Frequently Asked Questions

A retirement annuity (RA) is a long-term savings vehicle designed specifically for retirement. It is one of the most tax-efficient ways to save for retirement available to South Africans, particularly those who are self-employed or do not belong to an employer-sponsored pension or provident fund.

Here is how it works:

• You make regular or ad hoc contributions to the RA
• Your contributions are invested in a range of underlying funds according to your chosen investment strategy
• Contributions are tax deductible up to 27.5% of the higher of taxable income or remuneration, capped at R350,000 per tax year
• Investment growth inside the RA is largely free of income tax, capital gains tax and dividends tax while still invested
• You can access your RA from age 55, at retirement, you may take up to one third of the fund value as a lump sum (the first R550,000 is tax free), and you must use the remaining two thirds to purchase an annuity income
• Until retirement, the funds are locked in and protected from creditors

RAs are regulated under the Pension Funds Act and are subject to Regulation 28, which limits exposure to certain asset classes to manage risk.

A living annuity and a life annuity (also called a guaranteed annuity) are the two main options for converting your retirement savings into an income. They work very differently:

Life annuity: You hand your capital to an insurer in exchange for a guaranteed monthly income for the rest of your life (and optionally your spouse’s life). The income is guaranteed regardless of how long you live or how markets perform. However, when you die, the capital is gone. There is nothing left for your estate or beneficiaries (unless you selected a with-profit or joint life option).

Living annuity: Your capital remains invested in your name. You draw an income at a chosen rate. If you die, the remaining capital passes to your beneficiaries. However, there is no guaranteed income so if you draw too much or returns are poor, you can run out of money.

The right choice depends on your health, life expectancy, income needs, estate planning wishes, and risk tolerance. Many retirees use a combination of both: a guaranteed annuity for essential expenses and a living annuity for flexibility and potential estate value. An Ambiton adviser will help you make this critical decision.

When you leave an employer, a preservation fund allows you to transfer your pension or provident fund benefit and preserve it for retirement rather than drawing it out and paying tax. It's one of the most commonly overlooked planning opportunities we see.

Both are employer-sponsored retirement vehicles. The key differences lie in how contributions are taxed and how benefits are paid out at retirement. A pension fund restricts cash withdrawals to one third at retirement; a provident fund historically allowed the full benefit in cash, though legislation has aligned these more closely in recent years. 

The two-pot retirement system was introduced on 1 September 2024 and fundamentally changed how South African retirement fund members can access their savings before retirement.

Under the two-pot system, all new contributions to retirement funds (including RAs, pension funds and provident funds) are split as follows:

• Savings pot (one third of contributions): Accessible once per tax year before retirement, with a minimum withdrawal of R2,000. Withdrawals are subject to income tax at your marginal rate and require a SARS assessment
• Retirement pot (two thirds of contributions): Locked in until retirement. Must be used to purchase an annuity at retirement (subject to the usual one-third/two-thirds rules)

In addition, a “seed capital” amount of 10% of your fund value (capped at R30,000) was moved into your savings pot on 1 September 2024, giving immediate access to a portion of existing savings.

The two-pot system is designed to reduce the problem of South Africans cashing out their full retirement savings when changing jobs, while providing a limited safety valve for financial emergencies. If you are considering accessing your savings pot, speak to an Ambiton adviser about the tax implications and the long-term impact on your retirement savings.

The tax benefits of a retirement annuity in South Africa are substantial and operate on three levels:

1. Tax deductible contributions: You can deduct RA contributions of up to 27.5% of the higher of your taxable income or remuneration, capped at R350,000 per year. This reduces your taxable income in the year of contribution, providing an immediate tax saving
2. Tax-free growth: While your money remains invested in the RA, returns are not subject to income tax on interest, capital gains tax on growth, or dividends withholding tax on dividends. This allows compound growth to work more efficiently over time
3. Tax-free lump sum at retirement: At retirement, the first R550,000 of your total retirement fund lump sum is tax free (across all retirement funds combined, over your lifetime). If you have not previously made a withdrawal, this full amount is available

Any unused contributions (where your contributions exceed the annual deductible limit) are carried forward to future years and can be used to increase your tax-free lump sum at retirement. This is a valuable benefit for high earners who contribute above the annual deduction cap.

In most cases, no. Retirement annuity funds are locked in until you reach the minimum retirement age of 55. This is a key feature of the product i.e: the restriction protects your retirement savings from early depletion.

The limited exceptions where early access may be possible include:

• Emigration: If you formally emigrate from South Africa and your tax residency changes, you may be able to access your RA after a three-year waiting period, subject to tax. Note that the rules around financial emigration have changed significantly since the introduction of the new exchange control framework in 2021
• Terminal illness or disability: Some funds allow early access in cases of severe illness or permanent incapacity, subject to fund rules
• Small fund withdrawal: If the total value of the RA is below R7,000, a full withdrawal may be permitted

If you are considering early withdrawal or have questions about your specific circumstances, speak to an Ambiton adviser before making any decisions because the tax consequences of early withdrawal can be significant.

The proceeds of a retirement annuity on death are not governed by your will. Instead, they are distributed at the discretion of the retirement fund trustees in terms of Section 37C of the Pension Funds Act.

The trustees are required to identify all financial dependants of the deceased which may include a spouse, children, or other persons who depended on the deceased for financial support and distribute the proceeds equitably among them.

Your nominated beneficiary form is an important guide for the trustees, but it is not legally binding.

This means it is critically important to:

• Keep your beneficiary nomination form updated with your fund administrator
• Ensure the form accurately reflects your current dependants and their financial circumstances
• Communicate your wishes clearly to your financial adviser so they can assist your family through the process if needed

RA death benefits paid to dependants are generally not subject to estate duty, which is a significant advantage compared to assets that form part of the deceased estate.

Both a retirement annuity (RA) and a pension fund are retirement savings vehicles that offer tax benefits, but there are important structural differences:

• Membership: A pension fund is employer-sponsored so you belong to it through your employer. An RA is an individual product that anyone can take out, regardless of employment status. It is particularly useful for the self-employed, business owners, and employees who want to save more than their employer fund allows
• Contributions: Pension fund contributions are made by the employer and employee as a set percentage of salary. RA contributions are flexible meaning you can choose the amount and can vary or pause them
• Regulation 28: Both are subject to Regulation 28, which limits exposure to equities, offshore assets and other asset classes. RAs may have slightly different limits depending on their structure
• Access on resignation: When you leave an employer, you can access your pension fund (subject to tax). An RA cannot be accessed before age 55 regardless of employment status
• Retirement: Both allow a one-third lump sum at retirement with the balance used to purchase an annuity income

Many people contribute to both an employer pension fund and a personal RA to maximise their retirement savings and tax deductions. An Ambiton adviser can help you determine the right combination.

A retirement annuity and a provident fund are both retirement savings vehicles, but they have historically differed in how benefits are paid out at retirement:

• Pension fund and RA: At retirement, you may take up to one third as a lump sum and must use the remaining two thirds to purchase an annuity income
• Provident fund: Historically allowed the full benefit to be taken as a cash lump sum at retirement

However, this distinction was significantly reduced by the Retirement Funds Amendment Act (the “two-pot” reforms and prior annuitisation legislation). As of 1 March 2021, new contributions to provident funds by members under age 55 are subject to the same annuitisation requirements as pension funds and RAs. Contributions made before that date retain their old rules.

