Why beneficiary nomination is critical to your estate plan

AN essential component of estate and succession planning is ensuring that your beneficiary nominations are accurate and reflect your wishes. A well-considered nomination not only avoids confusion but can also reduce estate costs and expedite the transfer of assets to your loved ones. Here’s what to know:

- ALEX ODENDAAL

Life policies

Life policies are effective estate planning tools, especially when it comes to creating liquidity in one’s estate and providing for dependants. However, the efficacy depends heavily on correct beneficiary nomination. For instance, if the purpose of a life policy is to create liquidity in the estate, it would be advisable to nominate your estate as the beneficiary. This will ensure that the proceeds of the policy are paid directly into your deceased estate, thereby making funds available for settling debt. That said, keep in mind that the proceeds of life policies are considered deemed property in one’s estate and will be subject to estate duty, subject to a number of notable exceptions.