Having a valid will can help ensure that the right people benefit from your wealth
Preserving your wealth and distributing it to your family and loved ones is just as important as growing your wealth. This requires having a current and valid will.
A will is an important legal document that has a significant impact on your family and dependants’ quality of life after you pass away. However, there is more to preparing a will than recording your wishes in writing, signing the document, and keeping it somewhere safe for future reference. There are many pitfalls to watch out for when drafting a will, which is why it’s advisable to get specialist advice.
What makes a will valid?
The requirements for drafting a valid will are contained in section 2(1)(a) of the Wills Act 7 of 1953.
The points below summarise some of the basic requirements:
If you pass away without a valid will, your wishes may be ignored
If you do not have a valid will, you will die intestate. This means the assets in your deceased estate will be distributed in accordance with the Intestate Succession Act 81 of 1987. As a result, your wishes may be ignored. Your loved ones may not receive the assets you wished them to have, or your estranged spouse or child may receive a portion of your assets that you may have preferred to allocate elsewhere.
Dying intestate could also lead to serious delays in the administration of your estate and create tax and legal problems, which could result in financial losses for your family and dependants. It could also lead to potential conflict between your family and dependants.
(Please note: in this case study we have not considered the consequences of any marital regimes.)
Martha and Sam were married and had a daughter, Erin. Due to family disagreements and narcotics abuse, Erin has been estranged from her parents for many years. When Sam died without a will, instead of the entire estate passing to Martha, a portion was given to Erin – even though Martha maintained that Sam would have wanted the estate to go entirely to her and not to Erin. Unfortunately, Erin was suffering from a drug problem at the time and may not have made the best use of the inheritance.
Key factors to consider when drafting a will
While a valid will is fundamental, there are many other factors to consider to ensure that your intentions are fully carried out after you've passed away. It is important that your will should reflect your unique personal and family circumstances and goals, and that it adequately covers all eventualities and contingencies.
A. Changes in your circumstances
Your circumstances are always changing. To ensure both your will and estate plan remain relevant, it is important to review these regularly, especially in the following circumstances:
B. Obligations you may have
Under South African law, we have freedom of testation. This means that you can freely choose to whom you pass on your assets or who you want to disinherit, but there are certain limitations:
Michael divorced his spouse, Jennifer. In terms of the divorce order, Michael should pay maintenance to Jennifer and their two children. He then remarries and leaves his entire estate to his new wife Margaret and their newborn child. However, if the maintenance order does not cease on death, the maintenance claims against the estate will first have to be paid before Margaret can inherit. This could have serious financial and emotional implications and could also delay the finalisation of the estate.
C. Liquidity in your estate
If you bequeath a cash legacy to a beneficiary, it’s important to ensure that your estate has sufficient liquidity to accommodate the bequest. To avoid your loved ones being forced to sell assets unnecessarily to cover costs and liabilities, this requires careful consideration of a bequest that is subject to a burden or charge on the estate or property.
In John’s will he bequeaths his fixed property (on which there is a bond) to his daughter, Jane, and the residue of his estate to his wife, Mary. No mention is made in John’s will of a bond on the fixed property. The executor is required to settle the bond from the estate residue and only then is he able to transfer the fixed property to Jane (free of the debt). This could have serious consequences for the residual heir, Mary. There may be very little residue left after the bond liability has been paid, and Mary may be forced to sell some of the assets in the estate to cover estate liabilities and costs.
D. Legislative changes
As mentioned above, reviewing your will when your circumstances change is crucial. However, legislative and tax changes can also have an impact on your estate and the wording of your will. That is why it’s important to review your will more frequently to ensure you take into account these changes.
The Davis Tax Committee (DTC) has proposed some changes to abatements. An abatement is a rebate available to individuals that is subtracted from the net estate to arrive at the dutiable estate, i.e. it is exempt from estate duty. The DTC has proposed abolishing the inter-spousal abatement (any bequests made to a surviving spouse) and increasing the primary abatement from R3.5 million to R15 million for all taxpayers. If the proposal is enacted it will have serious consequences for many people and their estates, and many testators will have to review their wills.
We have specialist expertise to help you set up and manage your will
Our fiduciary specialists have the expertise to help you draft a clear, unambiguous and concise will that meets all the necessary legal requirements. We also stay on top of legislative or tax changes that can affect your estate. Having a current, valid will tailored to your circumstances can give you peace of mind that your family and loved ones won’t be subjected to unnecessary financial hardship and emotional stress when you’re no longer here. Please contact your relationship manager if you wish to discuss anything further or if you would like to arrange a meeting with a fiduciary specialist.
|Please contact your relationship manager if you would like specialist fiduciary advice about what this update may mean for your wealth.|
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