Due to the current nationwide lockdown South Africans have found themselves with a bit more time on their hands than usual. As many reflect on the hard times that we find ourselves in, they realise the importance of getting our financial house in order.
From savings, investments to insurance and wealth preservation, South Africans are evaluating how they manage their money, including how their estate will be administered in the future. Now is a good time to consider drawing up or reviewing your Will and nominating an executor for your estate.
Why you should have a will?
The most important advantages of having a Will are certainty and timeliness.
Having a Will ensures that your assets are divided among your chosen beneficiaries. Your Will also ensures that the estate administration process is accelerated if you nominate an executor in your Will. If you leave this to the Master of the High Court, it could take months before an executor is appointed leaving your family without critical income for this period.
A clear, well-written Will can ensure that family arguments over your estate are avoided. In rare cases, the courts may allow a Will to be contested, but there must be acceptable reasons to believe that the Will is not valid; for example, if the person who executed the will was not of sound mind or unduly influenced by a third party.
A Will can also outline how you would like certain assets to be used, for example selling an asset to pay for someone’s education.
If your beneficiaries are still too young to manage their inheritance, a Will can ensure the assets being placed in a trust that can either limit the beneficiaries’ access until they are of a certain age or distribute the money over a period of time. This can also be tailored to care for elderly beneficiaries, or those with special needs.
You can also name your children’s legal guardian in your Will if no natural guardian is alive.
The art of choosing an executor:
The second, and equally as important aspect of making sure your estate is managed correctly, is nominating an executor. This person is responsible for carrying out the instructions in your Will and helping to administer your estate.
The executor has various important functions:
Take over the management and protect the assets in the estate.
Procure the original Will and file it with the Master of the High Court.
Identify and notify the beneficiaries and all relevant parties of the person’s death.
There are several precise legislative administration procedures that must be followed.
Finalise income tax returns.
Handling details like terminating credit cards and notifying banks, pension funds and other service providers of the death.
Prepare and file a liquidation and distribution account.
Distribute the remaining assets to the beneficiaries.
This role comes with a huge amount of responsibility, so the person you choose must be honest, dependable, well-organised and vigilant about meeting deadlines. They should also have knowledge of the law of succession and taxation, and some level of business acumen.
Picking the right executor can help ensure the prompt, accurate distribution of your possessions as laid out in your will, and with a minimum of friction and delays.
Often people choose a family member to act as the executor of their estate but if you find yourself in a position where you are unable to choose an executor you could name a third-party executor like a trust company, bank or a professional who has experience in dealing with estates.
Remember that an executor can take a maximum fee of 3.5 % of the gross value of the estate as a fee if they want to.They may also earn 6 % of the income earned by the assets from the date of the person’s death until the estate is distributed. VAT is added to the fee if the executor is registered as a VAT vendor. You must keep your nominated executor informed of your plans for your estate and tell them where your original Will is kept. You should also give them a copy of your Will.
As we navigate these uncertain times it is important to ensure that we put in place the necessary measures to control the things that we can control. Preparing your Will and ensuring your estate will be managed in the event of your passing is one way you can do this.
Click here, for more information on drafting and safekeeping of a Will.