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Will Power

Article by Sylvia Walker – Fair Lady (March/April 2023)

Roughly 70% of working South Africans die without a will, often leaving their families in disarray or facing financial hardship. Here’s how to make sure it doesn’t happen to you.

There’s a reason ‘the reading of the will’ is such a well-loved movie plot point: a will, or the lack of one, can cause endless drama. Which is great in a cinema setting, but less so when it’s your family that’s left in the lurch.

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Why you need a will

Siyatec Executors featured in FairladyYou’re accumulating possessions all the time, and a will allows you to say what should happen to them after your death. Dying without a will means you die intestate and your assets will be distributed according to the Intestate Succession Act. This is done according to a rigid pecking order, starting with your surviving spouse, children, parents, or siblings. If there’s no spouse or children, your assets are given to your parents, aunts and uncles, siblings, or the nearest relative. This may not be what you want – a will avoids all these possible complications.

Can You Draft Your Own Will?

Yes, you can, as long as you’re 16 or older – just make sure it’s valid. It’s a good idea to get professional help if you have dependents or minor children, or you need specialized legal knowledge. Interestingly, a will doesn’t have to be typed – it can be handwritten, says Michal Gunzenhauser, managing partner at MG Law. ‘If it’s handwritten by someone else, that person cannot be a beneficiary of the will, and the testator and the witnesses must sign the will in the presence of one another.’

Requirements for a Valid Will

  • You are over the age of 16 at the time of drafting the will.
  • It is in writing and dated.
  • Every page of the will is signed by the testator and two witnesses.
  • It is signed by two witnesses over the age of 14.
  • The witnesses do not benefit from the will (i.e., the executor and heirs may not witness it).

A Trust for Minors

If you have young children and you die without a will, the money due to them will be placed in the Guardian’s Fund until they are 18 years old. This fund is administered by the Master of the High Court, and it limits how much can be paid to cover costs such as school or university fees or medical expenses. When the child turns 18, they must collect their inheritance from the Guardian’s Fund, which comes with its administrative burden, says Wafiq Davids, conveyancer at Siyatec Executors.

A professionally drafted will can make provision for a trust to be created if you pass away so that money is accessible to your children’s guardians as it is needed. Who raises your children is also a critical consideration, Michal says. ‘With no will, minor children may be placed with someone they are not familiar with, causing undue stress.

Cost of Drafting a Will

Getting an attorney to draft your will can set you back anything from R600 to R3 000 per hour. ‘The more complex the will, the more it costs to draft,’ Wafiq says. Many banks and other financial institutions draft wills for free. There’s usually a catch, though: they will do it in return for being the nominated executor. This is where they’ll make their money, Wafiq says, and the deceased’s family will have to communicate with the financial institution in winding up the estate.

Winding Up the Estate

This needs to be done by an executor who is specified in the will. A family member can be the executor, but it may be a good idea to nominate an attorney as co-executor who understands the legal steps required to administer the estate, says Anna-Mi Moorcroft from Burger Huyser Attorneys. ‘Also try to keep your will as simple as possible so your wishes are easy for your family members, the Master of the High Court, and your executor to understand.’

Executor’s Fees

It’s no small task to wind up an estate and it may take a year or longer, so the executor needs to be paid for his or her time and expertise. The executor’s fee is a maximum of 3.5% (excluding VAT) on the gross value of the estate (before debts are settled), and 6% (excluding VAT) on any income collected after the death of the deceased. Fees can be negotiated with the executor, but it’s generally not a time when family members feel like negotiating.

Policies paid directly to beneficiaries, retirement proceeds with beneficiaries, and policies where the deceased is not the owner all fall outside the estate and are not included in the fee calculation. You may be surprised by how much the executor’s fees come to: on a gross estate of R2 million, the maximum executor’s fee is R70000 plus VAT; and on an estate of R3 million, it’s R105000 plus VAT. There are alternatives, such as Siyatec Executors, which charges a flat fee on a sliding scale based on the value of the estate. So paying to have your will drafted and using a fixed-fee executor can provide a substantial saving.

The Cost of Dying

Apart from any final medical expenses and the executor’s fees, there are many other costs that creep in when an estate is being settled.

  1. All outstanding debt will need to be paid, including short- term and home-loan debt.
  2. If there is fixed property such as a family home, it will need to be transferred to the heirs, and conveyancing and transfer fees will have to be paid.
  3. SARS is notified when a tax-payer passes away, and a final tax return is done and any outstanding taxes are paid.
  4. Estate duty needs to be paid on the net estate value (after all debt has been settled) exceeding R3.5 million. The first R30 million is taxed at 20% and then 25% thereafter.

Make Sure There is Enough Cash

There needs to be enough cash in the estate from investments, bank accounts, or proceeds of life assurance policies to cover all costs. If not, the heirs will be asked to settle this debt. If they cannot or refuse to settle the debts, the estate will be insolvent.

‘Creditors are then paid out pro rata and the heirs don’t inherit, as there is nothing to inherit,’ Anna-Mi explains. ‘An heir who expects to inherit has an obligation to pay all debts. The good comes with the bad.’

As a last resort, the executor may have to sell off some of your assets such as cars, furniture and property. Even if you stipulated a special bequest of certain investments, such as shares or unit trusts, these will be liquidated and paid into the estate. You may have sufficient investments that can be converted into cash, but if not, consider taking out a life cover policy with the proceeds paid directly into your estate.

A Living Will

A living will specifies your wishes around healthcare and medical treatment when you’re unable to speak for yourself – if you’re in a coma, on life support, or terminally ill. It can also specify your wishes regarding organ donation.

A Word on Beneficiaries

If you nominate a beneficiary on a policy, the proceeds will be paid directly to them, providing cash in the months after your death. If there’s no beneficiary, the proceeds are paid into the estate, or a portion of the policy can be bequeathed to a beneficiary and the other portion paid into the deceased estate. Funeral or final expense policies can be paid to beneficiaries as well, providing funds for the funeral and other expenses. You can nominate beneficiaries for retirement annuities and pension fund benefits, but the trustees who manage these funds have the final say, making sure that dependents are taken care of irrespective of which beneficiaries were nominated.

‘For example, should the deceased have nominated his partner as the sole beneficiary of his pension but he has two minor children from a previous marriage who are dependent on him, the trustees can decide to distribute a portion to those children,’ Anna-Mi says. ‘Usually, though, the nominated beneficiaries are the dependants.’

Death can occur without warning. Make sure your will is sorted, your beneficiaries are updated, and your dependents are taken care of so you can focus on enjoying life.