The two-pot retirement system, introduced on 1 September 2024, further changed how retirement fund withdrawals work by creating a “savings component” (one third of contributions) that can be accessed once per year before retirement, and a “retirement component” (two thirds) that remains locked in until retirement.

Given the complexity of these rules, we strongly recommend speaking to an Ambiton adviser to understand how these changes affect your specific retirement savings.

Both products offer tax advantages, but they work very differently:

• Retirement annuity: Contributions are tax deductible (up to the annual limit). Growth is tax sheltered. Benefits are taxed at retirement (though the first R550,000 is tax free). Funds are locked in until age 55. Subject to Regulation 28 asset allocation limits
• Tax-free savings account (TFSA): Contributions are made with after-tax money (no upfront deduction). All growth, interest and withdrawals are completely tax free, forever. Funds are accessible at any time. No asset allocation restrictions. Contributions are limited to R36,000 per year with a lifetime limit of R500,000

An RA is generally better suited for long-term retirement savings where you want the upfront tax deduction and can commit to locking the money away. A TFSA is better suited for medium-term savings where flexibility is important, or as a complement to an RA for investors who have maximised their RA contribution.

Most financial advisers recommend using both products in combination. An Ambiton adviser will help you determine the right balance for your circumstances.

Retirement annuity funds can be included in the division of assets on divorce in South Africa. The non-member spouse may have a claim against the RA in terms of a divorce order, subject to the Pension Funds Act and the clean break principle introduced by the Divorce Act.

The clean break principle allows the non-member spouse’s share to be paid directly from the fund at the time of divorce, rather than waiting until the member spouse retires. The fund is required to comply with a valid divorce order assigning a portion of the benefit to the non-member spouse.

The tax treatment of the divorce settlement amount from an RA depends on the structure of the payment - this is a specialist area and we recommend obtaining both legal and financial advice if divorce is relevant to your situation.

Yes. You can reduce or stop contributions to a retirement annuity at any time. Making a retirement annuity “paid up” means you stop contributing but the existing fund value remains invested and continues to grow until you retire.

Before stopping contributions, consider:

• You will lose the ongoing tax deduction on contributions
• Some older RA contracts have penalties for reducing or stopping contributions (check your policy terms)
• The fund value remains locked in until age 55 regardless of whether you are contributing
• If your financial circumstances have changed temporarily, a contribution holiday may be preferable to cancelling entirely

If you are considering stopping contributions due to affordability, speak to an Ambiton adviser first because there may be a more efficient way to restructure your financial commitments without sacrificing your retirement savings.

A living annuity is a post-retirement income product in South Africa. When you retire from a retirement fund (pension fund, provident fund, or retirement annuity), you are required to use at least two thirds of your fund value to purchase an annuity income. A living annuity is one of two main options for doing this.

With a living annuity:

• Your retirement capital is invested in underlying investment funds of your choice
• You draw a monthly income from the capital at a drawdown rate you choose, between 2.5% and 17.5% of the fund value per year
• The drawdown rate is reviewed and reset annually on your policy anniversary
• The capital remains invested and can grow (or decline) depending on investment performance
• When you die, any remaining capital passes to your nominated beneficiaries — either as a lump sum or as a continued annuity income

The key risk of a living annuity is longevity risk i.e. if you draw too much income or investment returns are poor, you may exhaust your capital before you die. Careful drawdown management and investment strategy are critical.

The drawdown rate is the percentage of your living annuity capital that you draw as income each year. The minimum allowed is 2.5% and the maximum is 17.5%, reviewed annually.

Choosing the right drawdown rate is one of the most important decisions in retirement planning.

As a general guideline:

• A drawdown rate of 4% to 5% is widely considered sustainable over a long retirement, assuming reasonable investment returns
• A drawdown rate above 7% significantly increases the risk of depleting your capital before you die, particularly if you retire young or live longer than expected
• A drawdown rate below 4% may be too conservative if it does not meet your income needs

The sustainability of your drawdown rate depends on your investment returns, inflation, life expectancy, and whether you have other sources of income. At Ambiton, we model various scenarios with our clients to help them choose a drawdown rate that balances income needs with the long-term sustainability of their capital.

The primary risks of a living annuity are:

• Longevity risk: You outlive your capital. If you draw too much income or investment returns are poor, you may exhaust your fund before you die, leaving you with no income in your final years
• Investment risk: Your capital is exposed to market movements. A significant market downturn early in retirement can permanently impair your fund value and income sustainability
• Sequencing risk: Poor returns in the early years of retirement, combined with ongoing drawdowns, can have a disproportionately damaging impact on the long-term sustainability of the fund
• Inflation risk: If your income does not keep pace with inflation over a long retirement, your real purchasing power erodes significantly
• Behavioural risk: Increasing the drawdown rate in response to short-term financial pressure is one of the most common and damaging mistakes living annuity holders make

These risks can be managed through careful investment strategy, a sustainable drawdown rate, and regular reviews with a financial adviser. At Ambiton, we actively monitor our clients’ living annuity positions and provide ongoing guidance on drawdown rates and investment allocation.

One of the key advantages of a living annuity over a guaranteed annuity is that the remaining capital does not disappear on death. When the living annuity holder dies, the remaining fund value passes to the nominated beneficiaries, who have three options:

• Take the balance as a cash lump sum (subject to income tax)
• Continue drawing an income from the living annuity (the beneficiary becomes the new annuitant)
• Transfer the balance to their own retirement annuity or other approved fund (if they are under retirement age)

Living annuity death benefits are not subject to estate duty, which makes them a tax-efficient way to transfer wealth to the next generation. However, the income drawn by beneficiaries is subject to income tax at their marginal rate.

It is important to keep your beneficiary nominations on your living annuity updated, particularly after major life events such as marriage, divorce, or the death of a beneficiary.

No. The proceeds of a living annuity paid to nominated beneficiaries on the death of the annuitant are not subject to estate duty. This is one of the most significant estate planning advantages of a living annuity.

Because the living annuity does not form part of the deceased estate, it is also not subject to executor’s fees or the delays associated with estate administration. The capital can be accessed by beneficiaries relatively quickly after death.

This makes the living annuity a useful tool in broader estate planning, particularly where the goal is to transfer wealth efficiently to the next generation while providing the annuitant with retirement income during their lifetime. An Ambiton adviser can help you integrate your living annuity into your overall estate plan.

In most cases, a living annuity cannot be fully withdrawn as a lump sum. It is designed to provide a retirement income, and the capital must remain in the annuity structure until death.

However, there is a full commutation (de minimis) rule: if the total value of all your living annuities falls below R125,000, you may be permitted to commute (cash in) the full amount as a lump sum. This typically applies when the fund has been depleted through ongoing drawdowns to below the threshold.

The full commutation amount is subject to income tax at your marginal rate in the year of receipt. This can result in a significant tax liability if the amount is large relative to your other income.

There is no general provision to fully cash in a living annuity simply because you want access to the capital. If you need liquidity, options include increasing your drawdown rate (up to the 17.5% maximum) or restructuring your broader financial plan.

Speak to an Ambiton adviser before making any changes.

Income drawn from a living annuity is subject to income tax in South Africa at your marginal rate. SARS treats the monthly annuity income as taxable income, and the annuity provider is required to withhold PAYE (Pay As You Earn) tax on the income.

