Picture: 123RF/ZIMMY TWS
Picture: 123RF/ZIMMY TWS

An alarming 86% of South Africans die without having a will, consequently, deceased estates are at a state of emergency, according to Ernest Zamisa, financial planner at Momentum.

He says the master of the high court is snowed under with intestate estates, leaving many widows, widowers, orphans and beneficiaries without their intended inheritance.

“When you die without a will, you will have no input over your estate. In accordance with the Intestate Succession Act (Act 81 of 1987), your deceased estate will be distributed according to a set formula to your surviving spouse, children, parents, siblings and other family,” Zamisa cautions.

This means that your loved ones and/or beneficiaries are at risk of getting little to nothing as some of the assets meant for them will now go to someone you don’t know just because they are somehow related to you.

If you have not yet drawn up a will, now is your chance to make an appointment with a participating attorney to draw up a basic will free of charge as part of National Wills Week, a joint initiative of the Law Society of SA (LSSA) and its six constituent members: the Black Lawyers Association of SA; Cape Law Society; the KwaZulu-Natal Law Society; the Law Society of the Free State; the Law Society of the Northern Provinces; and the National Association of Democratic Lawyers.

The potential for conflict is even more relevant with the increase in second marriages

Christel Botha, fiduciary services manager at Alexander Forbes retail sales and service distribution, says in SA you can choose who should receive your possessions, so it makes no sense to have no will.

Sizwe Nxedlana, CEO of FNB Wealth and Investments, says it is concerning that many people believe they only need a will later in life. “A will is a vital part of your legacy planning and helps ensure that your loved ones are secure in the event of your passing,” he says.

Andrew Auld, certified wealth manager at Alexander Forbes Financial Planning Consultants, which has assisted clients in estate planning for more than 25 years, says he has learned never to understate the importance of the potential conflicts that can arise among family left behind if planning is not done thoroughly.

The potential for conflict is even more relevant with the increase in second marriages. Auld cautions that the costs of improper estate planning can be immeasurable in broken family relationships, financial hardship for loved ones and excessive taxes, to name but a few repercussions.

“Smart planning can help reduce the impact of taxes, as well as ensure there is adequate cash available to settle capital gains tax, estate duty and other costs at death,” he says.

Zamisa warns that without a will, minors face unnecessary trauma and stress should both their parents die, as the master of the high court — not the people their parents knew or trusted — will put them under guardianship. In terms of the act, these minors will only receive their inheritance, placed in a guardian’s fund, when they are 18 or older.

Costs of drafting a will

There is no specific fee charged for having a will drawn up with a financial planner as it forms part of the holistic financial planning service offered by the financial services industry, Auld says. But if you have a large estate with more complex needs and require more technical expertise, you can expect to pay fees in line with those charged by professionals, such as attorneys, accountants, trust companies and financial planning businesses.

FNB announced recently that if you are a client, you can have a will drawn up via the FNB online banking platform at no cost. Nxedlana says the FNB online wills services will guide you through a step-by-step process for drafting and downloading your will. FNB will keep your original will in safe custody at no extra cost, adds Johan Strydom, growth head, FNB Wealth and Investments.

You can also use the services of online wills provider QuickWill, which was founded by lawyer and software developer, Stella Pickard. Fairbridges Wertheim Becker is QuickWill’s legal partner. Pickard says a will created through QuickWill will carry the same legal weight as one drawn up by a lawyer, as the formalities around the signing of the will is what determines its legality and validity.

QuickWill charges R750 for its online will drafting service. Updates incur a new fee of R750 or you can subscribe for an annual service that allows for storage and unlimited updates for R150 a year.

You can visit Law Society of SA’s website (LSSA.org.za) or call 012 366-8800 for a list of attorneys offering a free will-drafting service.

What to consider when drafting a will

Marital status: If married, your marital regime plays a significant role as this will determine any legislative implications when leaving your assets to anyone other than your spouse. For example, if you are married in community of property, your and your spouse’s assets will form part of your deceased estate and your spouse will, by law, automatically be entitled to 50% of the combined asset value.

Minor children: Generally, benefits due to a minor (under the age of 18) from a deceased estate cannot go directly to the child, but indirectly through a testamentary trust, which is created in your will. Where the deceased parent had no will, all assets left to a minor will be sold and the cash paid into the guardian’s fund, a fund administered by the master of the high court. The funds will accumulate interest at the rates that apply from time to time and the minor’s guardian may claim for the beneficiaries’ expenses. The claims process is, however, time consuming and tedious and can take up to several weeks to be processed. Assets must be transferred to an heir but because a minor cannot legally sign documents, they cannot receive such assets in their names. That is why an executor may not pay cash into the bank account of a minor child.

However, if the only asset bequeathed to a minor child is fixed property, it could be transferred into their name, but the executor must apply for the master’s consent and, should the master grant such request, they will register a caveat ensuring that no person can bond or sell the property without the master’s written consent.

In most cases, the guardian will have to show they are financially capable to take full responsibility for the maintenance (general maintenance, municipal accounts, insurance, etc) of the property. The master may also require the guardian to provide them with a bond of security or other form of security. The master has full discretion on whether to allow for the property to be transferred and if requirements are not met, the master may insist that the property be sold and the proceeds be paid over to the guardian’s fund.

Investments such as shares and unit trusts, similarly, cannot be transferred directly to a minor child. You can state in your will that the inheritance of your minor child(ren) be administered in trust until they reach the age of 18 (or any later age that you may prefer). Your nominated trustees must manage the assets in the best interest of your child(ren), such as paying school fees and costs of further education.

Beneficiaries with special needs: A testamentary trust can also provide for dependants with special needs, such as handicapped children who require greater care. Your trustees must address these needs.

Guardians for minor children: You should nominate a guardian in your will to look after your minor children should both you and your spouse or partner die. If you have specified that a testamentary trust be set up at death, your child(ren)’s guardian will be able to carry out their responsibility in taking care of your child(ren)’s needs from funds paid out by the trust.

Nomination of an executor: You must nominate an executor of your estate to take over the administration and management of your estate on your death. To be an executor is not always an easy task as it requires certain expertise and adequate knowledge of deceased estates and the relevant laws that apply.

Burial preferences: You can indicate in your will if you want to be buried or cremated and also give instructions about organ donation. You should discuss your preferences with your next of kin to ensure your wishes are respected.

Asset and liability details: To ensure your executor is able to carry out the instructions according to your will, you must disclose details of all your assets, local and offshore, as well as liabilities. This is to establish a possible cash shortfall in your estate due to various charges and circumstances, for example, claims against your deceased estate, any maintenance claims from a divorced spouse, executor fees and administration charges.

• Source: Christel Botha, Fiduciary Services Manager at Alexander Forbes Retail Sales and Service Distribution