A health check for your Last Will and Testament
Your last will and testament is one of the most important documents you’ll ever execute. While most of us would prefer not to talk about or plan for a time when we’re no longer around, your family will be grateful if you’ve seen to it that your affairs are in order and that your wishes are clearly stipulated. Your will should be regularly reviewed, especially if legislation or your circumstances change. Here’s a handy checklist to help you determine whether your will is still up to date.
Is the date of signature on your will more than five years ago?
If it is, you should update your will. Personal circumstances often change over the course of a few years.
Do you have wills that deal separately with your South African and non-South African assets?
The administration process is easier if the wills are separate. South African (SA) legal terms used in wills are often different to those used in other countries in which you may have assets – this may cause interpretation issues, with additional cost and time implications.
Some jurisdictions have forced heirship rules instead of our wide powers of testamentary disposition. Immovable properties situated in such countries may thus not devolve in terms of the directions in your will, but in terms of their rules, and sometimes to other persons than intended. If your worldwide will drafted in SA is in Afrikaans and you have foreign assets, further delays and costs may occur, as a translation of the will may be needed to deal with the foreign assets.
If the above answer is yes, does the will that deals with the respective assets in and outside SA clearly state that it deals only with those assets, and that it revokes only wills dealing with the respective assets situated in the particular jurisdiction?
If not, one will may unintentionally give rise to the different will provisions being in conflict with each other. Even worse, one will can revoke the other, resulting in you potentially dying intestate in respect of certain assets.
Have you established the cash requirements in your estate?
Cash shortfalls may delay the winding up of your estate, and/or may cause some of your assets to be sold. Cash shortfalls may be as a result of outstanding liabilities in your estate, including bonds over fixed property, suretyships signed by you which are now being claimed against your estate, transactional debt, medical and last illness expenses, executors’ fees, estate duty and capital gains tax on death, or cash bequests in your current will. Loan liabilities owing by you to a SA Trust, as a result of the trustees having granted you loans to externalise funds from SA, may cause a shortfall in your SA estate. You have to plan the repayment hereof by your SA estate without having to bring assets back to SA.
Have you negotiated the executors’ fees with your nominated executor, and have you included the agreed fees in your will?
The maximum legal tariff is 3.5 % of the gross value of the assets administered by the executor, plus VAT in many instances. A further 6% plus VAT may be charged on income collected by the executor after your death. You can agree on a discounted fee with your nominated executor and ask the drafter of your will to place it on record in the will.
Have you nominated guardians to your minor children in your will?
The nomination of guardians serves as an indication of your wishes in this regard. A conversation should be had with the nominated persons to ensure that they are aware hereof and in agreement to be appointed.
Have you directed that bequests to minor children (below 18 years of age) be handed to their legal guardians or kept in trust until majority age?
If not, bequests to minors may be paid into the Guardian’s Fund and kept under control of the Fund until the children are majors.
Have you exempted the nominated executor as well as the trustee(s) of a trust created in your will from the requirement to provide security to the Master of the High Court?
If not, the Master may require them to furnish security, which may be expensive and cause them to not accept appointment as such. Possible delays may occur as a result hereof.
Have you considered the consequences of your marital regime on your death (if married)?
A marriage in community of property may mean that you can only dispose of your half of the assets in your communal estate in your will. The accrual system may have unintended consequences if not taken into account, for instance that your surviving spouse receives the accrual claim proceeds in addition to bequests to her in your will, which may reduce the size of bequests to other persons in terms of your will.
Have you dealt with loan assets in your will?
You can bequeath loan assets in your will to the persons owing you the loan amounts, thereby cancelling the loans. The effect hereof will be that the borrowers don’t have to repay the loan amounts to your estate on your death.
Have you considered the effect of US or UK situs assets, and the potential liability for inheritance taxes in the US and the UK on your death?
Assets situated in the US or in the UK, such as fixed property and shares listed on an exchange in those countries, may have the effect of inheritance taxes in those jurisdictions at much higher rates than in SA.
Do you maintain your parents or provide towards their maintenance or medical expenses?
You should consider how these expenses will be paid when you are not there to do so. Your parents can be maintained from a testamentary trust or as a condition to a bequest in your will.
Do you have a maintenance liability towards a previous spouse or to children in terms of a divorce order?
Depending on whether the liability carries on after your death, you should provide for payment thereof in terms of your will to avoid your estate having to make monthly payments for years to come. This may mean that your executor won’t be able to finalise your estate, as he or she may not be able to distribute the residue of the estate before all liabilities have been met.
Do you have bank accounts in overseas jurisdictions? If so, are you the only account holder or do you hold accounts jointly with someone else?
If you hold a bank account in joint tenancy with your spouse, the bank will on receipt of your death certificate remove your name off the account, and it will carry on in the name of your spouse. No probate will be required in the overseas jurisdiction (eliminating the associated costs) to transfer the bank account to your spouse in this way. You still need to bequeath the joint bank account in your will to someone if the account holders die together.
Do you own business interests? If so, have you provided for continuity in the business?
You can enter into a buy-and-sell agreement with an associated life policy to provide the liquidity to your business partner to buy your share of the business. Alternatively, you should provide for succession in your business in terms of a shareholders’ agreement or a bequest in your will.
Have you nominated beneficiaries for the proceeds of your life assurance and/or pensions benefits?
Proceeds will pay out to nominated beneficiaries outside your estate, and won’t be subject to executors’ fees, providing beneficiaries with liquidity at an earlier stage without having to wait for the administration process of the estate to take its course.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)