The tax implications at various stages are:

• While invested: Growth inside the living annuity (interest, dividends and capital gains) is not taxed while it remains in the fund
• Monthly income: Taxable at your marginal income tax rate, subject to PAYE withholding
• Death benefit: The lump sum paid to beneficiaries is taxable in their hands at their marginal rate. If beneficiaries choose to continue drawing an income from the annuity, that income is also taxable at their marginal rate

If your total income in retirement (including living annuity income, any other annuity income, and other taxable income) is below the tax threshold, you may qualify for a tax directive to reduce or eliminate PAYE withholding.

Speak to an Ambiton adviser or a tax professional about structuring your retirement income tax-efficiently.

A preservation fund is a retirement savings vehicle that allows you to transfer your pension or provident fund benefit when you leave an employer, preserving it for retirement rather than withdrawing it and paying tax.
When you resign or are retrenched, you have the option to:

• Withdraw the fund value in cash: subject to tax at the retirement fund lump sum tax tables
• Transfer to a preservation fund: tax free, with the capital continuing to grow toward retirement
• Transfer to a new employer’s fund (if allowed)

Using a preservation fund is almost always the better long-term decision. Withdrawing your fund when you change jobs is one of the most common and damaging retirement planning mistakes in South Africa because it depletes your retirement savings, triggers an immediate tax bill, and permanently forfeits the compound growth that would have accumulated.

Preservation funds allow one partial or full withdrawal before retirement (subject to tax), which provides some flexibility in a genuine emergency without requiring you to fully liquidate the fund.

Regulation 28 of the Pension Funds Act prescribes the maximum exposure that South African retirement funds (including retirement annuities, pension funds, provident funds and preservation funds) may have to various asset classes. Its purpose is to protect retirement savings from excessive risk concentration.

The key limits under Regulation 28 include:

• A maximum of 45% in equities (shares)
• A maximum of 45% in offshore assets (increased from 30% in 2022)
• Limits on property, hedge funds, private equity and other alternative investments

Regulation 28 applies only to money held inside retirement funds. It does not apply to discretionary investments such as unit trusts, tax-free savings accounts, or endowment policies.

For long-term investors who want higher offshore or equity exposure than Regulation 28 allows, investment products outside the retirement fund structure (such as unit trusts or endowments) can be used to complement retirement fund savings.

A unit trust (also called a collective investment scheme) is an investment vehicle that pools money from many investors to purchase a diversified portfolio of assets such as shares, bonds, property and cash. Each investor owns “units” in the fund proportional to their investment.

Unit trusts offer several advantages:

• Diversification: Your money is spread across many underlying investments, reducing the impact of any single investment performing poorly
• Professional management: A fund manager makes the investment decisions on behalf of all unit holders
• Liquidity: Most unit trusts can be bought and sold on any business day
• Accessibility: You can invest from relatively small amounts
• Flexibility: No lock-in period (unlike retirement funds), and no restrictions on how much you can invest

Unit trusts are subject to income tax on interest and capital gains tax on growth realised outside a tax-sheltered structure. They are well-suited for medium to long-term savings goals where flexibility and accessibility are important.

At Ambiton, we select unit trust funds from our panel of top-performing fund managers based on your risk profile and investment horizon.

The terms are often used interchangeably in South Africa, but there is a technical distinction:

Life insurance strictly refers to cover for a specific term: if you die within the term, a benefit is paid. If you survive the term, the policy ends with no payout. This is also called term life insurance.

Life assurance refers to a whole-of-life policy that is guaranteed to pay out eventually, because death is a certainty. Traditional whole life policies and endowment policies fall into this category.

In practice, most South Africans use both terms to refer to the same thing: a policy that pays a lump sum to your beneficiaries on your death.

At Ambiton, we advise on the full range of life and risk cover products and will help you identify which structure is most appropriate for your needs.

A life assurance policy is a contract between you and an insurer. You pay a monthly or annual premium, and in return the insurer agrees to pay a specified lump sum, called the sum assured or death benefit, to your nominated beneficiaries when you die.

The premium you pay is calculated based on factors including your age, health status, lifestyle, occupation, the amount of cover, and whether additional benefits such as disability or dread disease cover are included.

Some life policies also accumulate a surrender or cash value over time, which you may be able to borrow against or withdraw from under certain conditions.

However, pure risk policies, which simply pay out on death or disability, generally have no cash value.

At Ambiton, we conduct a thorough needs analysis before recommending any life assurance product, to ensure the cover is correctly structured for your circumstances.

A general rule of thumb is 10 to 12 times your annual income, but the right amount of life cover depends on your specific circumstances, including:

• Your outstanding debt: home loan, vehicle finance, personal loans, credit cards
• Your dependants: how many people rely on your income, and for how long
• Your existing assets and savings that could support your family
• Your monthly income and your family’s ongoing living expenses
• Education costs for your children
• Any business obligations such as buy and sell agreements or suretyship

The most accurate way to determine how much cover you need is through a formal needs analysis with a qualified financial adviser.

At Ambiton, this is always our starting point before recommending any level of cover.

Both products protect you if you cannot work, but they pay out differently:

Disability cover pays a once-off lump sum if you become permanently disabled. The lump sum can be used to pay off debt, cover medical costs, fund home modifications, or invest to generate replacement income. It is particularly useful for settling large once-off liabilities.

Income protection pays a monthly benefit for as long as you remain unable to work, it is designed to replace your salary on an ongoing basis. It is particularly valuable for people with high ongoing expenses and no large lump sum debts to settle.

Many people benefit from having both. A disability lump sum settles debt and provides capital; income protection covers monthly living expenses. An Ambiton adviser will help you determine the right combination for your specific situation.

Also known as critical illness or trauma cover, dread disease cover pays a tax-free lump sum upon diagnosis of a serious condition such as cancer, stroke or heart attack. It covers the indirect costs that medical aid doesn't - lost income, rehabilitation, home modifications and more. 

Keyman insurance (also called key person insurance) is a life or disability policy taken out by a business on the life of a key employee or owner whose death or disability would cause significant financial loss to the business. The business is both the policyholder and the beneficiary.

When the insured key person dies or becomes disabled, the business receives the policy payout. This money can be used to:

• Cover the cost of recruiting and training a replacement
• Replace lost revenue or profits during the transition period
• Service business debt or obligations that relied on the key person’s relationships or skills
• Reassure creditors, investors, and clients during a period of uncertainty

The “key person” is typically a founder, director, top salesperson, or specialist whose contribution to the business is difficult to replace quickly.

The business applies for a life or disability policy on the life of the key person. The business pays the premiums and is the nominated beneficiary. If the key person dies or becomes disabled during the policy term, the insurer pays the claim directly to the business.

The amount of cover is typically calculated based on the financial loss the business would suffer which may be expressed as a multiple of the key person’s salary, their contribution to revenue or profit, or the estimated cost of replacing them.

The key person’s consent is required to take out the policy. The policy does not belong to the key person and has no value to them personally i.e. it is purely a business asset.

The tax treatment of keyman insurance in South Africa depends on the nature and structure of the policy:

• If the keyman policy is a term life policy (not an endowment or investment-linked policy) and the benefit is intended to compensate the business for loss of income or profits, the premiums may be tax deductible as a business expense
• Where premiums are deductible, any payout received by the business is typically treated as taxable income
• If the policy is an endowment or has a cash value, premiums are generally not deductible and the payout may be partially or fully tax-free

The tax treatment is not straightforward and has been the subject of SARS guidance and case law. We strongly recommend obtaining tax advice specific to your policy structure.

