Wills and estates

Wills and estates

Have you considered the importance of a last will and testament? Do you have a will at all or does your existing document need updating? Are you aware that it is important to have a will – regardless of the size of value of the estate to ensure that your chosen heirs inherit your assets?

Drawing up a will is not a simple process. It is governed by legislation that setsout the legal requirements for a valid will. For instance, if a will does not comply with certain basic requirements, such as being signed, dated and witnessed, it may be invalid.

The best way to ensure that a will is valid is to ensure that experts draw it up.

Why you need a will
You will need a will to

  • ensure that your wishes are properly dealt with
  • protect the interests of your spouse and children
  • ensure the ease of administration of your estate
  • maximise the benefits to your heirs by limiting the taxes and duties that will be paid by your estate.

A will should be reviewed regularly and whenever your personal circumstances change, for example a change in marital status or the birth of a child.

The key requirements for a will
Ordinarily, the following issues will be dealt with in any will

  • the testator’s personal details
  • revocation of any previous will
  • issues regarding executors and in particular
    • the appointment thereof
    • the exemption of an executor from furnishgin security
    • the powers given to the executor
  • specific bequests of the testator
  • distribution of the residue of the estate
  • the formation of a trust, if appropriate
  • general provisions.

Your spouse or family members will need to know the following in order to facilitate the winding up of your estate

  • where your will is kept
  • details and location of life insurance policies
  • details of all investments and bank accounts
  • a list of all other assets.

The executor

Deciding on your executor
Your executor will act on your behalf to ensure that your final wishes are carreid out fully. They will also manage any outstanding financial issues that your estate might have, such as the payment of taxes and claims.

Your executor should be someone you and your family know and trust. In addition, that person must be able to understand your financial and tax affairs and be competent to enact your wishes in an objective manner.

Because a member of the family or a close friend may not be able to act objectively when facing an emotional situation, it is prudent tonominate a professional – your accountant – as an executor.

In addition to the trust factor, there is also a financial benefit from having an existing professional relationship with your executor. In certain circumstances, the Master of the High Court requires a bond of security from your executors which, theoretically, protects the assts in your estate from being misapropriated. Having sucha a bond is costly and impacts on the final value of your estate. Having an existing relationship with your executors, will instill the confidence in your to state in your will that you dispense the requirements of the executors having to furnish such security.

How many executors are necessary?
Depending on the size of your estate, the number of executors may vary but you should, at least, nominate two people.

How much power should be given to an executor?
To make it easy for the executor to administer your will in the most efficient manner, it is desirable to give them full power to run your estate as if you were still alive. This needs to be stated in your will.

Who becomes executor if one dies without a will?
If you die intestate (without a will), an Executor Dative will be appointed by the Master of the High Court. This is usually a surviving spouse or next-of-kin. Should an “outsider” be appointed, a costly bond of security would most probably have to be obtained.

The Guardian’s Fund
The Guardian’s Fund is a fund set up by the Master of the High Court to administer assets either willed to a minor child with no provision as to who is to administer these assets, or where a minor child has inherited without a will. The Fund also administers assets where abeneficiary cannot be found.

The Guardian’s Fund is not ideally suited for dealing with a minor child’s assets because it cannot use those assets freely for the benefit of the minor child. As a result, the growth prospect of such assets would be severely limited.

Usufructs
usufruct is the legal term that describes the situation where one person has the right of use over another person’s property for a stipulated timeframe. Upon termination of the usufruct, the full rights associated with the property revert to the owner, known as the holder of the bare dominium. It is commonly used where a surviving spouse continues to occupy a property until his or her own death.

Codicil
If you want to make an amendment to your will, you don’t need to re-write the entire document. By adding a codicil that stats what amendments you want to make to the original document and ensuring that it is correcly signed, witnessed and dated, your chages will be legally binding.

Trusts
It may occur that you do not want money left to an individual as sole prperty for their personal management for one or other reason. In this case you may wish to set up a testamentary trust.

Trusts are typically entities set up for the ownership or protection of assets. The trust will own the assets rather than the donor. As a result, the donor no longer controls the assets and will make the initial appointment of trustees to manage the trust in therms of the trust deed.

Broadly speaking, there are two types of trusts used for estate planning purposes:

An intervivos trust

  • this type of trust is set up during the donor’s lifetime
  • a benefit could be the reduction of estate duty if growth assets are owned by such a trust
  • by transferring assets to a trust, you may, if permitted by the trust deed, still retain the benefits of the use of the assets held by the trust
  • the donor can be one of the trustees of the trust, together with selected professional and trusted people.

 A testamentary trust

  • this type of trust is established in terms of your will
  • your will should specify who the trustees will be, bearing in mind that trustees are not necessarily the same people who are your executors
  • a testamentary trust is effective in ensuring that the interests of all the heirs are protected
  • for example, it can ensure that a surviving spouse’s income requirements are met while protecting the assets used to generate the revenue for the ultimate beneficiaries
  • tursts can also be sued to protect the assets for the benefit of minor children or those unable to take care of themselves and avoid the monies being designated to the Guardian’s Fund
  • you would state in your will that the trustees will manage the mony you have left to that person until the happending of an event such as the demise of a surviving spouse or the coming of age of a child – at this stage, the trust will terminate in part or in whole and the capital held within the trust will become the property of the said beneficiary or beneficiaries.

Tax planning
All estates are liable to render an income tax return as at the date of death of the testator. This tax liability ranks higher than any other claim against an estate. In assessing how to deal with the assets in your will, it is recommended that a tax professional advises you on the best way to minimise estate duty.

Estate duty
Estate duty is calculated only once all assets and liabilities of the estate have been determined. In calculating estate duty, certain amounts can be deducted from the net value of the estate. Once estate duty has been paid or secured, the executors can settle bequests and deal with teh residue of the estate.

What can we do for you?

  • we understand that wills are multifaceted legal documents that must comply with a number of laws and regulations and we are able to assist in the correct planning and compilation thereof
  • we have extensive experience in dealing with the requirements of the Master of the High Court and are able to wind up an estate in an objective, efficient and professional manner
  • we are sensitive to the needs of the family who require an effective yet unobtrusive service.

Our range of related services include

  • review of wills
  • estate planning and liquidity requirements
  • formation and administration of trusts
  • administration of estates
  • acting as executors and trustees
  • tax planning
  • wealth management.