“Everyone has a Will. You either draft one yourself or the state will draft one for you using the rules of intestate succession” – Shapiro
A will is probably one of the most important personal documents that you will write and so is it not worth investing a bit of time in this process to ensure that it is correct – rather leave a legacy and not a problem!
While most people are aware that they should have a will, and despite their good intentions, the fact is that only 10% -20% of South Africans actually have a will. Unfortunately, of those people who do have a will about a third of those wills cannot be implemented as was intended.
Some of the benefits of having a valid will are:
- Items with sentimental value can be passed on to those that most appreciate them.
- You can include people in your will that would not normally inherit from you per the laws of Intestate Succession.
- You can exclude people from your will that would have normally received an equal share of inheritance, per the laws of Interstate Succession.
- You can allocate greater or less shares of your estate to different family members as opposed to having to divide your estate equally amongst family members.
- You can choose a representative whom you trust i.e. nominated executor, to carry out your wishes and administer your estate.
- You can select guardian(s) for minor children.
- You can make provision for the creation of a trust/s in your will called ‘testamentary trusts’ to set aside assets to care for loved ones and minor children.
- A will streamlines the passing of assets and reduces the cost and additional expenses when trying to wind up your estate.
Having a will is particularly important if you have any minor children or if anyone who may potentially inherit from your estate may be a minor. As they are not 18 years old, they may not inherit directly and without an instruction in your will directing that their inheritance must be paid to a trust (where you are also able to nominate the trustees) their inheritance will be paid over to the Guardians Fund. Applications then need to be made to the Guardians Funds for funds to be released. The Guardians Fund will pay a maximum of R250 000 per year (plus any interest earned) for the maintenance of a minor. Any funds not claimed from the Guardians fund for 30 years are forfeited to the State.
Should you not have a valid will your estate will be wound up in terms of the law of intestate succession, the consequences of which may include the following:
- An executor must be appointed which is a costly and time-consuming process.
- The executor is forced to distribute your assets strictly in terms of the act
- Wishes expressed during your lifetime cannot be executed.
- Inconvenience and unpleasant situations regarding heirs could arise.
- Assets cannot be distributed until all the rules regarding intestate succession have been adhered to.
- The wrong people may inherit.
- Your heirs will split up your assets as they deem fit without what you may regard as fair distribution.
- If you have minor children the court will appoint a guardian, one that may be different from whom you might choose to look after your children.
- Minor children’s inheritance will be placed at the Guardians Fund, which is not easily accessible.
Ultimately the purpose of your will is to carry out your final wishes and to dispose of your assets as you would like to – so what your will should cover?
Personal Arrangements
You may like to leave instructions to your next of kin or executor as what you would like to happen to you after your death. These personal arrangements may include:
- Whether you would like to be buried or cremated;
- Any specific arrangements related to your burial or distribution of your ashes;
- Whether you would like to make your body available for organ donation, or for any other anatomical, therapeutic, medical or scientific purposes;
- Any special arrangements regarding a funeral or memorial service;
Distribution of your Estate Assets
When distributing your assets, you may distinguish between specific bequests and the distribution of the residual of your estate.
- Specific bequests relate to who shall receive certain identifiable items or amounts
- The distribution of your residual estate deals with your estate after your specific bequests have been implemented and all of your estate costs have been settled.
Efficient and effective execution of your estate
The court will appoint an executor for all wills where the value of that estate is in excess of R250 000.
We encourage you to leave a legacy and not a problem. By this we mean you should ensure that your will specifies who shall be responsible for winding up your estate. This is typically an onerous and time-consuming responsibility and usually something your family will not thank you for should you have nominated one of them.
We highly recommend that you nominate a professional executor whose business is structured and focused on this task so that it is completed in as short as time as is possible and not burden a family member.
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Costs and tax implications
The almost immediate costs that will be incurred on your death will typically be the funeral parlour, funeral or memorial service costs as well as the post service gathering.
