During National Wills Week, 11 September to 15 September, people across the country have the chance to have their Wills drafted free of charge. With this in mind, individuals should take the time to learn more about the drafting of valid and legally enforceable wills, to make the most of this opportunity.
According to Anica Ungerer, the current Manager in the Wills and Estates Department of Mazars, there are various aspects that individuals need to take into consideration when drafting their Will. “Being informed about these aspects will allow individuals to provide proper and well thought through instructions to the professional assisting them with their estate planning and the drafting of their Will.”
The administration of deceased estates can be quite complex and there are various administrative difficulties that can arise if your Will was not properly drafted, Ungerer says. “However, this fact should not deter people from attending to estate planning with the relevant professional and setting up a well thought through Will.”
The following six aspects are some of the most important bases to cover and whilst some may seem trivial, they could potentially lead to massive administrative problems that cannot always be overcome after death, says Ungerer.
1) Choosing the right executor
Ungerer explains that appointing two executors is a good start to effective estate planning. “It is important to choose an Executor, such as a relative or a friend that your family trusts, to act in conjunction with a professional. This Executor would, in conjunction with the beneficiaries, be directly involved in important estate related decisions. At the same time, the Master of the High Court has recently become quite difficult when dealing with Wills where only a lay person was appointed as a an executor, going as far as to refuse to issue a Letter of Executorship unless they have proper confirmation that assistance will be provided by qualified lawyers, accountants or firms that specialise and are experienced in the winding up of estates.”
Ungerer adds that, in order to ensure that there is proper representation for the family but simultaneous representation by the relevant professional, appointing two executors with one being a family member or trusted friend, and the other being a professional, could solve a lot of potential problems and assist in avoiding unnecessary delays.
2) Specifying guardians for minor children
“If you are a single parent or in the event that you and your spouse pass away simultaneously, you should make provision for a guardian in the event that your children are minors (below the age of 18 years) ,” Ungerer says.
She adds that, although a court can be consulted in the event that the Will was not clear on this aspect, setting this out in your Will, will ensure that your children end up with the individuals of your choice and will further assist in avoiding the legal expenses that goes hand-in-hand with any court related application.
3) Bequests of movable items
Ungerer says that special bequests of cash or assets of value are a good way to provide individuals (in addition to your rest and residue beneficiaries) with specific assets you would like them to have. “It is however important to avoid making so many special bequests that the rest and residue of your estate is left with inadequate liquidity or assets to settle estate related costs.”
Furthermore, bequeathing too many movable assets of little monetary (second hand value) such as furniture (excluding antiques, valuable paintings, jewellery etc.) will definitely make the administration of the estate more difficult and time consuming, she adds.
“A more practical way of allocating specific assets to specific individuals is to leave a detailed list, separate to your Will, with instructions as to the distribution of these items. As briefly mentioned above, it is also important to keep your liabilities and rest and residue beneficiaries in mind when setting out special bequests in your Will,” she says.
The main reason for this, is that, if the administration costs and liabilities exceed the rest and residue of your estate, it would leave your rest and residue beneficiaries with no inheritance and will force your executor to ‘abate’ (proportionately reduce) the award of specifically bequeathed assets, she explains.
4) Dealing with foreign assets
“In the event that you have extensive assets overseas (specifically immovable property), it is advisable that you draft two Wills, one dealing with the distribution of your foreign assets and the other dealing with the distribution of your South African assets. It is also very important to keep a proper record of all your assets (both local and abroad),” Ungerer says.
She adds that, specifically related to immovable property and the distribution thereof, it is important to bear in mind that many European countries have their own laws governing the division of these assets. “This means that, in some instances, it may not be possible to distribute these in terms of the provisions of a South African Will if the foreign laws were not taken into proper account when the Will was drafted.”
5) The tax consequences of death
“Estate Duty becomes payable when the net asset value of your estate exceeds the current rebate amount allowed by SARS. Currently the rebate is R3.5 million for individuals. However, note that since 2010, in the event that a married individual leaves his assets to his spouse, the last dying would have a rebate amount of R7 million available in their estate. However, note that the rebate will be reduced by any amount utilised in the estate of the predeceased if any assets were bequeathed to individuals other than the spouse,” Ungerer says
Death is regarded as a Capitals Gains Tax (CGT) deemed disposal of assets falling into the scope of the Act, specifically assets such as property and shares,” Ungerer says.
If an asset is bequeathed to and transferred into the name of a surviving spouse, she explains that there will be a roll-over of CGT until the death of the last dying. “However, should the asset(s) be sold, the sale will generate a further CGT event for, and to be dealt with in the estate of the first-dying. It is important to be fully aware of the various taxation issues that may arise from a deceased estate, specifically in these times where there have been quite a few annual amendments to the tax laws affecting specifically deceased estates.”
6) Reviewing your Will regularly
Lastly, Ungerer says that individuals need to revisit their Wills at regular intervals, more specifically whenever their circumstances change.
“This could, for example, be when there is a marriage or divorce or when a child is born, if you start a new business or obtain a large sum of money. Do not accept, once a Will has been drafted and signed, that you are set up for life,” she cautions.
“Being proactive and taking due care of these aspects at the time when your Will is drafted, will assist in simplifying the administration of your estate one day and will also save your loved ones from having to deal with further complications during an already difficult time,” Ungerer says.