People hold many different views about having a last will and testament. The reasons not to have a will usually range from being single, to not having any assets, and nobody to leave money to. The reality is, however, that dying intestate (without a will) could result in complications, says Standard Trust Limited, the wholly owned subsidiary of the Standard Bank Group Limited with over 130 years of experience in fiduciary services.
In essence, dying without a will means that whatever assets you may have accumulated may be inherited by individuals that you have not nominated. There is no clarity regarding who should get what. You are therefore leaving others to make decisions for you, as relate to your final wishes and even who your executor should be, says Kobus van Schalkwyk, Head of Corporate Development for Standard Trust Limited at Standard Bank Wealth.
“Dying without a will means that the Master of the High Court has the final say on the appointment of an executor to take control of the assets. This also means that people you may have wanted to benefit do not, and those you may not have wanted to benefit do.’ A will is therefore a tool to direct how and when assets are passed on to beneficiaries.
Some of the advantages of having a will in place include:
- You can arrange just when children can be given control of assets. Usually, a testamentary Trust is created and managed by a professional to carry out these orders. It is important to give careful consideration as to the identity of the trustee responsible for administering the Trust.
- You can lay down any conditions you choose for the distribution of your assets – as long as all the actions are legal.
- A will can be drawn up at any time to cater for specific circumstances in your life. As your marital status or financial position changes, so should your will.
- You can give directions of how liabilities are to be settled. For instance, it is common practice to order that the costs of a funeral be paid by the estate.
- “The reality is that whatever your financial status, you will leave something behind. The need for a will becomes more pressing when you have assets and a family. A will should, if you have minor children, be used to nominate guardians for them. Failing to do so could mean that your children are brought up by a person you would have preferred not to care for them, as this vital decision also becomes a function of the master of the high court,” says Mr van Schalkwyk. Appointing guardians and leaving money in a Trust for benefit of your children ensures that the guardians have access to funds for their development and education.”
It is common to find templates of wills on the Internet and even in local stationery shops. However, even though everyone has a right to draw up their own will, you should consider the following potential consequences:
- You could write instructions that are unclear and therefore cannot be carried out.
- You could forget to insert vital clauses, such as revoking an earlier will.
- You could omit to include vital information because you don’t have the benefit of an attorney, certified financial planner or fiduciary specialist trained in drawing up and administering asking questions and clarifying issues.
- You could make the mistake of thinking that a software package or Internet document asks all the same questions of you that a professional would ask.
- You could not have the correct number of witnesses or it could be incorrectly signed.
- You may not have the expertise required to correctly set up Trusts and other mechanisms you may require.
- “The best time to have a will drawn up is right now,” says Mr van Schalkwyk. “Taking time to meet with a professional and discuss your requirements will also mean that you understand exactly what taxes are triggered by death duties are, how they are administered and when they become payable.”
Your adviser should also be able to discuss capital gains tax (CGT) which is levied on an estate and indicate what the implications of this would be on the value of your estate. The higher the value of your estate, the more it becomes necessary for an adviser to assist with helping you plan how tax and CGT costs can be met without impacting negatively on the value of your estate. “
“The implications of pension fund pay outs and cash payable from life insurance policies should also form part of any consultation. Professional advice is useful in ensuring that the cost of taxes does not unnecessarily reduce the value of the estate to the detriment of your heirs. ”
“A professionally structured will, combined with proper personal financial and estate planning advice, are two tools that can help safeguard your assets and provide a legacy and an easier future for your family, ends Mr van Schalkwyk.