Page 45 - Nexia SAB&T Estate Planning Guide 2024

If however the election is not made for the premiums to be tax deductible,
when the policy pays out the proceeds will be exempt from tax.
The sole proprietor
n Sole proprietors should also consider succession planning.
n A sole proprietor’s Last Will and Testament should state who should be
approached first to take over the business, and how the executor should deal
with the situation.
n The sole proprietor will need to make a decision as to whether he wishes to
leave his business to an associate or to a family member. It could be useful
for the sole proprietor during his lifetime to give or sell the named successor
a small share of the business, and to introduce him to the secrets, modus
operandi and client base of the business. In addition, the sole proprietor
should write down the secrets or methodologies of the business, so that they
are available in the event of his demise.
n Even though a sole proprietor may have several employees, legally the
business and the sole proprietor are one and the same, which means
that should he pass away, his estate will be wound up, as essentially the
business forms part of his estate.
n Where he leaves the business to someone in terms of a Will, he could also
leave that person with enough capital to assist that new person’s purchase.
A life policy could be taken out whereby the sole proprietor is the life assured
and the potential new owner in terms of the Will is the beneficiary. The policy
proceeds on death would form part of the deceased’s dutiable estate, but the
amount of cover could be increased to mostly cover this as well.
n The executors could also arrange for the sale of the business whereby the
purchase price will form part of the deceased estate in terms of estate duty
and other taxes.
n Ultimately, a sole proprietor’s beneficiaries will benefit from a well thought
out succession plan.
n A sole proprietor who instructs his executor to sell the business and ensures
that his business will continue uninterrupted after his death, will benefit his
beneficiaries in the long run, as a beneficiary is likely to receive far less if a

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