Ambiton works with tax professionals to ensure keyman policies are structured correctly from the outset.

A buy and sell agreement is a legally binding contract between business partners (or shareholders) that governs what happens to a deceased or disabled partner’s share of the business. It is typically funded by life and disability insurance policies taken out by the partners on each other’s lives.

Without a buy and sell agreement, the death of a business partner can create serious problems:

• The deceased’s share of the business passes to their heirs, who may have no interest in or knowledge of the business
• The surviving partners may be forced into a business relationship with people they did not choose
• The business may need to be sold or wound up to realise the deceased’s share for their estate
• The surviving partners may not have the capital to buy out the deceased’s heirs
• A properly structured buy and sell agreement, funded by adequate insurance, ensures that:
• The surviving partners have the funds to buy the deceased’s share at a predetermined fair value
• The deceased’s heirs receive cash rather than a stake in a business they may not want
• The business continues without disruption

At Ambiton, we assist with the structuring, insurance funding, and ongoing review of buy and sell agreements for business clients.

Contingent liability cover, also known as surety protection, protects a business owner’s personal estate from business debt they have personally guaranteed. It is a life or disability policy structured to cover the outstanding amount of any personal suretyship the business owner has signed.

When a business owner signs surety for a business loan, they are personally liable for that debt if the business cannot repay it. If the business owner dies or becomes disabled, their personal estate including their home and personal assets, is at risk.

Contingent liability cover ensures the personal guarantee is settled by the insurer rather than by the business owner’s personal assets.

This is an often-overlooked but critically important cover for any business owner who has signed personal surety, which is extremely common in South Africa.

A business overheads protector is an income protection product designed specifically for business owners. If the business owner becomes disabled and is unable to work, the policy pays a monthly benefit to cover the fixed overhead costs of the business even while no revenue is being generated.

Covered expenses typically include:

• Staff salaries
• Rent and lease costs
• Insurance premiums
• Loan repayments
• Utility costs
• Professional subscriptions and licences

Without a business overheads protector, a business owner who becomes disabled faces the difficult choice of either depleting personal savings to keep the business running, or allowing the business to fail during their recovery.

This cover bridges that gap and keeps the business viable until the owner is able to return to work.

In most cases, life insurance payouts (death benefits) are not subject to income tax in South Africa when paid directly to a nominated beneficiary.

The beneficiary receives the full sum assured without any income tax deduction.

However, there are important nuances:

• If the life policy is paid into your deceased estate rather than directly to a beneficiary, the payout forms part of the estate and may be subject to estate duty
• If premiums were claimed as a business expense (for example, on a keyman policy), the payout may be treated as taxable income in the hands of the business
• If the policy has a cash or surrender value and you withdraw from it, the growth portion may attract tax

To ensure your policy is structured in a tax-efficient way, speak to an Ambiton adviser before taking out cover.

There is no single “best” life insurance company in South Africa. The right insurer depends on your specific profile, health status, the type of cover you need, and your budget.

The major life insurers in South Africa include Sanlam, Old Mutual, Discovery, Momentum, Liberty, BrightRock, FNB Life, and 1Life, among others.

Rather than choosing an insurer directly, working with an independent broker like Ambiton gives you access to multiple insurers simultaneously.

We assess your needs, obtain
comparative quotes, and recommend the most appropriate option for your circumstances with no bias toward any single insurer.

When you die, the nominated beneficiary or your estate must notify the insurer and submit a claim. The insurer will require a death certificate, the original policy document, and a completed claim form.

Depending on the cause of death and the policy terms, additional documentation such as a medical report or inquest report may be required.

If a beneficiary has been nominated, the payout is made directly to them and does not form part of the deceased estate, meaning it is not subject to the estate administration process and is typically paid out significantly faster than estate assets.

If no beneficiary is nominated, or if the nominated beneficiary has predeceased you, the payout falls into your estate and is distributed in terms of your will.

At Ambiton, we assist our clients’ families through the claims process when a life claim arises, handling the administration and communication with the insurer on their behalf.

Yes, in some cases. A life insurance policy with a surrender or cash value can be ceded (assigned) to a lender as security for a loan. The lender becomes the cessionary and has a claim against the policy value in the event of default or death before the loan is repaid.

This is most commonly used for business loans, agricultural finance, or where a borrower wants to use an existing policy rather than take out new security. The cession must be formally documented and registered with the insurer.

Pure risk policies with no cash value cannot be used as loan collateral. Speak to an Ambiton adviser if you are considering ceding a policy as security.

Income protection insurance pays you a monthly benefit if you are unable to work due to illness or injury.

Unlike lump sum disability cover, income protection replaces a portion of your income on an ongoing basis, typically up to 75% of your pre-disability income, for as long as you remain unable to work, up to the policy’s benefit period (which may be to age 65 or for a defined term).

Income protection is particularly important for:

• Self-employed individuals and business owners, whose income stops immediately if they cannot work
• Professionals whose earning capacity is tied directly to their ability to practice
• People with significant financial obligations such as a home loan or dependants

Income protection is one of the most commonly underinsured areas of personal financial planning in South Africa. Most people insure their car and home but not their most valuable asset - their ability to earn an income.

Income protection insurance works as follows:

• You pay a monthly premium to the insurer
• If you become unable to work due to illness or injury, you submit a claim with supporting medical evidence
• After a waiting period (typically 1, 3, or 6 months - chosen at inception), the insurer begins paying a monthly benefit
• The benefit is paid for as long as you remain unable to work, up to the maximum benefit period specified in the policy
• Benefits are typically linked to CPI or a fixed escalation rate to maintain their real value over time

The definition of disability used in the policy is critically important: Some policies pay only if you cannot perform any occupation, while others pay if you cannot perform your own occupation.

“Own occupation” definitions are more favourable to the policyholder and are what Ambiton typically recommends where available.

The tax treatment of income protection payouts in South Africa depends on who pays the premium:

• If you pay the premiums personally (with after-tax money), the monthly benefit is generally not taxable in your hands
• If your employer pays the premiums on your behalf, the monthly benefit is typically treated as taxable income, because the premiums were paid from pre-tax money

This is an important consideration when structuring income protection cover. Policies paid personally tend to produce tax-free benefits, which makes them more tax-efficient in the long run despite offering no upfront tax deduction.

Speak to an Ambiton adviser to ensure your cover is structured correctly.

Income protection policies typically cover up to 75% of your pre-disability income. The 75% cap exists to maintain an incentive to return to work.

When calculating how much cover you need, consider:

• Your monthly fixed expenses: bond, vehicle, insurance, utilities, food
• Your dependants’ needs
• Whether your employer provides any sick leave or disability benefits that would reduce your gap
• How long you could sustain your lifestyle from savings before needing the benefit to kick in (this determines your waiting period choice)

The waiting period you choose directly affects your premium i.e. a longer waiting period means a lower premium. If you have three to six months of emergency savings, a longer waiting period is a cost-effective choice.

An Ambiton adviser will work through these trade-offs with you.

Standard income protection insurance covers inability to work due to illness or injury. It does not typically cover retrenchment or voluntary resignation.

Some insurers offer a retrenchment benefit as an optional add-on to an income protection policy, which pays a monthly benefit for a limited period (usually 3 to 6 months) if you are retrenched through no fault of your own. This is distinct from standard income protection and is subject to specific qualifying conditions.

