Living Will & Testament: What you need to know
“I am still young… I took out life insurance a few years ago … I am always careful and take precautions for everything I do… I am a safe and considerate driver…”
Does this sound familiar? Unfortunately none of these are solely in your control – your life can change in an instant and you need to ensure that your loved ones are taken care of, even if the worst was to happen. Having a 'Will' drawn up, is in essence your voice when you are no longer here to speak for yourself.
'When you own a property, a 'Will' becomes even more important as you would not want your loved ones to be left without a roof over their heads 'explained Craig Hutchison, CEO of Engel & Völkers Southern Africa. “Having life insurance attached to your bond, will ensure that the remaining bond is settled with the bank and that your 'heirs' do not still need to cope with the financial burden on top of the emotional stresses”.
Craig explained the basic terms which we all need to know are as follows: When someone passes away they are referred to as the 'deceased'. The deceased normally has a 'Will' in place. Those who benefit from this 'Will' are known as the heirs, and the heirs receive an 'inheritance'. The money,property and belongings they left to their heirs is called an 'estate', and the 'estate' is administered by someone called the 'executor'.
So now we've got the terminology in place, let's answer the key questions which arise:
What happens if I do not have a 'Will'?
If you did not make provision by means of a 'Will', when you die,your estate is distributed according to the manner prescribed by the Intestate Succession Act, 1987. The chances are that you would ideally not like your estate to be divided as per the Act, which is why a 'Will' is very important,irrespective whether you are rich or poor. Allen West, Property Consultant at MacRobert Attorneys gave a guideline on how the act will divide your estate in the absence of a 'Will':
- Only spouse survives: Entire estate goes to spouse
- Only descendants survive: Estate is divided between descendants
- Spouse & descendantssurvive: Thespouse gets R2 500 000 or a child'sshare and the balance is divided equally between the spouse and descendants
- Both parents survive: Total share is divided equally between both parents
- One parent: Total Estate goes to the parent
- One parent &descendants: Half the Estate goes to the parent;balance is divided equally amongst descendants
- No spouse; No descendants;No parents; but descendants through mother & descendants through father: Estate divided into two parts: half to descendants through mother;half to descendants through father
- No spouse; No descendants;No parents; No descendants through mother or father: Full Proceeds of the Estate has to be paid into the Guardians Fundin the event of no descendants whatsoever.
Always get the advice of an expert when drawing up your 'Will'. Your attorney, bank or financial advisor can assist in having your 'Will' drawn up. “In order for a 'Will' to be valid upon your death, your 'Will' must be in black and white, signed by impartial witnesses in front of the testator, signed on every page by all parties and clearly dated to ensure the last version is the one which will be used” advised Allen.
Every 'Will' needs an executor
After you have decided what you would like your 'Will' to say, it is time to name an executor. This is a very important step as this is the person in charge of taking control of all assets and liabilities, and distributing your estate as per your wishes. Whilst executors have a fiduciary responsibility of care, they are also bound by various laws and taxation requirements.
Ensure that you regularly revise your 'Will' as your living situation might change. Getting divorced, children being born or growing up and being able to sustain themselves, retirement, marriage etc. could impact on how you would like your inheritance to be divided. “We advise that you set a personal task to revisit your will every year on a set date. Almost an anniversary for your 'Will'. This way you can rest assured that you have not forgotten any property which you might have obtained or disposed of, as well as amending your personal situation” Craig recommended. “Doing this together with a revision of your life insurance will guarantee provision for escalation”.
What is the procedure followed once a person dies?
- Get a medical certificate
- Register a death with the department of home affairs
- Plan the funeral
- Locate the 'Will'
- Contact the person who is appointed as executor who will report the estate to the Master, and administer the estate in accordance with the 'Will' or otherwise
What happens to the property if I die?
Your heirs may either instruct to sell the property, or live in the property until the estate is resolved. Either which could take up to a year depending on the complexity of the estate.
Do my heirs pay tax if they inherit my property?
According to SARS, an asset acquired by a SA resident heir by means of inheritance from a SA resident or non-resident deceased estate, is what is described as a 'capital receipt' and is therefore not included in the heir's gross income. In South Africa, there is therefore no tax payable by the heirs who get an inheritance. Capital Gains Tax (CGT) is also not payable by the receiver of the inheritance. Estate duty and CGT, where applicable, are usually payable by the estate. If it is a foreign estate, it will be subject to the taxes of its country of origin. In South Africa, immovable property in SA falls within SA Tax Laws.
“There are many steps following each of these main headings and one can see why an expert needs to be consulted. So before you burden your loved ones with unnecessary stress, make sure you have taken the basic steps to alleviate any problems you can on their behalf” Craig concluded.
MacRobert Attorneys has an estate and trust division and specialise in providing expert advice and services in respect of drafting and safekeeping of 'Will's, estate planning, mortis cause and inter vivos trusts and deceased estate administration. For the period of 12 to 16 September 2016,MacRobert Attorneys are participating in National Free 'Will's week. During this period MacRobert Attorneys offer a free consultation for a basic 'Will'. Simply contact Elma Deppe on 012-4253574 or firstname.lastname@example.org to make a booking or send inquiries.