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By Malissa Anthony*

Malissa Anthony

Something that South Africans take for granted is that we have the right to choose who inherits our fortune when we die. This so-called ‘freedom of testation’ is, oddly, not a universal right with antiquated European laws often dictating the order in which heirs inherit their parents’ wealth.

That is not the case in South Africa, where we can decide, within limits, exactly where and to whom our assets are to be allocated. As long as you have a valid will, of course.

Which is the crux of this article, because an estimated 70% of the South African working population do not have a valid will. When you die, your family then loses control of your estate because they have no say how your estate is settled. That process is left up to the courts and attorneys appointed to wind up intestate estates.

With National Will Week having just passed, I thought I’d offer some quick tips and insights into what you need to do, why and how.

What constitutes a valid Will?

For your Will to be legally valid, it has to comply with the Wills Act 7 of 1953. This means:

  1. It must be in writing
  2. you must be older than 16 and be capable of appreciating what you are signing.
  3. you and the witnesses must sign the Will in the presence of each other, and you must sign on every page
  4. the witnesses must be older than 14 and not receive any benefit in the Will.

You can draft the Will yourself, but it’s a good idea to have a professional review it to make sure it contains all the necessary elements to make it legally binding.

What to consider when drafting a Will

Here’s a snapshot of the most important things to bear in mind when drafting a Will.

Be absolutely sure it meets the strict legal requirements of a Will, otherwise it will be deemed invalid.

This is especially important if you have a minor (a child younger then 18) who would be dependent on your estate. Which is also why you should name a guardian who will be charged with looking after your child/ren. Without a Will in place, your family might have no say over who is appointed guardian.

Further considerations regarding your children under 18 is whether to set up a trust that will administer your affairs until they reach legal age. This will avoid all assets being liquidated or being placed in the Guardians Fund, which is administered by each Master of the High Court and is only released to them when they turn 18. The trust will give you greater control as to how your minor heirs will benefit from their inheritance. When creating a testamentary trust, you need to ensure that all provisions related to the appointment of the trustees and their powers are clearly defined, as your will ultimately become the trust deed.

Although not part of your written Will, a precaution that is worth taking is to provide for your loved ones in respect to immediate expenses and any expenses that they may need to settle in the event of your demise like funeral and household expenses and medical bills. This can be achieved through forward planning and policies to cover these costs.

Lastly, always remember to update your Will when circumstances change. A birth, a death, a marriage, a divorce, a new house or investment portfolio – these all need to be included in your Will to keep it current. It is important to mention that divorce can be detrimental in the event that you failed to review your will and you do not wish for your ex-spouse to inherit. Therefore, amending your will should be a priority when there is a change in personal circumstances.

Married South Africans tend to have joint wills drafted whereby the surviving spouse is typically the sole beneficiary of the first dying spouse’s estate. However, in the event of a divorce, people often tend to neglect to amend their will, which may lead to challenges.

In terms of Section 2B of the Wills Act, in the event of a divorce and where you have died within three months of the divorce, it will be given effect that your former spouse had died prior to the dissolution of the marriage. However, if you pass away and more than 3 months have passed since the dissolution of the marriage and you have not amended your will, your former spouse if they remain in the will, are considered to be the intended beneficiary of your estate.

And always remember where you store your Will and let your loved ones or someone managing your affairs know where it’s kept.

What happens if I have offshore assets?

Your affairs do become a little more complex if you have assets held offshore because you could, if you choose, have a separate Will to deal with those assets. One needs to consider the type of offshore asset involved and the succession laws of that jurisdiction. Therefore, with a fiduciary professional would be pertinent, and would be able to assist in determining whether two separate wills are in fact necessary.

It is important not to mistake and believe that by having a separate will, that it evades with the requirement to report these assets for estate duty purposes in your country for which you are a tax resident. In South African, tax residents worldwide assets are liable for income tax earned on worldwide income, estate duty as well as capital gains tax. Therefore, estate duty is charged on the dutiable amount in respect to the worldwide estate for every person who dies on or after 1 April 1995 in terms of SARS. Although South Africans may be exposed to laws of double taxation in the country of residency and South Africa. South Africa currently has estate duty agreements with the US, UK, Zimbabwe, Botswana, Lesotho and Swaziland.

What happens if I die without a Will?

If you fail to have a Will in place or one that is invalid, your estate will be administered and distributed in terms of the laws of the Intestate Succession Act 81 of 1987. Whilst the provisions of this Act are generally fair, ensuring that your assets are transferred to your spouse and children, some problems may arise, namely:

  1. Your assets may not be left to the person of your choice.
  2. It may take some time for an executor to be appointed, and in addition may not be someone you would have chosen for yourself – this person will be responsible for the winding up of your estate.
  3. Extra and unnecessary costs are involved.
  4. Any inheritance due to a minor will be liquidated and deposited into the Guardian’s Fund; and
  5. Conflicts may arise between your family members as no clear instructions have been made regarding the division of your estate.

Why using a qualified professionals make sense

Given how complex these issues can be, it’s easy to see the sense in working with a qualified professional who has the required experience and knowledge to make sure your Will is legal and valid.

They can also identify issues that may arise and help you avoid or mitigate them without going against your wishes expressed in your Will. Also, by nominating a qualified professional you can negotiate a reduced executors fee, which could be as high as 3,5% excluding VAT of your estate.

Brenthurst Wealth Management offers will drafting, will review and redrafting services together with facilities for the safekeeping of wills, estate planning and deceased estate administration. Don’t hesitate to reach out to us to find out how we can safeguard your family’s future.

  • Malissa Anthony is the General Manager of Brenthurst Wealth, a qualified attorney and one of two fiduciary experts who is also a registered member of the Fiduciary Institute of South Africa®.