If retrenchment cover is important to you, speak to an Ambiton adviser about which policies include this option and what the qualifying criteria are.

Dread disease cover, also known as critical illness cover or trauma cover, pays a tax-free lump sum if you are diagnosed with a specified serious illness or condition.

The most commonly covered conditions include:

• Cancer (various types and stages)
• Heart attack
• Stroke
• Coronary artery bypass surgery
• Kidney failure
• Major organ transplant
• Blindness
• Paraplegia or quadriplegia
• Alzheimer’s disease and other forms of severe dementia

The lump sum is paid regardless of whether you are able to work, and can be used for any purpose such as medical costs not covered by your medical aid, rehabilitation, home modifications, paying off debt, replacing lost income during recovery, or funding alternative treatment.

Medical aid covers your medical costs such as hospitalisation, treatment, medication and procedures but it does not cover the broader financial impact of a serious illness.

When you are diagnosed with cancer, a heart attack, or a stroke, the costs that threaten your financial wellbeing are often the ones medical aid does not pay for:

• Lost income during treatment and recovery
• Costs of a carer or home help
• Travel costs for ongoing treatment
• Alternative or complementary therapies not covered by medical aid
• Home or vehicle modifications required as a result of the illness
• Psychological support for you and your family
• Debt repayments while you are unable to work

A dread disease lump sum gives you financial flexibility to deal with these indirect costs without depleting your savings or creating new debt. Medical aid and dread disease cover serve different purposes and work best together.

Dread disease cover pays on diagnosis of a specified condition regardless of whether you are able to work. For example, an early-stage cancer diagnosis may trigger a dread disease payout even if you are still working full time.

Disability cover pays if you are unable to work due to illness or injury - the trigger is functional impairment, not the diagnosis itself. You could be diagnosed with a serious condition but not qualify for a disability claim if you are still able to perform your occupation.

The two products complement each other. Dread disease cover provides immediate financial support at the point of diagnosis; disability cover protects your income if the condition prevents you from working. Many comprehensive life assurance packages include both.

Yes, for most people, dread disease cover is a valuable and important component of a comprehensive risk plan. The statistics for South Africa are sobering: cancer is the second leading cause of death, and the lifetime risk of a South African being diagnosed with cancer is approximately 1 in 8 for women and 1 in 7 for men. Heart disease and stroke are similarly prevalent.

The financial impact of a serious illness extends far beyond the medical costs. Most people significantly underestimate how much money they would need to maintain their lifestyle, service their debt, and fund their recovery during a major health event.

The cost of dread disease cover relative to the protection it provides is generally very reasonable, particularly when taken out at a younger age.

An Ambiton adviser can show you exactly what a policy would cost for your specific profile and circumstances.

An insurance claim is a formal request made by a policyholder to their insurer for payment or compensation following a loss or event covered by their policy.

When something goes wrong like your car is stolen, your home floods, you are involved in an accident, or you suffer a disability, you submit a claim to your insurer as the mechanism for activating the cover you have been paying for.

The insurer assesses the claim against the terms and conditions of the policy and, if valid, makes a payment to settle the loss: either directly to you, to a third party (such as a panel beater or builder), or to a service provider on your behalf.

At Ambiton, we manage the claims process on your behalf from start to finish so your first call when something goes wrong is to us, not to the insurer.

The claims process in South Africa typically follows these steps:

1. Notify your broker or insurer: Contact Ambiton as soon as possible after the incident. Prompt notification is important — most policies require you to notify the insurer within a reasonable time, and delays can complicate the process
2. Provide documentation: You will need to supply relevant documentation depending on the type of claim. This typically includes a completed claim form, a copy of your identity document, proof of ownership or value, photographs of the damage, and in some cases a police report or incident report
3. Assessment: The insurer appoints an assessor or loss adjuster to investigate and assess the validity and quantum of the claim. For smaller claims, this may be done remotely; for larger claims, a physical inspection is typically required
4. Decision: The insurer accepts, partially accepts, or repudiates (rejects) the claim based on the assessment and the policy terms
5. Settlement: If accepted, the claim is settled by payment to you, repair by an approved service provider, or replacement of the damaged item

At Ambiton, we manage steps 1 through 5 on your behalf: submitting the claim, following up with the insurer, liaising with the assessor, and ensuring the settlement is fair and prompt.

Submitting a claim through Ambiton is straightforward.

Contact us as soon as possible after the incident by:

Phone: 041 581 7170 (business hours)
After hours emergency: 078 451 4284
Email: marketing@ambiton.co.za
Online: Use our claims submission form on the website

When you contact us, have the following information ready where possible:

• your policy number,
• the date and nature of the incident,
• a description of the loss or damage,
• and any relevant supporting information such as a SAPS case number.

We will guide you through the rest of the process, advise you on what documentation is required, submit the claim to the insurer on your behalf, and keep you updated at every stage until settlement.

The documentation required depends on the type of claim. As a general guide:

• All claims: Completed claim form, copy of identity document, copy of policy schedule
• Motor vehicle claims: South African Police Service (SAPS) case number (for theft, hijacking or third-party accident), photographs of the damage, driver’s licence, vehicle registration documents
• Home contents and personal all-risk claims: List of stolen or damaged items with approximate values, proof of ownership where possible (receipts, photographs, bank statements), SAPS case number for theft
• Building claims: Photographs of the damage, contractor quotes for repairs, SAPS case number where applicable (e.g. malicious damage)
• Life and disability claims: Death certificate or medical evidence of disability, completed insurer claim form, identity documents of claimant and beneficiaries

We will guide you through exactly what is needed for your specific claim and help you compile the documentation correctly to avoid unnecessary delays.

For many types of claims in South Africa, a police report (SAPS case number) is required or strongly recommended. Specifically:

• Theft of a vehicle: A SAPS case number is almost always required
• Hijacking: A SAPS case number is required
• Home burglary or theft: A SAPS case number is required
• Third-party vehicle accidents: A SAPS case number is required if there are injuries, if the other driver does not stop, or if liability is disputed
• Malicious damage to property: A SAPS case number is required

For accidents where only your own vehicle is damaged and no other party is involved, a police report may not always be required but it is always advisable to report any incident
to the police, both to comply with your policy requirements and to protect yourself from subsequent disputes.

Check your policy wording or contact Ambiton before assuming a police report is not needed. Failing to report an incident that your policy requires you to report can result in your claim being repudiated.

Managing an insurance claim without professional support puts you at a significant disadvantage. Insurers deal with claims every day, most policyholders deal with a major claim once or twice in a lifetime. The knowledge gap is substantial.

A broker adds value in the claims process by:

• Knowing exactly what documentation is required and ensuring it is submitted correctly the first time
• Understanding the policy wording and identifying grounds for the claim that the policyholder may not be aware of
• Maintaining relationships with insurer claims departments and assessors, which facilitates faster resolution
• Negotiating on your behalf if the insurer’s initial assessment or settlement offer is below what the policy entitles you to
• Escalating disputes formally and effectively if a claim is unfairly repudiated
• Providing a buffer between you and the insurer during what is often a stressful period

At Ambiton, claims handling is one of our core services, not an afterthought. We believe that a broker is only as good as the support they provide when a client actually needs to claim.

