Is your Last Will and Testament valid and up to date?

We are all aware of the saying ‘nothing is certain except death and taxes’. Morbid as it might sound, it’s never a convenient time to start thinking about what will happen to your family or assets once you are no longer here. Drafting a Will, is something that everybody needs to prioritise at some stage and rather sooner than later, as we never know what the future holds.

“Property is the biggest asset you will ever own. Whether it’s new property you are purchasing and thinking of your first Will, or an addition to your property portfolio where your current Will just needs to be updated, having a Will is non-negotiable ”says Craig Hutchison, CEO Engel & Völkers Southern Africa.

Here are a few guidelines to compiling your last Will and Testament to make more understandable and a little less overwhelming:

Why draft a Will?

• A Will brings clarity and certainty and allows you to determine who will benefit from your estate, giving you the opportunity to dispose of your assets according to your wishes.

Who needs a Will?

• It is a common misconception that you only need a Will if you have a large number of valuable assets. Any person older than 16 years who has assets, even if it is just a car or a bank account can compile a Will “It is particularly advisable to have a Will if you own a business or overseas assets; if you are married; divorced or have a life partner or if you have dependents such as minor children”, states Katherine Timoney, Candidate Attorney at Gillan & Veldhuizen.

What happens when there is no Will?

• Christel Botha, Fiduciary Services Manager at Alexander Forbes states that with no Will in place, there is a law that determines who will inherit from your estate (Intestate Succession Act). This may cause inheritance to devolve to someone whom you may not have wanted to inherit from your estate. A spouse, for instance, will only be entitled to a child’s share or R250 000 whichever the greatest in cases where a spouse and children survives the deceased. The marital regime will also have an immense effect on how the estate is distributed.

The hierarchy of intestate succession Act is as follows:

• Primarily the spouse and children of the deceased.

• If a parent of minor children dies, without a Will and the other parent is unable to provide care, the state will have the power to determine who will become the guardian of the children, and the property they will inherit.

• If there is no spouse or children, the surviving parent(s) will benefit.

• If the parents are predeceased, the closest blood relatives will benefit.

• If no surviving blood relatives are found, the estate will be converted to cash and will be paid into the Guardians Fund. 

• If the money is not claimed by a person entitled thereto within 30 years, then the money is forfeited to the state. 

Where do I start?

Start out by drafting a Will. “It is best to contact a professional which may include your financial adviser, a Trust Company, an attorney etc. Many people tend to use a template Will which they may have obtained from the internet which only allows for information to be completed, however, these kind of Wills are not always in line with legislation and may leave your heirs with lots of challenges when the estate needs to be administered” Botha added.

Keep the following in mind:

• Who do you want to manage it – who do you trust?

• What do you have to leave behind?

• Who do you need to leave something for?

• What about your children?

Documentation that should be kept together with your Will

• Death certificate

• ID of the deceased

• ID of the surviving spouse (if applicable)

• Marriage certificate (if applicable)

• Antenuptial contract (if applicable)

• Details of all assets and the value there of, including: bank accounts, pensions, stocks and shares, property (movable and immovable)

• Tax details

• Medical aid

• Life insurance information

What specifics needs to be included:

• Include as much as you can, it is always better to be over prepared than not at all. We asked the experts each for their recommendation of what to include:

Property (investments/assets)

• Compiling a list of assets and liabilities is always recommended. In some cases where a fixed asset is bequeathed to more than one person, the asset may need to be sold where for example one of the heirs wishes to sell their share in the asset. Investments and bank accounts needs to be specified should they be left to someone in particular -Christel Botha, Fiduciary Services Manager at Alexander Forbes

• Leaving property to more than one individual, although completely valid, could cause potential practical problems when it comes to the estate of that individual. Furthermore if an individual owns immovable property abroad it is important to consider the possible necessity for a foreign Will (depending on the laws regulating the division of land in that particular country) - Anica Ungerer, Manager in the Wills and Estates Department of Mazars

• The most important to be considered in the case of property is the case of farms. A farm (any property over 18 hectares) may only be registered in one person/legal entity’s name. Therefore, if you would like to leave a farm to more than one heir, it must be inherited by a company, where the shareholders are two heirs, for example, in equal parts. If the owner does not set this up in his or her will, the only solution is to enter into are-distribution agreement (buyout) or have the executor sell the property to the company. If this is the case, transfer duty applies, which can be heavy. Any number of people can own residential or commercial property under 18hectares - Lynne Serfontein, Fiduciary services consultant at FedGroup

• Property should be described accurately and clearly referenced to the title deed of the fixed property, investment contract numbers, etc. that will make sure that the right asset is bequeathed to the right heir advises -  Elbe Thatcher, Fiduciary Specialist at Old Mutual Wealth Fiduciar

Spouses vs. Partners

• Legally speaking, there is no such thing as a common law spouse, so the law does not recognize this union. A ‘common law’ spouse is not entitled to anything, as far as assets are concerned. They may get something from your pension fund, as pension funds are governed by the Pensions Fund Act that will define a dependent and a “spouse” under different rules –but again, this differs from pension fund to pension fund. This is a grey area if you are not legally married. Therefore, it is imperative that both a Will and all appropriate beneficiary forms are filled in. But, the Will is not a standalone contract – the trustees of the pension fund can override the Will.

