Let’s get this straight: Having a Will is not sufficient. Rather, having a proper drafted Will in line with your wishes is the fundamental, basic, main prize. Nothing less than this is good enough.
One of the main concerns is ensuring that your Will adequately takes into account your wishes when dealing with your minor children. Problems are typically encountered at administration of the deceased estate when it comes to Trustees, who were named in the Will, and with whom the deceased has not had a relationship for the past few years.
These Trustees are usually not in a position to adequately manage the Trust, or, are not on good terms with either the surviving spouse or the minor children. When attending to bequests relating to minor children, proper advice needs to be obtained to assess the options available in order to ensure that your children’s inheritance is protected.
In order to assess the need to update your Will, ask yourself the following questions:
- What will happen to your assets when you pass away?
- Has a guardian to your children been named in your will?
- Are you sure that benefits to your children will devolve to the Guardian? Is this mentioned in your Will?
- What happens when the Guardian passes away?
- Does the Guardian have the necessary skills to administer the assets for the benefit of your children?
- Is your Will worded in such a manner which ensures that the best interests of your child is taken into account?
Possibilities can be considered when minors are involved and the consequences of each are as follows:
- When dealing with minor children and how they are to be looked after your demise, needs to be planned for when attending to your Will. When drafting your will, you are afforded the opportunity to nominate a guardian, whom you trust and of your choice, to look after your child. Taking into account that you and your spouse are the natural guardians of your children, the opportunity to appoint another guardian, who will then act as such, will only be effected after both your deaths. It is further imperative that a clause be inserted to the Will, to deal with any bequest to the Guardian of the minor, otherwise there could be unintended consequence of having the funds paid to the Guardian’s Fund, which is administered by the Master of the High Court.
- In the absence of a valid Will, a Tutor will be appointed by the Master of the High Court to attend to the affairs of your minor children. Should a minor be the heir of your assets, the following should be taken into account:
- Immovable assets can be transferred to a minor by the executor;
- However, an inheritance of movable assets and cash can only be received by the minor if the guardian is willing to accept such inheritance on their behalf. The acceptance of cash or transfer of movable assets on behalf of the minor by the guardian is also subject to the condition that the Will of the Testator has to direct this – and if security has been given by the guardian to the satisfaction of the Master. If neither of the above is provided for, the executor will have to pay the cash (both by way of liquidity which already existed in the estate and by way of movables that has to be sold), into the Guardian’s Fund. Thus, should your minor children inherit a cash amount of R100 000 without a clause stating that such amount is to be payable to such minor’s Guardian to be held for the benefit of the minor, the R100 000 cash amount will be paid to the Guardian’s Fund, to be held until majority of such minor.
- A Testamentary Trust can be created which allows safeguarding of the assets in the Trust for the benefit of the minor until such time as the Testator deems it fit, and necessary, to have the funds distributed to the child. It is important to make provision for creation of a Testamentary Trust in your Will, as the protection and powers of the Trust are contained solely within the Will. This meaning that, the powers are limited to the terms of the trust, i.e. if it is not contained in the trust, it is not allowed. This may result in your Trustees not having appropriate and comprehensive powers to administer the Trust in line with your wishes, possibly resulting in abuse thereof by the Trustees or beneficiaries. It is advisable to have such provision dealing with a testamentary trust drafted by a fiduciary specialist.
We regularly deal with clients who are frustrated by sheer number of pages in their Will. By opting for a simple Will, you run the risk of creating a Testamentary Trust that does not provide for any powers for the trustees. This can have disastrous consequences when attending to the administration of your estate on your death.
- Should you already have a family Trust in existence, it could, depending on the purposes of the Trust, be advisable to have the assets transferred to the inter vivo’s Trust on your death, to be administered in terms of the Trust deed, for the benefit of your beneficiaries.
Remember, each family has a unique set of circumstances that should be catered for when attending to estate planning needs. There is simply no “one size fits all” solution when it comes to a valid Will. The first step, however, is to get in touch with an experienced fiduciary professional who can offer valuable guidance on your unique position.
AUTHOR: Remay de Kock, Legal Adviser at BDO Wealth Advisers