During the winding up of your will there will be executors’ fees, estate duty, masters (of the high court) fees, professional fees, and various taxes such as income tax, capital gains tax etc. Depending on how your estate is structured, these costs could be significant.
Why martial regimes are important
Should you be married, the manner in which you are married will have an effect on the way the value of your estate is calculated.
- If in community of property, 50% of your assets will be excluded while 50% of your spouse’s assets will be included. There are further implications with the distribution of assets
- If under the Accrual system, a calculation of yours and your spouse’s estate will be done, and your estate will be adjusted for the net accrual.
Ensure that your will may be implemented
Before any specific bequests or residual of your estate is transferred as per your wishes, the Executor will need to settle all debts and pay all of the costs related to your estate. Experienced shows that almost half of wills cannot be implemented as intended. Once your will has been drafted a liquidity analysis must also be performed to ensure that your will is “executable” (i.e. able to be implemented)
Requirements for the will to be Valid
For your will to be considered valid there are various provisions that need to be adhere to. A few of the more important of these are
- You must be over 16 years old
- You must not have signed your will under duress
- Your will must be witnesses by at least two witnesses who are at least 14 years old and a considered to be competent.
- The witnesses and the signatory/ies to the will must sign in each other’s presence.
- The witnesses must be independent i.e. they cannot be a beneficiary of your will.
- A witness may be a member of the family provided neither s/he nor his/her spouse has been nominated as an heir, executor, trustee or guardian in the will.
A will recorded as a video cannot be valid as there are no signatures. An electronic will have to go through a court process to determine whether it is valid.
Storage of your Will
Having drafted a valid will it is important that it is
- stored in a safe place where it will not be lost or damaged (fire, water, coffee, sunlight etc) and
- able to be easily retrieved when it is needed.
Momentum Trust are able offer this service as well as ensuring that the necessary people are aware of where your will is stored. The details of your beneficiaries will only become known when the will is being executed unless you specifically request that they are previously informed.
Other Considerations
Settling of debt
As mentioned above, your estate will only be distributed as per your wishes once all of the debt and costs relating to your estate have been settled.
If you have not already done so, you should seriously consider taking out an insurance policy that will be sufficient to settle all debt and costs when required.
Income replacement
Having ensured that you have a valid will and that it can be implemented according to your wishes as you have also made provision for any debt and costs, you should also consider the implications of the monthly income that your dependents will require.
You may have made some provision for this eventuality through investments, life policies and retirement funding. It is highly recommended; however, that when you draft your will and perform a liquidity analysis it includes an estimate of the capital amount that would be required to replace your monthly income.
When Should you Change your Will?
As your life circumstances are always changing you should regularly review your will to ensure that it is still appropriate i.e. you should change your Will to reflect your current wishes and situations.
A life changing event normally requires you to redraft your will. Below is a list of some of these events:
- You get married.
- You are unmarried but have a life partner.
- You get divorced.
- You bring a new baby into the family.
- You have new stepchildren.
- You acquire or dispose of substantial assets, such as a home.
- You change your mind about who you want to inherit a significant portion of your property.
While it is possible to do an addendum to your will (called a codicil) to avoid any potential confusion we highly recommend you redraft your will when a change is required.
Letter of wishes
While a will is a list of instructions as to how you would like your estate to be dealt with, a letter of wishes is a way for you to inform others of matters to be considered after your death. As it is not binding, a letter of wishes can be considered as a guideline for your executor and others such as your guardians, trustees etc. as to how you would like them to deal with certain issues. A letter of wishes allows your will to focus your instructions without having to include a lot of the details.
The letter of wishes is a separate document but is usually kept in a sealed envelope with the will. As it is not a legal document there are no requirements to be adhered to; however, as a minimum it should be signed and dated so that its validity can be ascertained. While the letter of wishes is not an instruction, to avoid any confusion, its details must not conflict with any provisions contained in your will. The letter of wishes should not be witnesses to avoid it being considered a codicil to your will.
Some of the issues that may be contained in a letter of wishes
- Who to notify of your death, or in some cases, who not to tell.
- Whether you would prefer cremation or burial (although this is normally covered in your will as well.
