Preparing a will is often something we avoid. We don’t want to dwell on our mortality, but estate planning is a vital part of a good financial plan. And, once you have spent time and effort in crafting a valid will, it’s easy to amend it as your circumstances change.
Wills can be very simple or they can be a maze of complicated jargon, depending on your personal situation and the value of your estate. They can cover items of actual worth, as well as those of sentimental value. But they’re absolutely essential; a legally binding, well-thought-through will can lessen the strain on your family when you pass away.
“Only a very small percentage of South Africans have a legal will,” says Ms. Jacinta Bassuday Legal Manager at Standard Trust Limited, “and even when a will is in place, common mistakes can render it invalid, which could place your estate, and your family, in turmoil.”
To avoid such pitfalls Ms. Bassuday outlines the necessary features of a will, below:
1. Review your will every year
Things change – people get married, divorced, move house, have children, sell assets, build or lose businesses – and those changes will impact on your will. So review your will once a year to ensure it represents your wishes when you pass away, and make any necessary changes to keep unfavorable statutes from coming into play. Choose a date as a yearly reminder and make a habit of it.
2. Don’t forget a residuary (‘leftovers’) clause
If you forget to include a residuary clause to cover property that you don’t specifically mention elsewhere in your will, you will die partially ‘intestate’, meaning the law will dictate how that property will be distributed, and to whom
3. Make contingency plans
Let’s say you’ve named four beneficiaries in your will, but one of them passes away before you do – you will have to name another beneficiary in his or her stead. In addition, name a reserve executor in case something happens to the first-selected executor.
Also work with your attorney/professional drafter on a number of ‘what if’ scenarios. For example, what if the value of your stock portfolio falls dramatically, how will that affect what you want to do in your will?
4. Don’t get too detailed
Rather than stating rand amounts, use percentages wherever possible. This is why:
Let’s assume that your estate is valued at R1.8 million when you draft your will, and you decide to leave most of it to your only daughter, except for R180 000 that you want to leave to your sister. Your daughter will get 90% of your estate. But when you draft your will, you don’t state the percentage, but instead state that R180 000 will go to your sister. You may think that your daughter will get more if the estate grows in value. However, this may not be the case. What if the value of your estate decreases, because of an unexpected dip in property prices or an unforeseen tax liability? When you pass away, your estate could have dwindled to R185 000. By using rand amounts instead of percentages, your sister will still get R180 000, but your daughter will get very little.
5. Don’t keep secrets from your lawyer
It’s suggested that you give your attorney or trust company all the details about your finances: offshore accounts, the money under the mattress, or your claim to the Kruger millions - make sure they know about all of it. If not, you family or heirs could find themselves battling to lay claim to assets you intended them to receive on your passing.
6. Ensure your life policies reflect what you have in your will
If you decide to change a beneficiary of a policy, you must change both the policy and the will. It is also important to note that, if you have pension funds, the trustees of the fund must ensure that any dependents get the funds, regardless of what you say in the will. It can take up to a year for the dependents to get the paid-out funds if the Trustees get involved in claims from dependents that were not nominated in the will.
“This is why life insurance is so important,” explains Ms. Bassuday “If the correct documentation is in place, your heirs should receive payment from a life policy within 10 days. This will give them access to much needed funds while the estate is being concluded.”
7. Store your will in a place your loved ones can easily locate
Give a copy of your will to your executor and another copy to a trusted person. Set aside an afternoon to organise your documents and accounts, so the finalising process can run smoothly.
8. Make sure your will is properly signed
“This is perhaps the most common mistake,” says Jacinta “Your will must be signed and properly witnessed, or it will be rendered invalid, which is one of the reasons it’s a good idea to have a professional drafter”.
A properly drafted will is more likely to give you and your heirs peace of mind, knowing that their futures will be financially secure.
“Though the process may make some feel uncomfortable, a legal, effective will can extend your love and care for your loved ones beyond death,” says Ms. Bassuday