How Up to Date is Your Will?

What do you need to know about Wills?

If you die with a will, testate succession takes place in terms of your wishes as the testator.

If you die without a will, you will die intestate. This means that your estate will be distributed according to the laws of intestate succession.

What are the formalities required for a valid Will?

  • The will must be in writing, hand written or typed.
  • You must sign in full on each page as the testator.
  • Two witnesses must sign in each other’s presence and in your presence as the testator.
  • Care must be taken to date the will, so that there is no dispute with the Master as to when the will was signed.
  • The person, who signs as witness, should be at least 14 years of age and of sound mind.
  • The executor and any person who stands to benefit from the estate must not sign the will as witnesses, as this may disqualify them from inheriting under the will or nullify their appointment as executor. The Court may allow such persons to benefit if they had not defrauded and unduly influenced the testator or they would have inherited in terms of intestate succession.
  • All the formalities required in the execution of a will, apply to the execution of a codicil.

Terminology used in a Will

  • Adiation – the act of accepting the benefit under a will.
  • Codicil – is an annexure to an existing will, which is made to supplement or amend an existing will.
  • Executor – is a person nominated by you as the testator to administer your estate.
  • Repudiation – the act of rejecting the benefit under the will.
  • Testator – the person making the will (male).
  • Testatrix – the person making the will (female).
  • How does a divorce affect your Will?

If you as a testator die within 3 months of your divorce, your ex-spouse would not inherit in terms of your will, unless a contrary intention is indicated. However if you die more than three months after your divorce and without changing your will, the ex-spouse will inherit in terms of that will, if it so provides.

Imagine the heartache that would be caused if you didn’t make these changes and passed away, and your ex-spouse inherited your entire estate, to the detriment of your children or your new spouse?

The living Will

The living will reflects the wishes of the person making their will, with regards to medical decisions if that person becomes incapacitated or is unable to act on their own behalf. The living will is not a legally enforceable document but merely a statement of wishes. The decision of the spouse of the incapacitated person may in fact override the living will. In any event many people do write living wills to ease the burden of guilt associated with a decision such as switching off life support machines.

Good reasons to have a valid Will

  • Intestate succession can be avoided, ensuring that your wishes are followed
  • Testamentary trusts can be created to provide for minor children and spouses
  • Delays in the administration of the deceased estate can be avoided or minimised
  • Guardians can be nominated for minor children
  • Special instructions can be incorporated into the will, for example a living will
  • Perhaps most important though, is that you get to nominate your Executor, this allows you to appoint someone familiar with your personal affairs, your wishes and your values!
  • Remember the Executor will take decisions around investments, disposing of assets and may even be called upon to run your business for a period of time; you need to make sure that this is done according to your wishes and not the Executor’s agenda.

And from a tax perspective…

As from 1st January 2010, the basic estate duty free allowance, currently R3.5m, may be carried forward from the estate of the first dying of two spouses to the estate of the surviving spouse, provided the first dying spouse bequeaths the whole or the major portion of his or her estate to the survivor.

This means that an estate duty free allowance of up to R7m could possibly be claimed in the surviving spouse`s estate. This “portable” allowance would be reduced by any bequests made by the first dying spouse to a beneficiary other than the survivor.

Although Estate Duty is leviable at 20% after this “tax free” amount, by undertaking proper planning and regularly revisiting this plan you can put structures in place that may negate this tax completely. Furthermore on your death Capital Gains Tax is payable on your assets and with the right plan and structure this can also be avoided.

If you plan incorrectly you could, for instance, create a situation where a viable business (or a family home) has to close down or be sold due to a lack of liquidity to pay these expenses. And what you wanted to leave as a legacy is no longer possible.

It should also be noted that by structuring your affairs incorrectly, you may be in a situation where your estate, or other wealth creation vehicles such as a Family Trust, has to pay other taxes such as Donations Tax which could have been legally avoided through something as simple as the correct wording in your will! In fact even the order in which you leave your assets to beneficiaries can greatly affect the amount of Estate Duty payable.

Should you require any assistance in reviewing your will to maximise your asset protection and minimise the taxes payable on your death, please contact your partner for further information.

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