• You have complete freedom of testation in the Will –and can bequeath everything to your partner, irrespective of marital status –this will not be questioned by the state. But, your partner will only get everything that is managed by the executor – e.g. assets. This is not applicable to pension funds, nor life insurance (unless there is no beneficiary on life assurance, in which case it’s payable to the estate). If there are beneficiaries, they will be the recipients, and this insurance contract, overrides the will.

Children

• If your child is younger than 18, they cannot sign a receipt on the inheritance. If you don’t have a Will, your entire estate will be reduced to cash, and that cash is paid into the guardian’s fund (governed by master of the high court). This includes family heirlooms and property, and government sets the interest rate. The guardian is required to go to the master’s office and must provide or issue receipts and quotes if they wish to apply for funds to help raise and educate the child. At the age of 18, the child must present in person at the master of the court, prove who they are, and go through an onerous process to have the capital released to them.

• It is, therefore, much better to create a will trust ,where appointed trustees manage and invest the financial assets, keep heirlooms safe, and pay the guardians of the child a monthly amount, plus education, and teach them how to safe guard the money. In this case, the parent can specify at what age the capital is released. For example, he or she may specify: 10% at 21; 10% when qualified; and so on. This can ensure the child is encouraged to better themselves and get educated.

• The priority for all trustees is to take care of the beneficiary and get them educated. The trustee has an obligation and duty to act in beneficiary’s best interest. Such trusts must be registered with SARS and annual financials need to be done, so that when the child comes of age, the trustees can account for what they’ve done with the child’s money. Choose your trustees with care. Over and above having trustees, your children also need a guardian to look towards schooling, who your child associates with, religion, and emotional care and guidance. The guardian will receive monthly amounts from the trustees, and both parties must be named in the Will.

How much will it cost?

“A will can costs anything from nothing, to overR10 000. At Fed Group, we charge R513 if we are appointed the estate’s executor. For an additional R1000+VAT, you can appoint anyone to be the executor” says Lynne Serfontein (CAIB) TEP, Fiduciary services consultant,Fed Group.

Who should keep copies of the Will?

Charmaine Schwenn, Director, Tate, Nolan & Knight Attorneys advises that during his lifetime a testator may keep the original Will or entrust it’s custody to some other person or institution. It is important to keep the original Will in a safe place as the Master of the High Court who oversees the Executor will only accept an original Will complying with all the statutory formalities of drawing a Will. Most attorneys have a securities safe-keeping facility that is indexed and fire proof. It is best that the testator retains a copy and leave a copy with someone they trust with clear instructions as to where the original is located. The biggest difficulty that some encounter is that on the death the family cannot locate the Will.

When and how often to update a Will?

Whenever there are any major changes in your life, your will should be top of mind. These include a marriage, the birth of a child, divorce, purchasing new property or the death of a beneficiary or executor. Your Will must be adapted to fit your circumstances. For example, when your children no longer are minors, you may no longer require the provisions that you had in place for guardians and trusts to administer their inheritance. It is important to update your will after a change in marital status, particularly after a divorce. If you do not change your will to prevent an ex-spouse from inheriting after a divorce, an ex-spouse is still entitled to inherit if the other spouse dies within three months of the divorce being finalised.

Who will execute the estate?

Executing a will could be a long and difficult process. It involves dealing with the Masters office, SARS, banks, the insurance, creditors and much more. Thatcher says the administration of the estate will be done by the executor nominated in the Will. If no executor was nominated in the will, the Master will appoint an executor to administer the estate.  In South Africa, there isn’t a formal “reading” process – once a person dies the Will becomes a public document. 

The process after death

• The ID document of the deceased must be found. If your local GP certifies the death is by natural causes, a post mortem examination can be avoided. If unnatural causes are suspected, the police will undertake a full inquest. The undertakers will apply to Home Affairs for a death certificate, which is received 5 – 7 days after death.

• Executor will provide the family with a list of requirements (title deeds, credit cards, ID documents, and assets and liabilities).

• The executor will analyse the information received and apply to master of the high court for letters of executorship i.e. authority from the court to act.

• The executor will open an estate late bank account –everything must flow into a bank account relating to the deceased, and the executor is accountable to the last cent.

• The executor will publish a notice to creditors, to establish if the estate is solvent or insolvent. The executor will then collect information/proof on all the assets, and liabilities and see to the lodgement of personal, income, and capital gains tax. If the estate is valued at more than R3.5 million, then they will look at estate duty, i.e. death taxes. If there is estate duty or minor children, then sworn valuations on everything, by an independent sworn appraiser are necessary.

• The executor then draws up an account, which is advertised in the newspaper. If this is free of objections, transferring assets to heirs begins. 

How long does it take after death for the estate to be resolved?

Botha notes that this depends on the complexity of the estate. Any delays being experienced, the existence of any possible litigation matters, possible maintenance claims, possible existence of children out of wedlock etc. may cause a delay during the estate administration process. A simple estate can be administered between 6 and 12 months, however, each estate can only be assessed by considering all the merits concerning the estate before establishing a time frame.

Death is inevitable so it’s your responsibility to set aside a few hours to take care of this very important document. Most people will avoid this as they find it very intimidating and don’t really know where or how to start. There is no better time than the present to draw up your Will. “At least you will have peace of mind that should anything un fore seen occur, your property will be distributed in terms of your wishes” Hutchison concluded.