The time it takes to settle an insurance claim depends on the type and complexity of the claim:

• Simple claims: such as a windscreen replacement or a straightforward theft claim with all documentation in order, can often be settled within a few days to two weeks
• Motor vehicle accident claims typically take two to four weeks, depending on the extent of the damage and the availability of parts
• Building and structural damage claims can take four to eight weeks or longer, particularly where a specialist assessor or quantity surveyor is required
• Life and disability claims typically take four to eight weeks from submission of all required documentation
• Complex or disputed claims can take significantly longer, particularly where liability is contested or an investigation is required

At Ambiton, we actively follow up on all open claims and push for prompt resolution.

If a claim is taking longer than expected, we escalate on your behalf and keep you informed at every stage.

Insurance claims are denied (repudiated) for a number of reasons. The most common in South Africa include:

• Non-disclosure: Failing to disclose material information when taking out the policy such as previous claims, modifications to your vehicle, or the true use of the insured item
• Exclusions: The cause of the loss falls under a policy exclusion for example, wear and tear, gradual deterioration, or an event specifically excluded from cover
• Failure to take reasonable precautions: Leaving a vehicle unlocked, failing to maintain a building, or not having prescribed security in place
• Late notification: Failing to notify the insurer within the required timeframe
• Misrepresentation: Providing incorrect information in the claim form or to the assessor
• Policy not in force: Premiums were in arrears and the policy had lapsed at the time of the loss
• Underinsurance: The insured value is significantly below the replacement value, triggering a proportional reduction in the claim (average clause)

If your claim has been denied, contact Ambiton immediately. We will review the repudiation letter, assess whether the grounds are valid, and advise you on whether and how to dispute the decision.

If your claim is rejected, you have several options:

• Internal dispute: Request that the insurer formally review the repudiation through their internal complaints process. This should always be your first step
• Broker intervention: If you are an Ambiton client, contact us immediately. We will assess the grounds for repudiation, engage with the insurer on your behalf, and advocate for a fair outcome. In many cases, claims initially rejected can be successfully disputed
• Ombudsman for Short Term Insurance (OSTI): If the internal process does not resolve the dispute, you can escalate to the OSTI, which provides a free,
  independent dispute resolution service. The OSTI can investigate the matter and its rulings are binding on the insurer up to a specified financial limit
• FAIS Ombud: For complaints relating to the advice you received from your broker or insurer, the FAIS Ombud handles disputes between clients and financial services providers
• Legal action: As a last resort, you may pursue the matter through the courts, though this is rarely necessary given the effectiveness of the ombudsman process

Time limits apply to escalations so do not delay in seeking assistance if your claim has been rejected.

Yes, in most cases, making an insurance claim will affect your premium at renewal. How much it is affected depends on:

1. The number of claims you have made: Multiple claims in a short period will have a more significant impact than a single claim
2. The type of claim: At-fault claims (where you are responsible for the loss) typically have a greater impact than non-fault claims (e.g. a third party hit your vehicle while it was parked)
3. The value of the claim: Large claims have a greater premium impact than minor ones
4. Your insurer and their specific underwriting approach

Many insurers offer a “no-claims bonus” that reduces your premium over time if you do not claim. Making a claim will typically reduce or eliminate this bonus.

Before making a small claim, it is worth weighing the cost of the excess against the potential premium increase at renewal. For a minor loss that is only slightly above your excess, it may be more cost-effective to absorb the loss yourself.

An Ambiton adviser can help you make this assessment.

In most cases, short term insurance claim payouts in South Africa are not subject to income tax. They are treated as compensation for a loss rather than as income. You are being restored to the position you were in before the loss, not enriched.

However, there are exceptions:

• If the payout exceeds the actual replacement cost or original cost of the asset, the excess may be subject to capital gains tax
• Business interruption insurance payouts, which replace lost revenue or profits, are generally treated as taxable income in the hands of the business
• If a business has claimed the insurance premium as a tax-deductible expense, the corresponding claim payout may be included in taxable income

For personal short term insurance claims (home, vehicle, contents), the payout is generally not taxable. If you are uncertain about the tax treatment of a specific claim payout, consult a tax adviser.

A third party insurance claim arises when you claim against another person’s insurance (or they claim against yours) following an incident in which one party caused loss or damage to the other.

In the context of motor vehicle insurance, a third party claim typically means:

• You were involved in an accident that was the other driver’s fault, and you are claiming against their insurer for your vehicle damage or injuries
• Alternatively, another person is claiming against your insurer because you caused damage to their vehicle or property

Third party claims can be more complex than first-party claims because liability must first be established. If the other party’s insurer disputes their client’s liability, the process can be protracted.

At Ambiton, we assist our clients in navigating third party claims whether you are the claimant or the respondent. We will advise you on your rights, manage communication with both insurers, and ensure the process is handled correctly.

If you are involved in an accident caused by an uninsured driver, your options depend on the type of cover you have:

• If you have comprehensive motor insurance: Your own insurer will typically pay to repair or replace your vehicle, subject to your excess. You may lose your no-claims bonus. Your insurer may then attempt to recover the cost from the uninsured driver through subrogation
• If you have third party only cover: You are not covered for damage to your own vehicle caused by an uninsured driver. You would need to pursue the uninsured driver directly through the courts
• Road Accident Fund (RAF): If you or your passengers suffered bodily injuries in the accident, you may be able to claim from the Road Accident Fund regardless of whether the other driver was insured. The RAF covers claims for loss of income, general damages, and medical expenses arising from motor vehicle accidents on South African roads

Given the high number of uninsured drivers on South African roads, comprehensive motor insurance and an understanding of RAF claims are both important.

Contact Ambiton if you are in this situation, we will advise you on the most appropriate course of action.

The Road Accident Fund (RAF) is a statutory body established by the Road Accident Fund Act that compensates victims of motor vehicle accidents on South African roads for bodily injuries sustained. It does not cover property damage.

The RAF covers:

• Loss of income or support (for the injured party or dependants of a deceased victim)
• General damages for pain and suffering, disfigurement, and loss of amenities of life (subject to a serious injury assessment)
• Medical expenses not covered elsewhere

RAF claims can be made against the identified driver’s fund, or against the RAF directly where the driver is unidentified (e.g. a hit and run). The process involves a formal assessment of the injury, documentation of the accident, and submission of a claim.

RAF claims can be complex and are subject to prescription (a three-year time limit from the date of the accident).

If you or a family member has been injured in a motor vehicle accident, contact Ambiton for guidance, and consider engaging an attorney who specialises in RAF claims.

An excess (also called a deductible) is the portion of a claim that you are required to pay yourself before your insurer pays the remainder. It is your financial contribution to each claim.

For example, if your car is damaged in an accident and the repair costs R25,000, and your policy has an excess of R3,500, you pay R3,500 and your insurer pays R21,500.

Excesses serve two purposes: they reduce the cost of insurance (the higher your excess, the lower your premium) and they discourage small, nuisance claims.

Some policies have multiple excesses that apply in specific circumstances, such as:

• A standard excess on all claims
• An additional excess for drivers under 25
• An additional excess if the driver is not listed on the policy
• A specified excess for specific causes of loss such as hail damage

It is important to understand your excess before you claim, so you can make an informed decision about whether to claim or absorb the cost yourself.

Ambiton reviews excess structures with our clients as part of the annual policy review.

Underinsurance occurs when the insured value of an asset is less than its actual replacement cost. It is one of the most common and damaging issues in South African short term insurance, and it can significantly reduce your claim payout.