- A listing your main assets – including bank accounts, life insurance policies, expensive items or jewellery and their location.
- Guiding your executors or trustees in terms of how you would like any money managed or trusts to be run. These guidelines should be general and not undermine the discretionary powers of the trustees, as it may invalidate the trust.
- Advising guardians on how you would like your children to be raised, their religious upbringing, education, and where they should live. These details should be reviewed as the children grow up.
- Giving more detailed information to assist your executor/s in identifying specific items that you are bequeathing in terms of your will.
- Providing explanations as to why you have excluded someone from the will, if you think that it may be a controversial decision or challenged later.
What is a Living will?
A living will is a written statement detailing your desires regarding future medical treatment in circumstances in which you are no longer able to express informed consent, especially an advance directive.
A living will is recommended as it can assist or remove the decision making process from your family or loved ones at a time that is normally highly distressing.
Why draft your will with me?
While I have extensive experience in drafting wills, I am also supported by the team at Momentum Trust who have received extensive training regarding the drafting of wills so that you may be assured that it will be correct and valid.
Apart from drafting the will I will perform a detailed liquidity analysis and explain to you the cost implications of your current estate. The analysis will consider
- Your immediate cash requirements,
- All the costs of winding up your will including taxes,
- The cost implications on your estate as a consequence of your martial regime (accrual claims, community of property etc.)
- The amount required to settle your debt
- The capital amount required to replace your monthly income.
This will then allow you to make arrangements to ensure that your will is capable of being implemented.
Through Momentum you can:
- ensure that your will is safely stored and able to be accessed when required
- ensure that your guardians and executors are aware of your will and where it can be accessed
- appoint professional executors and have peace of mind that your estate will be wound up efficiently and professionally
- appoint independent trustees for any trust they may be formed and be assured that your wishes are implemented
If you will like to have your drafted please either email me at derek.pettitt@momentum.co.za or let me have the information that I require by answering the questionnaire by clicking here
Glossary of terms commonly used in a will
Administrator – a name sometimes used instead of an executor
Beneficiaries – persons or entities who are nominated in a will to receive some (or all) of the estate assets
Capital Gains – the tax payable and the realisation of assets which is calculated as the difference between the sale price and the base cost (usually the purchase price).
Collate – to recognise all of the donations that a beneficiary received during the life of the testator/testatrix when calculating their inheritance in terms of the will.
Estate duty – the tax payable to SARS on the net value of your estate after an initial deduction (abatement) of R3.5 million. Estate duty is levied at 20% for estates up to R30 million and at 25% thereafter.
Executable will – an estate which has sufficient cash available to cover the costs so that the testator’s/testatrix’s wishes may be fully implemented.
Executor – A person or institution nominated to wind up the estate.
Executors Fees – the fee charged by the Executor for winding up the will – this is regulated and may not be more than 3.5% of the gross value of the estate (excl. VAT)
Guardian – A person who cares for person/s (often minors) or property.
Intestate – where a person dies without leaving a valid will. The court will appoint an executor who will distribute the estate according to the law of Intestate Succession.
Master of the High Court – The Master oversees the administration of deceased estates. The Master acts as the upper guardian of all minors and estates under curatorship.
Professional fees – are the fees paid to third parties in winding up the will. This will include estate agent’s fees for any properties sold, attorney’s fees for setting up trusts etc.
Residual estate – the assets remaining after all costs have been
Substitute provisions – alternative distributions to beneficiaries should a nominated beneficiary not been able to receive the benefit.
Testamentary Trust – a Trust that only comes into existence as a consequence of having been provided for in a will to ensure the testator’s/testatrix’s wishes are implemented typically with regard to amounts due to minors.
Testatrix – A female person for whom a will is drawn up
Testator -A male person for whom a will is drawn up.
Trustee – A person or institution appointed to administer the assets in a trust on behalf of a beneficiary/ies.
Witness – A person who signs the will as confirmation that the testator/testatrix have signed the will with sound mind and that s/he is not acting under duress.
