building’s occupancy status and ensuring safe storage are musts, including for your own safety. Check with your adviser whether there are specific items you are concerned about storing.

Generally, if you store items safely and in accordance with the law, you should be covered, but cover must match the true replacement costs of the items you are insuring, including the structure of your garage and home. is not always true. Pay too much for your initial investment based on valuation, and you are likely to wait a long time to see growth on your investment.

There are costs to buying into prevailing narratives, and those who are serious about building wealth in the long term will realise that a sound investment strategy has several facets.

Avoiding a share simply because its price has not performed “well”, or selling it because it has “not done as well” as some others, is a precarious strategy. At any given time, a well-structured, diversified portfolio will have parts that are working and parts that are lagging.

The best investment decisions are based on a sober assessment of fair value, and they take various future scenarios into account, knowing that things rarely pan out exactly as predicted. and they invest in shares that should increase in value over longer periods, usually five to 10 years.

“Microscope investors” prefer to look at daily details. They believe that trading very actively holds the key to good returns. Shares are bought with the intention of generating quick returns, and this type of investor’s main goal is to outperform the market over the long term.

Microscope investors need to know what they are doing, though. This strategy needs commitment and hard work. In my experience, only a small number of people – usually financial professionals – can pull this off.

The thing to be careful of is having a telescope strategy with a microscope mindset. If you are a long-term investor, it is important not to panic about daily market fluctuations.