Most policies contain an “average clause” (also called co-insurance). This means that if you are underinsured, your insurer will only pay a proportional share of the claim equal to the ratio of the insured value to the actual replacement value.

For example: if your home contents are worth R500,000 but you have only insured them for R250,000 (50% of their value), and you suffer a loss of R100,000, the average clause means your insurer will only pay R50,000 (50% of the claim).

Underinsurance most commonly occurs when:

• Insured values have not been updated to keep pace with inflation or rising replacement costs
• New items have been acquired without updating the policy
• Building sums insured are based on market value rather than replacement (rebuild) cost

At Ambiton, we conduct regular policy reviews to identify and address underinsurance before a claim arises.

A Last Will and Testament is a legal document that records your wishes regarding the distribution of your assets and the care of any minor children after your death. It names your chosen beneficiaries, appoints an executor to administer your estate, and may include instructions for your funeral.

In South Africa, a valid will must be in writing, signed by the testator (the person making the will) in the presence of two competent witnesses, and signed by those witnesses in the presence of the testator and each other. Witnesses may not be beneficiaries under the will.

A Last Will and Testament typically covers:

• The distribution of your assets: who inherits what, and in what proportions
• The appointment of an executor: the person responsible for administering your estate
• The appointment of a guardian for minor children
• The creation of a testamentary trust for minor or vulnerable beneficiaries
• Specific bequests: particular items left to particular people
• Funeral and burial wishes
• The settlement of debts and liabilities from the estate

A will does not automatically cover assets held in a trust, retirement fund benefits, or life assurance policies with nominated beneficiaries - these are governed by their own nomination documents and fund rules.

Technically yes, a handwritten (holograph) will is legally valid in South Africa provided it meets the formal requirements of the Wills Act 7 of 1953. It must be signed by you and two competent witnesses who are present at the same time, none of whom may be beneficiaries.

However, a poorly drafted will is one of the most common causes of family disputes, delays in estate administration, and unintended consequences.

Even small errors in wording or execution can invalidate a bequest or create ambiguity that requires court intervention.

At Ambiton, we strongly recommend having your will drafted by a qualified professional to ensure it accurately reflects your wishes and will withstand legal scrutiny.

Yes. A will can be amended or replaced at any time during your lifetime, provided you have testamentary capacity (the legal and mental ability to make a will).

Changes are made by either:

• Drafting a new will that explicitly revokes all previous wills
• Adding a codicil: a formal amendment to an existing will that must be executed with the same formalities as the original

Informal changes such as crossing out text, writing in the margins, or adding sticky notes are not legally valid and can create confusion or invalidity.

We recommend reviewing your will after any major life event such as marriage, divorce, the birth of a child, the death of a beneficiary, or a significant change in your assets.

If you die without a valid will (known as dying intestate), your estate is distributed according to the Intestate Succession Act 81 of 1987. This means the law (not you) decides who inherits your assets.

The Act prescribes a fixed formula for distribution among a surviving spouse and children, which may not reflect your actual wishes.

Dying intestate also typically results in:

• A longer and more complicated estate administration process
• Potential conflict between family members over the distribution
• No provision for unmarried partners, who receive nothing under intestate succession
• No guardian appointed for minor children — the court decides
• Increased costs to the estate

Having a valid, up-to-date will is one of the simplest and most important financial planning steps you can take.

Despite the similar name, a living will and a Last Will and Testament are entirely different documents.

A Last Will and Testament takes effect after your death and deals with the distribution of your assets and the care of your dependants.

A living will (also called an advance directive or advance health care directive) takes effect during your lifetime if you become incapacitated and unable to communicate your wishes. It records your instructions regarding medical treatment for example, whether you wish to be resuscitated, whether you consent to life support, and under what circumstances you would want treatment withheld.

Both documents are important components of a comprehensive estate plan. Ambiton assists with the drafting of both.

The cost of drafting a will in South Africa varies depending on the complexity of your estate and the professional you engage. A simple will for an individual or couple can range from a few hundred to a few thousand rand when prepared by an attorney or financial planner.

Some banks and insurers offer will drafting services, though these are sometimes subject to conditions such as requiring the institution to be named as executor, which may not always be in your best interest.

At Ambiton, will drafting is part of our comprehensive estate planning service. Contact us to discuss your requirements and get an indication of costs based on your specific circumstances.

Your executor is the person or institution responsible for administering your estate after your death: collecting assets, settling debts, paying taxes, and distributing the inheritance to your beneficiaries. It is one of the most important appointments in your will.

You can appoint:

• A trusted family member or friend: though this is a significant administrative burden, and they may need professional assistance
• A professional: such as an attorney, financial adviser, or trust company who has the expertise to handle the process efficiently
• A combination of both: a family member as co-executor alongside a professional

Ambiton can be appointed as executor in your will, or can assist a family member who has been nominated in that role. We manage the full administration process on your behalf, from the preliminary interview through to final distribution.

In South Africa, a will must be signed in the presence of two competent witnesses who are both present at the same time. The witnesses must also sign the will in the presence of the testator and each other.

A competent witness must be:

• At least 14 years of age
• Not a beneficiary under the will, or the spouse of a beneficiary - a beneficiary who witnesses the will does not invalidate the will itself, but forfeits their inheritance

Common choices for witnesses include colleagues, neighbours, or friends who have no interest in the estate. A notary is not required in South Africa, though having the will stored securely with your attorney, the Master of the High Court, or a trusted institution, is strongly recommended.

Estate planning is the process of arranging, during your lifetime, for the orderly transfer and administration of your estate after your death. It ensures that your assets go to the right people, at the right time, in the most tax-efficient way possible.

Estate planning is important because without it:

• Your assets may not be distributed according to your wishes
• Your estate may pay significantly more estate duty and capital gains tax than necessary
• Your beneficiaries may wait months or years before receiving their inheritance due to liquidity problems in the estate
• Your business may be forced to wind up or sell assets to settle estate liabilities
• Minor children may be left without adequate financial provision or a nominated guardian

Comprehensive estate planning addresses all of these risks proactively, while you are still alive and able to make informed decisions.

Comprehensive estate planning typically involves:

• Drafting or updating your Last Will and Testament
• Reviewing beneficiary nominations on life assurance policies and retirement funds
• Assessing potential estate duty and capital gains tax liabilities
• Ensuring sufficient liquidity in your estate to settle debts and taxes without forcing asset sales
• Considering the use of trusts to protect and preserve wealth across generations
• Reviewing your marital contract and its implications for your estate
• Appointing an executor and, if you have minor children, a guardian
• Drafting a living will and power of attorney

Estate planning is not a once-off exercise. It should be reviewed regularly and updated after any major life event.

A will is one component of estate planning but estate planning is much broader.

Your will records your wishes for the distribution of your assets after death.

Estate planning is the comprehensive process of structuring your affairs during your lifetime to minimise tax, protect your assets, ensure liquidity, provide for your dependants, and make the administration of your estate as straightforward as possible.

Think of it this way: a will tells people what to do with your estate. Estate planning determines what your estate looks like when you die and ensures it is structured in the best possible way for the people you leave behind.

