When administering and winding up estates, one realises the crucial importance of a will. This might be one of the most important documents you will draft and sign during your lifetime. Death, in itself, is such a difficult time for the loved ones you leave behind. Your will (or the lack thereof) should not complicate matters even further. By having your will drafted in a clear and unambiguous manner, you will ease the future administration of your estate.
Here are 7 further reasons why you should have a valid will in place:
1) It is the only way in which you can ensure that your estate will be divided according to your wishes after your death.
2) If you do not have a valid will in place when you die, your estate will simply devolve according to the intestate rules of succession, which can be both inflexible and impractical. You will have no control as to who will inherit from your estate, with the result that the wrong person(s) may receive a portion/benefit from your estate. There are also many rules and regulations that need to be adhered to, which may further delay the administration of your estate and run up unnecessary costs.
3) In your will you have the opportunity to nominate an Executor to take control of your affairs once you pass away. The role of the Executor is to protect your assets, settle your debts, identify your heirs and distribute your assets in line with your will, a process that is overseen by the Master of the High Court. This role can be fulfilled by any adult person whom you trust, whether it is your spouse, major child, friend or a professional person such as an attorney or accountant.
It is advisable that you nominate an alternative (second) Executor, providing for the situation where your first nominated Executor is not willing or able to perform the duties of an Executor at the time of your death.
Furthermore, it is advised that you stipulate the executor’s fees as agreed to by yourself and the nominated Executor as this fee may be quite substantial, depending on the value of your estate.
4) If you have not appointed an Executor, your beneficiaries will have to decide and agree on a nomination and submit same in writing to the Master of the High Court, who has the final discretion in accepting the beneficiaries’ nomination and/or requiring the addition of an agent to assist the nominated Executor. This route will delay the winding-up of your estate considerably, especially if the Master does not accept one/more of the beneficiaries’ nominations.
In addition hereto, the Master may require that the Executor, appointed as set out above, provides security for the estate’s debt. Such security will normally take on the form of a security bond from a short term insurance company for the value of the assets reflecting in the preliminary inventory submitted to the Master. This will cause great and unfortunate inconvenience for the nominated Executor. A well drafted will usually contains a clause specifically exempting the nominated executor from having to furnish security.
5) By having your will drafted clearly and unambiguously, you will prevent a situation of heirs squabbling about who gets what. Disputes about the estate’s assets and debts frustrate and delay the administration process. In addition hereto, existing relationships between heirs may take a terrible, even permanent, blow.
6) Should you pass away without a will and you leave minor children behind, their inheritance, in terms of the rules of intestate succession, must be paid into the Guardian’s Fund until they reach majority. A downside to this happening is that the interest rate on the investment may be low. A further difficulty is that, should you leave behind a valuable property, the surviving spouse and/or major children may be forced to sell the property in order to raise the necessary funds to be transferred into the Guardian’s Fund on the minor child’s behalf.
This situation can easily be avoided by making provision for a testamentary trust in your will into which all assets inherited by a minor child will be transferred and kept until he/she reaches majority or an older age you may stipulate in your will.
7) For the more sophisticated planner, a valid will can be used as an effective tax planning tool. With the assistance of a professional/expert, you can legally structure your portfolio and draft your will in such a way as to minimize your estate duty liability upon death. Estate duty is payable from the residue of your estate, which is the portion that is left after all legacies and bequests have been paid out. Should the estate duty payable on your estate by unnecessarily high, the heir(s) inheriting the residue, will receive less than you might have intended.
Taking into account the knowledge and experience required to draft a will properly, paying for the good advice when drafting your will is a small price to pay.
Be pound wise – contact Meyer De Waal (firstname.lastname@example.org) for a consultation for the drafting of your will if you do not already have one in place.