Your last message to your loved ones…

If you have not made a Will before, there are numerous factors you need to consider before you will be ready to start. You need to be at least 16 years old and judged to be mentally competent to make a Will in South Africa.

What are your assets?

Before starting your Will, you should start by making a list of all your assets such as cash, life insurance policies, investments, vehicles and any other personal possessions of value. It is your assets that you can leave to your loved ones.

Who will you appoint as your Executor?

An executor is someone you have named in your Will as the person you would like to be responsible for handling your affairs after your death. Being an executor involves a considerable amount of work, and includes the following responsibilities such as:

  • Dealing with all the paperwork related to your estate.
  • Gathering all the assets of your estate.
  • Ensuring that all your debts, bills and taxes are paid out of the money in your estate.
  • Distributing the remainder of your estate (after payment of debts, bills and taxes) in accordance with your Will.
  • Holding assets or money ‘in trust’ for a beneficiary, if this is a requirement of your Will, e.g. if the beneficiary is under 18 at the time of your death.

It is important to choose your executor(s) with care, as these responsibilities can be difficult for someone who is unaccustomed to dealing with official and financial matters. In certain circumstances, an executor who makes an error in carrying out these responsibilities can be held personally liable for any loss suffered by another person as a result. It is also advisable to speak to the person you are considering appointing as an executor before writing your Will, to ensure that they are willing to undertake this responsibility.

Who can be your executor?

When choosing an executor, bear in mind the following considerations:

Two executors are better than one, as this provides ‘back-up’ if your appointed executor passes away or is otherwise incapacitated at the time of your death. Your executor should be a responsible person who is willing and able to handle the legal, financial and administrative tasks involved in dealing with your estate.

Ideally, one of your executors should be younger than you, so that there is a reasonable chance that they will out-live you.

If you are married or in a civil partnership, your spouse or partner would ordinarily be one of your executors.

If your children are over 18, they can be appointed joint executors.

If one or more of your children is under 18, it is advisable to appoint a professional such as a Certified Financial Planner, Attorney or Accountant as one of the executors, as it will be necessary to establish a ‘trust’ in which property is held until the child reaches 18. You could also consider their guardian as an executor.

Guardians

A Guardian is someone you have named in your Will as the person you would like to be responsible for your children if they are orphaned before reaching the age of 18.

If you fail to appoint Guardians in your Will and both parents die before the children reach 18, the courts will appoint Guardians instead, but they won’t necessarily appoint the person that you would have preferred to take care of your children which is unfortunately often the case.

If when you pass away the other parent of your child survives, the surviving parent will normally continue to have full responsibility for the child. However, if neither parent survives (as in some road accidents) then the Guardians you have appointed will take on the responsibility for your children.

Being a Guardian means taking on a significant duty of care for your surviving children. The role of Guardian can also involve considerable expense, and you should consider making arrangements for this in drawing up your Will, particularly in relation to setting out Trusts and appointing Trustees.

Responsibilities of a guardian

When considering who to appoint as Guardian for your children, you will need to consider the following:

  • How do I feel about their values and parenting skills?
  • Are they able to offer a stable family environment?
  • What is the quality of their present relationship with my child/children?
  • Are they willing and able to handle the responsibility of caring for my child/children on a long-term basis?

How many Guardians?

You may appoint just one Guardian, however, most people when writing their Will choose to appoint two, typically a couple.

If you appoint the Guardians as Trustees as well, it is advisable also to appoint another Trustee who is not related to the Guardians, e.g. a financial planner, lawyer or accountant. Doing so will help to provide objectivity and guard against conflicts of interest. It will also provide the Guardians with some support in handling the financial and legal aspects of a Trust.

Estate Duty Issues

Estate Duty is the tax payable on the value of the estate of someone who has died.
It is possible to minimise the amount of Estate Duty that will be payable on your death, by consulting a Certified Financial Planner or Estate Planning expert when drawing up your will.

Do you want to create a Trust?

A Trust is an arrangement set up by your Will or Deed in which money, property or other assets are held and managed by the appointed Trustees on behalf of the named beneficiaries.

A Trust is usually set up when a person writing a Will has children under the age of 18. Doing so allows for your money, property and assets to be looked after properly until your surviving children are old enough in the eyes of the law to take responsibility for them. When you set up a Trust in your Will, you must also appoint Trustees who will become responsible for managing the assets in accordance with your instructions as stated in your Will. Consult an expert to set up a Trust.

How will you distribute your assets?

While you may leave your assets to anyone you wish, you should leave enough to your dependants for them to live on. If you have dependants and write a Will that leaves everything to another beneficiary, your Will may be challenged in the courts, who may declare it invalid.

Who are your dependants?

Your partner: as well as your spouse or civil partner – you may need to consider any former spouse or civil partner who has not re-married, or any partner with whom you’ve been living for at least the last two years.

Your children: as well as your natural children, you will also need to make arrangements for any adopted or step-children, or anyone that you have been caring for as if they were your child.

Others: You may also need to make arrangements for anyone that you have been financially providing for, such as an elderly or infirm relative.

Personal Circumstances

No two situations are the same, and expert professional advice is always a wise investment.
Consult a Certified Financial Planner, Attorney and/or an accountant when making your Will.

Useful Contacts

www.fpi.co.za – To find an accredited Certified Financial Planner or consider a career in Financial Planning email: fpi@fpimail.co.za tel: 086 1000 FPI (374) or 011 470 6000

Author: Gerald Mwandiambira CFP®