The Need for a Will | Merchant West

Articles | The Need for a Will

We are certainly living though unprecedented times in South Africa as we are confined to our homes in order to stop the COVID-19 virus that is rapidly spreading across the world. Not only is it affecting our movements, our ability to socialize and work, but it is also having a significant impact on our economy and the strength of our currency. What will happen next? Who knows? No one can predict how far this virus will span or the exact impact it will have on all of our lives. Although, what we do know is that now more than ever, it is imperative to plan for any outcome or possibility. Even in the best of times, the basics of estate planning should be done by every single person, and that includes signing a Will and planning for the cash needs of your family immediately after your death.

If you do not sign a Will, your estate will devolve in terms of the rules of intestate succession. This could mean that someone who you would have liked to bequeath a specific asset to, will not inherit that asset from you. Without a Will, there is no nomination of an executor by you, with the result that nominations of an executor would have to be obtained from your closest family members after your death before it can be lodged with the Master of the High Court, causing possible delays.

The assets in your estate will be subject to executor’s fees. The maximum tariff that an executor may charge to administer and wind up your estate is 3.5% of the gross value of the assets in your estate, including the value of the proceeds of the above policies payable to your estate. You can nominate an executor in your Will and place on record in the Will that the nominated executor has agreed to charge a discounted executor’s fee at a reduced rate.

 

Why your Will could be out of date

Changes in circumstances or changes in legislation can cause your Will to be out of date, with the effect that the consequences thereof are not what you intended it to be.

If your circumstances have changed as follows, you should (in general) reconsider your Will:

  • Change in your marital status: if you were divorced more than three months ago and still bequeath assets to your (now ex) spouse in your Will, he/she will inherit those benefits even if you would rather exclude him/her as heir;
  • Death of an heir: if you failed to name an alternative heir in the event of an heir being predeceased, the benefits could devolve on the deceased heir’s estate to devolve in terms thereof;
  • Children becoming of majority age: children over the age of 18 can inherit and hold assets in their own name, eliminating the need for trust structures for minors;
  • Acquisition of foreign assets: Foreign assets acquired after the date of signature of your last Will, could be more efficiently administered in terms of a foreign Will depending on the jurisdiction where it is and the type of asset, than being covered in terms of your South African Will. Probate may also be necessary to be able to transfer these assets to your heirs, and the process of applying for probate may be delayed with one Will dealing with your worldwide assets and your executor having to obtain sealed copies of lodged documents from the Master of the High Court in South Africa.

 

Checklist to ascertain if you need to update your Will

Below is a 12 Point checklist to assist you to ascertain whether you should relook at your Will or update it:

1.

Is the date of signature on your Will more than five years ago?

If so, you should update your Will. Personal circumstances change over the course of a few years.

 

2.

Do you have Wills that deal separately with your South African and non-South African assets?

The administrative process of a deceased estate is simpler and easier if Wills dealing with assets in different jurisdictions are separated. SA legal terms used in Wills are often different to those used in other countries where you have assets, and may cause interpretation issues with additional cost and time implications. Some jurisdictions have forced heirship rules instead of our wide powers of testamentary disposition. Bequests of immovable properties situated in such countries may as a result hereof not devolve in terms of the directions in your Will to the heirs you bequeath it to, but in terms of these rules to other persons. If your worldwide Will drafted in SA is in Afrikaans and you have foreign assets, it may cause further delays and costs, as a translation of that Will may be needed to deal with the foreign assets.  

 

4.

Dth If your answer to question 3 is yes, does the Will that deals with the respective assets in and outside SA clearly state that it deals only with those assets, and even more importantly, that it only revokes Wills dealing with the respective assets situated in the particular jurisdiction? If not, one Will may unintentionally give rise to the provisions of another Will being in conflict with the other or even worse, the one Will can revoke the other resulting in you potentially dying intestate in respect of certain assets.

 

5.

D Have you negotiated the executors’ fees with your nominated executor and have you included the agreed fees in your Will?

The maximum legal tariff is 3.5 % plus VAT of the gross value of the assets administered by the executor. A further 6% plus VAT may be charged on income collected by the executor after your death. You can agree on a discounted fee with your nominated executor and ask the drafter of your Will to place it on record in the Will.

 

7.

Have you nominated guardians, failing the biological parents, to your minor children in your Will?

The nomination of guardians serves as an indication of your wishes in this regard. A conversation should be had with the nominated persons to ensure that they are aware hereof and agree hereto. Nominations in your Will and that of your spouse should be the same persons.

 

8.

Do you direct that bequests to minor children (below 18 years of age) be handed to their legal guardians or kept in trust until majority age?

If not, the bequests to minors may be paid into the Guardians Fund and will be kept under their control until the heirs are majors.

 

9.

           Have you considered the consequences of your marital regime on your death (if married)? A marriage in community of property may mean that you can only dispose of a half share of the assets in your communal estate in your Will. The accrual system being applicable to your marriage may have unintended consequences, including that your spouse firstly receive the accrual claim proceeds, which may have the effect that bequest to other persons are reduced.

 

10.

Have you considered the effect of US or UK situs assets and the potential liability for inheritance taxes in the US and the UK at your death? Assets situated in the US or in the UK such as fixed property and shares listed on an exchange in those countries, may cause your estate to incur inheritance taxes in those jurisdictions at much higher rates than in SA.

 

11.

Do you have a maintenance liability towards a previous spouse or to children in terms of a divorce order? Depending on whether the liability carries on after your death, you should provide for the payment thereof in terms of your Will to avoid your estate having to make monthly payments for years to come, as your executor will then not be able to finalize the estate.

 

12.

Do you own business interests? If yes, have you provided for continuity in the business? You can enter into a buy and sell agreement with a life policy associated therewith to provide the liquidity to your business partner to buy your share of the business, providing liquidity to your estate. Otherwise you should provide for succession in your business in terms of a shareholders’ agreement or a bequest in your Will.

 

 

By Marteen Michau

Founder of Fidelis Vox

Proud Fiduciary Partner to Sterling Private Wealth

 

For more information on how we can assist you with your estate planning and your Will, email us at info@merchantwest.co.za