The 7 Pillars of a Practical Will
Whether you are young or old, healthy or ill, single or attached, you should have a will.
1) Why You Need a Will
Many people underestimate the importance of a Will, but the reality is that whatever your financial status, you will leave something behind. A will gives you the control and assurance that the people you love the most will be taken care of when you are no longer there. Without a will, your family could be left with financial and legal challenges and disputes that could last for many years. Dying intestate (without a valid will) or an incomplete Will means you have no say over who winds up your estate or what they charge. You can save your family this undue stress by seeking the assistance of a professional estate practitioner or financial planner.
Wills need to be revised from time to time, especially if important events have taken place in the life of the Testator. These events may include the birth of a child, marriage, divorce, death of a beneficiary or executor, gaining of property that is not part of the existing Will, etc.
2) Do it properly with a professional
Don’t be tempted to use a template Will or to copy a friend’s; there is just too much at stake here to take any chances. Apart from all the legal formalities involved, there are a multitude of practical considerations that all call for professional help.
Badly drawn Wills risk outright invalidity, reduced tax and estate planning efficiency, confusion, doubt and dispute – our law reports are replete with bitter and costly family feuds that would have been avoided with a properly drawn and executed Will.
3) Appoint the right executor/s
Your estate will be administered and distributed by an executor or executors. We recommend that you nominate a non-professional such as your spouse as an executor but your Will should include “The Power of Assumption” so as at time of death the Executor’s may choose someone who is professional and who they can trust to act with absolute integrity and professionalism and be able to negotiate an equitable fee – you will no longer be around to keep an eye on them.
4) Have a Practical Plan for your Loved ones
Firstly, all your bank accounts and other assets will be frozen when the executors take control and deceased estates take a long time to wind up. Check that your dependents will have enough cash on hand to tide them over for at least several months’ worth of living expenses. The most common solutions include separate bank accounts, investments and life assurance policies that will pay out directly to dependents’ and/or family trusts on your death.
Secondly, when you die your family will be in shock. Help them through the stress and anxiety of bereavement by keeping a file with everything listed below –
- The first list to put in front of the file is a list of the names and contact details of everyone you can think of who your family can and should turn to for support and advice – tax adviser, lawyer, , accountant, insurance broker, medical aid specialist, doctor, financial adviser, investment manager, bank contact, employers, employees, business partners and so on.
- Next, a copy of your Will and contact details for your executor (who should keep the original Will in safe custody).
- If you have wishes in regard to funeral arrangements, cremation etc., leave a signed directive giving details (or referring to any instructions in your Will).
- Medical aid details and details of any funeral policy.
- Copies of ID documents – for you, your spouse, your children, other dependents or heirs, guardians etc.
- Important family documents like marriage certificates, ANCs, cohabitation agreements, divorce orders and so on.
- A full list of your assets (give detailed descriptions of any important assets, and don’t forget full details of any loans made to family members) and your liabilities.
- Details of all bank and savings accounts, credit cards, investments, life policies, pension funds, retirement annuities and the like.
5) Think of the children
If you have minor children, a comprehensive Will becomes essential. If parents do not nominate Guardians in their Will, the courts will decide who raise their children, regardless of their wishes. Any assets left to a minor child will be placed in the Guardians Fund managed by the Master. This is extremely dangerous. A professionally drafted will usually makes provision the establishment of a Testamentary Trust which will provide for the children’s benefit and to pay for their support and education. It is very important to give careful consideration as to the identity of the Trustees responsible for administering the Trust.
6) Estate Duty
- It is important to do proper estate planning as the possibility exists that estate duty may be payable at your death. Ensure that there is sufficient cash in the Estate to pay the Estate Duty tax; otherwise it may lead to the forced sale of estate assets if there is a cash shortfall which cannot voluntarily be paid or taken over by the beneficiaries. The same principle would apply if there is Capital Gains Tax liability to be paid.
- In cases where you live together with another person, both parties frequently contribute to the household and collection of assets without registering any assets on both parties’ names or fully accounting for assets. The identification of assets therefore is very important.
7) What kind of taxes are payable on estates after one’s death?
The government levies estate duty, which is a form of tax, on the estate after your death. No estate duty has to be paid if your estate, which may include property, insurance and money, is worth less than an amount of R 3 500 000. Your estate will have to pay 20% estate duty on any net amount over R3 500 000 up to an amount of R30 Million, however after the 1st March 2018, you will pay 25% on any excess above an estate value of R30 Million. Estates are also subject to Capital Gains Tax.
A properly constructed Estate Plan enables one to take advantage of any tax efficient arbitrage.
NOTE ON: “LIVING WILLS & ADVANCE DIRECTIVES “
What are Living Wills and Advance Directives
Advance Directives and Living Wills are documents in which you make known your wishes for your personal care, and for your medical treatment or non-treatment. It only comes into effect if you are found to lack capacity to make personal decisions.
Difference between a Living Wills and a Advance Directive
Unlike a Living Will, Advance Directives give you the opportunity to appoint a medical proxy (a loved one or family member) to speak on your behalf should you be incapacitated and unable to speak for yourself. They are also more comprehensive than a Living Will.
In a medical emergency, or any other circumstance which leaves you unable to communicate, your Advance Directive will help those responsible for your care to decide on your treatment. And it will help your loved ones to make the right decisions on your behalf.
Without an Advance Directive you may be subject to aggressive medical intervention, which you may not want to have. Or you may have a specific medical condition for which you do want all available treatment.
Planning ahead with an Advance Directive can give your principal caregiver, family members, and other loved ones peace of mind when it comes to making decisions about your future health care. It lets everyone know what is important to you, and what is not. Talking about death with those close to us is not about being ghoulish or giving up on life, but a way to ensure greater quality of life, even when faced with a life-limiting illness or tragic accident. When your loved ones are clear about your preferences for treatment, they’re free to devote their energy to care and compassion.