When asked if they have a Last Will and Testament in place, many South Africans have to answer that they don’t. The reality is that not having a Will in place when you die could have a significant, negative impact on your family and other dependants.
Of course, you can write up your own Will, which will be valid as long as it is signed by two witnesses who have no financial interest in the Will. If you have a simple estate and basic wishes, downloading a DIY Will is an option, but because this is such an important document, most financial services organisations offer assistance in drawing up a Will, no matter how big or small your estate is.
However, the larger the estate, the more factors you need to consider. So if your estate is worth more than R3,5 million, if you have financial dependants or wish to create a trust, it is important to seek professional advice.
Why everyone should have a Will
Even if you don’t care what happens to your belongings after your death, having a Will makes it easier to wind up your estate, particularly if you have financial dependants. When you die without a Will, you lose the opportunity of appointing an executor (the person who will administer your estate), a trustee (if a testamentary trust is created in terms of your Will), and a guardian for your children.
If you don’t have a Will or if your Will is found to be invalid, your estate Will be administered in terms of the Intestate Succession Act 81 of 1987. This process takes time, and your estate is divided according to the rules of the Act, rather than any preferences you may have had.
Why you need an executor
You’ll need an executor if your estate is worth more than R250 000. An executor's role is to keep your assets safe until the final decisions have been made about how your assets Will be distributed.
If you don't nominate an executor in your Will, the court will appoint one. This means that the court will decide how your assets are distributed and it could take as long as five years for your estate to be wrapped up.
Estate planning: Save your beneficiaries from tax burdens
If your estate is worth more than R3,5 million, it will attract estate duty. There is an estate duty exemption if an estate is left to a spouse, but if it is left to children, estate duty becomes payable.
A professional adviser will structure your Will and estate planning to minimise the taxes due after your death. This should also include provision for life cover that will settle any estate duty, particularly in the case of immovable property. For example, if you leave your family home to your children, they may be liable for estate duty even if they don’t plan to sell the property.
Your minor children rely on your Will
A Will, combined with excellent estate planning, is especially important if you have minor children. It should include details about who you would like to take care of them (their guardian), as well as a letter of wishes regarding any specific requests for their upbringing. For example, if you want them to attend a private school, you should specify this, although you would also need to provide sufficient funds to meet those wishes, usually in the form of life cover.
If you wish to leave assets to your minor children, it is recommended that you include a testamentary trust in your Will, to come into effect upon your death. This trust will house all your assets until the children come of age or reach an age specified in your Will.
Estate planning can be complicated, so it’s best to get advice from a professional. Once you’ve drawn up your Will, be sure to update it regularly to take your changing lifestyle into account. If you are uncertain of the steps to take, speak to your financial adviser to find the solutions that are best-suited for you and your loved ones.
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