Did you know that legendary singer and icon, Prince died without a will? He may not have cared about his will prior to his death but the impact it now has on his family and possible heirs would make it one he would likely regret.
Die with a will and your wishes should be carried out. Die without a will and state law takes over, regardless of what you may have wanted.
Everybody should have a Will and it should be updated regularly to ensure that your family’s needs are met, according to your wishes on your death.
This is the advice of Hedley Lamarque, Financial Planner at BDO Wealth Advisers in Durban.
“If you die without a will, the state determines how your estate is distributed in terms of the law of intestate succession. This may mean that people you may not have wanted to could benefit from your estate at the expense of those whom you wanted to inherit your estate,” Lamarque said.
“Also, the state and your next of kin will appoint the executor, which may cause hardship if it is an outsider with no knowledge of you and your personal circumstances. The inheritance of your minor children will go into a Guardian’s Fund and a guardian may be appointed by the court.”
These unwanted events are easy to avoid, according to Lamarque. Drafting a will has many other benefits too.
In Prince’s case the probate process will be long and extremely expensive, and paid for by Prince’s estate, which means less will be left over for his heirs.
“You decide who your heirs will be and how the proceeds from your estate will be distributed. You can nominate someone you trust as the executor of your Will, and you decide who the guardian of your children will be, which allows you to choose a person whom you know will have your children’s best interests at heart.”
“It is also possible to set up a trust and nominate trustees to protect the inheritance of your spouse and children. This allows you to specify how the income can be used and how the capital is paid to the beneficiaries, along with any other special instructions you may have.”
Lamarque went on to say that keeping a will up to date was vital, otherwise the intended heirs may not inherit or, if the will was not changed to keep up with new legislation, this could result in unexpected taxes or other adverse consequences. But before your heirs receive their inheritance creditors must be paid off, estate taxes must be paid, executors and administrators must receive their fees for handling the probate process, and court fees must be settled. It is only once these expenses have been paid, your heirs finally receive what’s left which would be be considerably less than it would have been before.
When should you update your will?
- After every life-changing event such as having a child, altering your marital status, buying or selling property or if your financial situation changes
- When you have a child you should also name a legal guardian in case of your death and you could consider creating a testamentary trust, failing which, any inheritance which a minor is due to receive will be placed in the Guardian’s Fund
- When you marry
- If you divorce to prevent your former spouse from benefiting from your death. If you die within three months of the date of your divorce, any inheritance due to be received by your ex-spouse will be dealt with as if your ex-spouse had predeceased you
- If a house mentioned in a will is subsequently sold, then it would be advisable to amend or remove that particular clause in the will. This would also apply to buying a new property
- A desire or need to change executors, especially if a nominated executor died or became unable to carry out the task
- The death of a beneficiary or a desire to add or remove a beneficiary
- Retirement or a change to your financial situation, for example if you inherited or lost a large sum of money. Other considerations would be the type of property inherited. For instance, agricultural property cannot be subdivided and a bequest of this type of inherited property would need to be carefully structured
How often should you update your will?
Lamarque recommends that you review your will every year to ensure that all is in order and that amendments have been made after any life-altering events.
“This could involve simply preparing a codicil which adds, deletes or amends a clause, rather than drafting a whole new Will. Either way, this would need to be signed or the formalities of the wills Act would need to be complied with.”
When you get married - the marital property regime and antenuptial contract, if applicable, should be carefully considered as these would have an impact on the structuring of the estate and could cause complications should they not be incorporated in the estate planning and will drafting process.
“I would also recommend that a liquidity and estate duty calculation be carried out when the will is drafted, as this will give you an indication of the consequences of the structure of your will. These calculations will highlight any issues which many need to be addressed.”
“Before making a will, it is advisable that you receive guidance on the formalities of the process,” Lamarque said.
KEY POINTERS FOR A GOOD WILL
* Keep it comprehensive, yet as simple as possible
* Be as specific as you can
* If you are considering a complicated will, seek out professional assistance
* Ensure your instructions can be carried out, i.e. the distributions are practical
* Nominate a guardian if you have minor children
* The will should be properly signed and witnessed by two competent witnesses (over 14 years of age and competent to give evidence in a court of law)
* Ensure your will is dated clearly, so that if there are multiple wills it can easily be determined which is the final one
* Make sure a beneficiary is not involved in drawing up or attesting to a will as a witness
So what should Prince have done? In the very worst case he should have at least created a valid Will that established his intentions. Or even better still he should have left his assets in Trusts with the heirs he chose as beneficiaries. Because the administration of a Trust is not public, while a Will and probate are public processes, his family would be saved the media circus too.