Long-term financial security requires you to stick to a plan that sets clear goals, has a strategy to reach them, and keeps you on course when short-term challenges arise. That plan should include provision to pass on the fruits of your success to the next generation. Estate planning is part of an ongoing financial journey, using specific tools and products to help you protect and transfer wealth, creating a legacy to leave to your loved ones.

Build your estate in 3 steps

• Save tax-efficiently
  Your first financial priority is to start an emergency savings fund and contribute to it steadily until you have enough saved to cover 3–6 months of expenses, in case you’re hit by major unexpected costs. It’s also better to start saving for your children’s future and your retirement as early as possible, but once all 3 of those investment priorities are in place, consider tax-free investments (TFIs) to build more wealth into your estate. Returns on TFIs (interest, dividends, and capital gains) are exempt from tax, which boosts long-term growth.
  
  From 1 March 2026, the annual TFI contribution limit has been increased to R46,000, with the lifetime cap remaining R500,000. Unused annual allowances don’t carry forward and exceeding either limit attracts a 40% penalty on the excess.
  
  Tax-free compounding over decades makes TFIs useful for education savings, as a supplement to retirement planning, and as seed capital for intergenerational wealth. You can invest in TFIs through banks, insurers, and unit trust managers, and you’re allowed to hold more than one account, provided that your total contributions across providers stay within the limits.

• Pay off your bond early
  Using any surplus cash to pay off your home loan early can reduce lifetime interest significantly, freeing more future cash flow for investing. While the numbers vary by interest rate cycle and the term remaining on your bond, the principle holds: eliminating expensive or long-term debt is a low-risk way to improve your net worth. It also sets you up for the next phase of your wealth and estate planning journey – investing more aggressively for growth, after careful planning with your financial adviser.
  
  
• Building a legacy
  Once you’re debt-free and your long-term needs are covered, you can concentrate on wealth creation, intergenerational transfer, and philanthropy. Because these investments don’t need to match a specific liability, you have latitude to take more investment risk. Structures like unit trusts, endowments, trusts, and share portfolios can all play a role, chosen and combined to balance growth, control, protection, and tax efficiency.

Endowments

An endowment policy is a long-term investment bundle issued by a life insurer. The returns inside the bundle are taxed at the insurer level, typically at fixed policyholder fund rates of 30% on income and an effective 12% on capital gains, which could be attractive if your marginal tax rate exceeds 30%. Critically for estate planning, you can nominate beneficiaries, and on your death the proceeds would be paid directly to them, bypassing the estate administration process and improving liquidity for your heirs. However, endowment proceeds may still attract estate duty in South Africa (unless they are inherited by a surviving spouse).

Trusts

A trust can help you protect your assets, centralise governance, and manage intergenerational wealth transfer according to rules you define. In South Africa, you might use:

• A living (inter vivos) trust to hold growth assets during your lifetime, for succession and protection.
• A testamentary trust created in your will (vital if you have minor children), so that their inheritance is overseen by trustees you choose, rather than paid into the Guardian’s Fund.

Trusts require careful setup and ongoing compliance related to trustee meetings, accounts, and tax. Nedbank offers trust services – including corporate trusteeship and administration – to help trusts maintain governance, reporting and regulatory compliance over time.

Legacy wealth planning

Legacy planning aligns your structures – will, trusts, beneficiary nominations, marriage regime, life policies – with your intentions, while minimising taxes and delays. Key South African considerations include:

• Estate duty
  An estate worth up to R3.5 million is exempt from estate duty. Currently, the estate is taxed at 20% on the value between R3.5 million and R30 million, and 25% on any portion above that. If a married partner dies, the surviving spouse can later add any unused portion of the deceased R3.5 million estate abatement to their existing R3.5 million abatement. This means that when the surviving spouse dies, they could qualify for a tax abatement of up to R7 million on the estate. In addition, bequests to a surviving spouse and approved charities are also generally exempt from estate duty.
  
  
• Liquidity
  Estates are frozen at death. Ensure there’s enough cash available to settle debt, tax, and executor fees, to avoid forced asset sales.
  
  
• Administration timeline
  Clear, up-to-date documents and an organised asset register speed up the Master’s and executor processes and reduce stress on family.

Nedbank Private Wealth’s Fiduciary Team can help you structure your estate for maximum returns both in life and after death, quantify the costs of winding up an estate, and plan for liquidity.

What to consider when preparing your will, and how to go about it

A valid, well drafted will ensures that your assets pass to the right people, allows you to nominate guardians for minors and appoint an executor you trust, and creates a testamentary trust for children or vulnerable heirs. Without it, the intestate succession rules apply, and the process often becomes slower and more stressful.

• Keep it current
  Update it after births, deaths, marriages, divorces, emigration, or major asset changes.
  
  
• Name the right people
  Carefully consider whom to appoint as your executor and alternate executor, trustees of any testamentary trust, and guardians for minor children.
  
  
• Clarify bequests
  Specify how assets should be divided and consider cash legacies for liquidity.
  
  
• Plan for liquidity
  Consider life cover or liquid assets to fund estate costs, estate duty, and capital gains tax at death.
  
  
• Store your will safely
  Your family and executor must be able to locate the original document quickly. Professional safe custody helps avoid delays.

Nedbank has a suite of specialised wills and estate planning solutions, such as:

• will drafting and safe custody,
• executor and estate administration,
• trust services, and
• comprehensive estate planning with Nedbank Private Wealth.  

Consult a professional estate planner about drawing up your will – not only to ensure that the document is valid, but also for financial planning advice about your estate and assets.