Many of us postpone the task of putting pen to paper to record our wishes regarding the distribution of assets when we die. Unwisely, as it is important to have a will to ensure that your estate devolves efficiently, cost effectively and with a minimum of delay upon your chosen beneficiaries. And to achieve the latter, you should ideally seek professional advice.
WHAT WILL MY WILL DEAL WITH?
Your will must take many things into consideration, the most obvious being the nomination of heirs and the appointment of an executor to administer your estate. A trust can be created to control any assets being awarded to a minor child and it is also possible to stipulate your choice of guardian to care for your minor children in the event of the untimely death of your spouse and yourself.
However, issues which are less apparent but also of paramount importance, should always be considered in conjunction with the drafting of your will. Consider the following questions:
- Will there be sufficient liquidity in your estate to pay your debts and at the same time provide for the financial security of your family?
- Do you have business interests which may be vulnerable?
- Can estate duty be minimised?
- Is your mortgage bond covered by insurance?
- If applicable, where will the funds come from to meet your obligations in terms of a divorce order?
- What are the capital gains tax implications?
- Is your will correctly structured to cover your offshore assets?
Any or all of these aspects may have relevance for you, and by seeking the best possible professional assistance you will be able to identify problem areas, investigate solutions and achieve the peace of mind of knowing that you have done everything possible to streamline your financial affairs and to ensure that your will is a sound legal document.
SHOULD YOUR WILL BE REVIEWED REGULARLY?
Yes. Events which shape one’s life, such as marriage, the purchase of an additional property or a first property, the birth of a child, the death of a loved one or perhaps a divorce, all lead to a change in personal circumstances which may require the updating of your will.
CAN I DRAW UP MY OWN WILL WITHOUT SEEKING PROFESSIONAL ADVICE AND IF I DO SO WILL MY WILL BE VALID?
The law does not prevent a lay person from drawing up his own will but there are many legal formalities which must be complied with for the will to be valid. Often these are overlooked by the inexperienced draftsman with the result that the will is rendered invalid, a situation which may only be capable of rectification by a costly application to the High Court. In addition there are many issues which may need to be dealt with in a person’s will which might not be considered unless professional advice is sought.
HOW IS A DECEASED ESTATE WOUND UP?
The Administration of Estates Act prescribes the formal procedure which must be followed insofar as the winding up of a deceased estate is concerned. The executor must generally attend to the following:
- Handling each asset forming part of the estate in an appropriate manner;
- Settling all liabilities;
- Obtaining all necessary tax clearances ie. estate duty, income tax, capital gains tax;
- Complying with the provisions of the Administration of Estates Act including the placing of statutory advertisements and formal accounting to the Master;
- Communication with the heirs and all other interested parties;
- Collection and investment of all cash forming part of the estate;
- Payment and transfer of inheritances to the heirs entitled to same.
WHAT ARE EXECUTOR’S FEES AND CAN IT BE NEGOTIATED?
The Administration of Estates Act prescribes a tariff equal to 3.5% of the value of the gross assets of the estate being administered as Executor’s remuneration as well as a commission of 6% on all income collected by the executor from date of death to date of finalisation of the administration process.
The executor’s fee can be negotiated in certain circumstances.
For assistance, contact Lauren Smith at laurens(at)stbb.co.za or 021 673-4700.