The benefits of estate planning and having a valid will are undisputed and go hand in hand.
Structuring your estate in a cost-effective way enables
you to preserve and grow your wealth for the benefit of your heirs, while
having a valid and up-to-date will ensures your estate will be distributed according
to your personal wishes.
Doing this for loved ones will help secure their
future and may spare them many headaches.
“The set-up and needs of every family are unique, and can be complex, so it’s a good idea to speak to an accredited financial adviser who can help you make informed decisions suited to your specific situation,” says Shakira Bodasing, senior legal adviser at Old Mutual. “Most importantly, a financial adviser can give you insight into the cost or tax implications of your various options.”
What needs to be your focus when estate planning?
Bodasing explains there are two main priorities when
it comes to estate planning:
- The first priority is to make sure you have enough liquid assets (assets that can be easily converted into cash) to pay all your liabilities (outstanding debts and taxes as well as estate duties and executor fees). Options to cover these and other expenses include taking out a life insurance plan, which generally pays out promptly and is not tied up in the estate bank account.
- Your second priority is to manage and maximise your assets so you can provide your beneficiaries with the financially secure future you envisage for them.
Can you appoint your own executor in your will?
Yes, in your will you can state who you want to
appoint as the executor of your will. This could be a trusted family member (but
preferably one who is not also a beneficiary) or an attorney.
The role of the executor can be complex, and you need to carefully consider who takes up this role.
Can you nominate guardians for your children in your
Yes, this is another important benefit of having a
will. Drafting a will gives you the opportunity to nominate a guardian (ideally
a trusted relative or friend) to look after your children’s best interests in
case both parents pass away.
“As a parent, knowing your young children will be well
taken care of can provide enormous peace of mind,” says Bodasing.
Ensure that the person you want to nominate fully understands
everything this role entails and is willing and able to take up this
Be aware too that if you appoint someone who has no
experience of winding up an estate, the Master of the High Court may request
that they furnish the Master with a bond of security.
You also have the option of setting up a testamentary trust in your will to hold and administer assets on behalf of beneficiaries who are under 18 or physically or mentally challenged.
What happens if you
die without having a valid will?
If you die
‘intestate’, your estate will be administered and wound up according to the
Intestate Succession Act by the Master of the High Court. You will have no say in
the appointment of the executor or guardian, nor will you have a voice in the distribution
of your assets.
Your estate will be divided among your
surviving spouse, children, parents or siblings according to a set formula dictated
disadvantage of passing away without a valid will is that it can potentially leave your loved ones
without access to your funds for many months, even years, until the estate is
finally wound up.
In short, there are many disadvantages to dying
intestate, and no advantages.
What does it mean to have testamentary capacity to
write a will?
In terms of South Africa’s laws on
succession, you need to have “testamentary capacity” to draw up or amend your
will. This means you need to be of sound mind and have the mental capacity to
For this reason it’s a good idea to include your witnesses’
full names and contact details on your will. If your cognitive abilities are later
contested, the court can call on the witnesses to give testimony on the state
of your mind at the time the will was signed.
The court generally assumes that if you are of sound
mind you will not be manipulated by others or sign documents you don’t like or understand.
More useful estate planning tips
- Check your will regularly and update it whenever you experience a major life change. Having a child or getting married or divorced are likely to affect your choice of beneficiaries, for instance. Financial events like buying a new property or business also need to be reflected in your will.
- If you want to make significant changes to your will, it is best to draw up a new one. Your new will must include the date and state upfront that it revokes (cancels or renders invalid) all previous wills and codicils. If possible, destroy the old will and its copies.
- Store the most recent original will safely with your lawyer or bank. Speak to your financial adviser regarding secure options.
For more information or guidance on estate planning and drafting a will, go to www.oldmutual.co.za/personal/solutions/wills-trusts-and-estates/
To speak to a financial adviser call 0860 60 60 60.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer. Ts and Cs apply.