By Remay de Kock and Kezia Talbot, Legal Advisors, BDO Wealth Advisors
For some it might be your ante nuptial contract, for others they might regard their company strategic plan or annual budget as the most important document they will ever draft. Although each of these are important in their own right, not a lot can outweigh the importance of drafting a Will.
More than two thirds of South Africans do not have a Will. This is concerning, considering that should you die without a valid Will in place, you will die intestate. The consequences of your estate devolving in terms of this Act? Your unsaid and unwritten wishes will not be taken into account and your assets might devolve to family members, who you might have not wanted to inherit, for any number of reasons, even worse, your bank accounts will be frozen as soon as notice of your death is received.
Not only is drafting a Will important in order to ensure your assets will be distributed to persons whom you actually nominate, but in drafting a Will, you are forced to think of other aspects that might influence your family after death. Proper planning can then be done regarding all aspects of your estate, regulating the events before and after death.
In matters concerning events before death, planning can be made for a Power of Attorney should you become physically incapable of handling your own affairs. For matters after death, you need to make provision for those you leave behind. Things you should bear in mind:
- Do you have children?
- How old are they?
- Who will look after them?
- Will they be able to handle their financial affairs once you pass away? If not, have you made provision for a trust?
- Have you considered a living Will in case you are on life support?
- Do you have sufficient liquidity in place in order to pay all the liabilities on date of death, as well as the liabilities arising after death (capital gains tax, estate duty, funeral expenses).
The same can also be said if you have a Will in place: how long has it been since you last reviewed your Will? Is your current Will an accurate reflection of your current wishes? Questions to ask yourself to give an indication as to whether or not you may need to update your Will:
- Has there been a change in your marital status?
- Is the executor you named still the person you want to handle your estate?
- Has there been any changes to your beneficiaries?
- Are you nearing retirement?
- You might have experienced some financial flexibility which leaves you with more cash at hand to be able to distribute between beneficiaries.
The problem is that most people only realize the importance of a Will once confronted with the death of a loved one. It is one thing to ensure that your Will is in place and you have ensured sufficient liquidity to pay off your debts and you have something left over for your heirs. This, however, does not take into account the emotional stress of the loss of a family member and the arrangements regarding burial, days spent tracking down relevant documents in order to be able to report the deceased estate and phone calls to financial advisors or attorneys. This is all equally important, as an inventory will have to be prepared describing which assets the client owned. Would you be able to identify all assets should something happen to a family member today?
In doing proper estate planning, you need to consider not only the financial impact you leave behind in dealing with the administration and distribution of your estate, but also consider the practical impact regarding tracking of all documents necessary to finalise your estate. Would your family know where to look and find important information regarding your assets? Would they know what to do with the information once they find it?
Read part two of this article
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