A comprehensive estate plan typically includes the following documents:

• Last Will and Testament: the foundational document recording your wishes for asset distribution
• Living will: recording your medical treatment wishes if you become incapacitated
• General power of attorney: authorising a trusted person to act on your behalf while you are alive but unable to manage your affairs
• Trust deed: if a trust forms part of your estate plan
• Updated beneficiary nomination forms for retirement funds and life assurance policies
• A record of your assets, liabilities, and key account information for your executor

Ambiton assists with the preparation and co-ordination of all of these documents as part of our estate planning service.

The cost of estate planning in South Africa depends on the complexity of your estate and the services required. A basic estate plan, including a will and a review of your beneficiary nominations, is relatively affordable.

More complex planning involving trusts, tax structuring, and business succession can involve more significant professional fees.

It is worth considering the cost of estate planning in the context of the cost of not planning: estate duty in South Africa is levied at 20% on the dutiable value of your estate above R3.5 million (and 25% above R30 million). Proper planning can significantly reduce this liability and preserve more of your estate for your beneficiaries.

Contact Ambiton for a no-obligation consultation to discuss your estate planning needs and an indication of costs.

The honest answer is: now. Estate planning is not only for the elderly or the wealthy. Anyone who owns assets, has dependants, runs a business, or has specific wishes about what happens after their death benefits from having a plan in place.

Particular life events that should trigger a review of your estate plan include:

• Getting married or divorced
• The birth or adoption of a child
• Purchasing a home or other significant asset
• Starting or buying a business
• The death of a beneficiary or executor named in your will
• A significant change in your financial position
• Reaching retirement age

Your estate plan should be a living document, reviewed and updated as your life changes.

Business owners face unique estate planning challenges that individuals without a business interest do not. Key considerations include:

• Business succession: who takes over the business if you die or become disabled, and on what terms
• Buy and sell agreements: legally binding arrangements between business partners, funded by life assurance, that ensure a smooth transfer of ownership
• Keyman assurance: protecting the business against the financial impact of losing a key person
• Contingent liability cover: protecting your personal estate from business debts you have personally guaranteed
  Valuation of the business interest for estate duty purposes
• Liquidity planning: ensuring your estate has sufficient cash to settle liabilities without forcing a sale of the business

At Ambiton, we advise on both the personal and business dimensions of estate planning, ensuring that your personal and commercial interests are protected and aligned.

A trust is a legal arrangement in which one party (the trustee) holds and manages assets on behalf of another party (the beneficiary), in accordance with the terms of a trust deed. In estate planning, trusts are used to:

• Protect assets from creditors and potential future claims
• Provide for minor children or vulnerable beneficiaries without giving them direct access to large sums of money
• Reduce estate duty by removing assets from your personal estate during your lifetime
• Preserve family wealth across generations
• Avoid the delays and costs of the formal estate administration process for assets held in the trust

Trusts are a powerful but complex planning tool. Whether a trust is appropriate for your situation depends on the nature and value of your assets, your family structure, and your long-term objectives.

Ambiton assists with the drafting, registration, and ongoing administration of both inter vivos trusts and testamentary trusts.

An inter vivos trust (also called a living trust) is created and comes into effect during your lifetime. Assets are transferred into the trust while you are alive, removing them from your personal estate. An inter vivos trust is commonly used for asset protection and estate duty planning.

A testamentary trust is created through your will and only comes into existence after your death. It is typically used to provide for minor children or other dependants who should not receive a direct inheritance immediately. The trust holds and manages the assets on their behalf until they reach a specified age or milestone.

Both types of trust require a trust deed setting out the terms, appointed trustees, and beneficiaries. Ambiton assists with the drafting and administration of both.

A will and a trust serve different purposes and work in different ways:

• A will takes effect after your death and goes through the formal estate administration process, which is subject to oversight by the Master of the High Court and can take 12 months or longer
• A trust (inter vivos) takes effect during your lifetime and assets held in the trust do not form part of your deceased estate, bypassing the formal administration process entirely
• A will is a public document once lodged with the Master; a trust deed is private
• A will can be contested; a properly structured trust is significantly harder to challenge

Many comprehensive estate plans use both, a trust for assets you want protected and transferred efficiently, and a will for remaining personal assets and to appoint guardians for minor children.

Estate administration is the formal legal process of winding up a deceased person’s estate. It involves collecting and valuing all assets, settling all debts and liabilities, paying any taxes due, and distributing the remaining assets to the beneficiaries in accordance with the will (or the Intestate Succession Act if there is no valid will).

In South Africa, estate administration is overseen by the Master of the High Court and is governed by the Administration of Estates Act 66 of 1965. The process typically takes between 35 and 60 weeks from the date of death to final distribution, depending on the complexity of the estate.

The estate administration process in South Africa follows these key steps:

• Date of death: Obtain the death certificate, establish whether a valid will exists, and gather the deceased’s documents
• Preliminary interview: Identify beneficiaries, establish assets and liabilities, and complete the necessary reporting documentation
• Appointment of executor: The Master of the High Court formally appoints the executor and issues Letters of Executorship
• Advertisement for creditors: Published in the Government Gazette and a local newspaper; creditors have 30 days to lodge claims
• Liquidation and distribution account: A full account of all assets, liabilities, and proposed distributions is drawn up and lodged with the Master
• Inspection period: The account lies open for inspection for 21 days; objections can be lodged
• Distribution: Once the account is confirmed, creditors are paid and assets are transferred to beneficiaries
• Sign-off: The executor provides the Master with proof that all creditors have been paid and the estate is finalised

The process is significantly more straightforward when a valid will is in place and an executor has been nominated.

Estate duty is a tax levied on the dutiable value of a deceased person’s estate in South Africa. The current rates are:

• 20% on the dutiable value of the estate up to R30 million
• 25% on the dutiable value above R30 million

Every South African estate benefits from a primary abatement of R3.5 million, meaning the first R3.5 million of the dutiable estate is not subject to estate duty. There are also deductions available for bequests to a surviving spouse and certain other amounts.

Effective estate planning can significantly reduce the estate duty payable for example through the use of trusts, life assurance policies payable outside the estate, and structured gifting during your lifetime.

This is one of the primary reasons estate planning is so important for anyone with a sizeable estate.

Retirement fund benefits (pension funds, provident funds, and retirement annuities) do not automatically form part of your deceased estate and are not distributed in terms of your will. They are governed by the Pension Funds Act, which requires the fund trustees to identify and provide for all financial dependants of the deceased, regardless of the beneficiary nomination form.

Your beneficiary nomination form is an important guide for the trustees, but it is not legally binding - the trustees must exercise their discretion in the best interests of all dependants. This is why it is critical to keep your nomination form updated and to communicate clearly with your financial adviser about your wishes and dependants.

Life assurance policies with a nominated beneficiary are paid directly to that beneficiary outside the estate, provided the nomination is valid and up to date.

Some basic elements of estate planning such as completing a beneficiary nomination form or drafting a simple will can technically be done without professional assistance.

However, for most people, attempting to navigate estate planning without professional guidance carries significant risk.

Common mistakes made by people who plan without professional help include:

• Wills that are technically invalid due to execution errors
• Unintended tax consequences from poorly structured asset ownership
• Trusts that are improperly constituted or administered
• Retirement fund nominations that conflict with actual dependant obligations
• No liquidity provision, forcing the sale of assets to settle estate liabilities

The consequences of these mistakes typically fall on your beneficiaries at the worst possible time.

At Ambiton, we offer a no-obligation estate planning consultation to help you understand what you need and what it involves.