Never too young to draw up a will

2014-09-14 15:00

A will is something you only need to worry about when you are old and about to kick the bucket, right? Wrong! A will is something you should be thinking about as soon as you start building assets, regardless of your age or your marital status. Neesa Moodley-Isaacs unpacks what you need

The good news is that this week is National Will Week, an initiative driven by the Law Society of SA.

Between Monday, September 15 and Friday, September 19, you can have a basic will drawn up for free by a participating attorney. “If you die without a will, the law of intestate succession applies, which is not ideal,” says Jeffrey Wiseman, the head of fiduciary at Momentum Wealth. For example, if you are married with children, your will would typically leave all assets to your spouse.

But if you die intestate (without a will), there is a forced division of assets between your spouse and your children. “This can be tricky. For example, if you owned fixed property, it will have to be sold so that it can be divided between your spouse and your children before your estate is wound up,” he explains.

If you are single and you die without a will or “intestate”, your estate would fall to your parents on a 50/50 basis. But if one of your parents is dead, that parent’s share of your estate goes to their descendants or your siblings.

Cash inheritances for minors

If you have left a cash inheritance for your children and you did not have a will, the money is paid into the Guardian’s Fund. Your surviving spouse has to provide financial security to the Master of the Court if they want to have control over your children’s inheritance.

The surviving spouse then has to make legal applications to the Guardian’s Fund to access money for your minor beneficiaries and has to motivate what the money is required for.

The cost of a will

A basic will can cost anything from R500 to R1?500. You will find that financial institutions such as banks often offer you a “free” will. The catch is that the bank or financial institution then has to be appointed as executor of your estate and will earn executor fees.

Executor fees are usually 3.5% of the gross value of your assets and this comes to 3.99% with VAT. If you leave behind assets that will generate an income after your death, such as rental property or interest-bearing assets, the executor of your estate earns 6% (6.84% including VAT) on those assets until your estate is wound up.

“The average basic estate takes anything from eight to 12 months to wind up and the more complex estates will take longer,” notes Wiseman.

Note that the executor fees above are the maximum fees that an executor can charge you. It is advisable to have your will drawn up and appoint an executor before you die so you can negotiate a reduced fee upfront. This saves your family the hassle of having to appoint an executor and trying to negotiate fees in the wake of your death.

“If you nominate your spouse or a family member as executor, he or she will have to appoint a professional executor anyway so this does not save fees in the long run,” Wiseman notes.

Regulation 910 of the Attorneys Act states that only an attorney, trust company or auditor can be appointed as executor. If you have appointed a family member as the executor of your will and this person is not an attorney, trust company or auditor, the Master of the High Court will require the appointment of a person or company (known as an agent) that complies with Regulation 910 to assist with the administration of the deceased estate.

“It is also important to note that if your will did not exempt the executor of security (or in cases where there is no will), the executor will have to lodge security to the full value of the estate,” warns Tanya Lochner of fiduciary services at Glacier by Sanlam.

For your will to be considered valid, it must be in writing and must be signed in the presence of two competent witnesses who are not beneficiaries of the will. Wiseman says Momentum Wealth always advises clients to have their original will stored safely, preferably by the company that has drawn it up, and to keep a copy of the will at home. “This also reduces the risk of any tampering with your original will,” he says.

To find the contact details of a participating attorney in your area and have your basic will drawn up for free, go to the Law Society of SA’s website (www.lssa.org.za) and click on “national wills week” on the right side of the home page

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