It is scary to think that less than 25 percent of South Africans die with a valid will.
This means that more than 70% of South Africans’ possessions are distributed in terms of the Intestate Succession Act. The Intestate Succession Act provides for your estate to be passed on to your spouse and children in equal shares, your parents or your siblings, depending on the structure of your family. If you do not want these family members to inherit from you, you must have a Will in place.
This is however not the only reason to set up your Will. One of which is that you can appoint an executor for your estate that you trust, and you can state that the executor does not have to provide security for the assets in your estate.
If you die intestate with an estate worth more than R125 000, the Master of the High Court will ask your family members to appoint an executor. Anyone other than a parent, child or spouse will be required to put up security. All the while, the assets in your estate, including your bank accounts, will be frozen, creating problems for any dependents who may need the money for living expenses.
If you die intestate and you have minor children (under the age of 18), money due to them will have to be paid into the Guardian’s Fund, which may produce low returns and make access to the funds difficult. In any event, your heirs will clearly be in a stronger position if you make a Will.
There are many benefits to investing in a consultation with a suitably qualified professional who can guide you on how to draw up the best will for your circumstances. He or she can alert you to the many legal problems that can arise when you write a will – for example, how to word a bequest of property that is mortgaged to a bank.
But not everyone is prepared to spend the money or the time. At least two of the big banks are offering easy-to-complete, free, online wills. But are they worth considering?
These free Wills are really most suited to people who plan to leave their assets very simply to, for example, family members. Alfie Bester, fiduciary specialist at Citadel Fiduciary and a Fisa council member, said template-type wills work in nine out of 10 cases, particularly for lower-income earners. However, in one out of 10 cases, he said, they are dangerous and an expert is required. “Rather spend the money on a specialist. It could wind up being more expensive if you don’t,” he warned. Banks and large trust companies have been known to refuse to take up executorship of estates that fall below a certain value.
You should also be aware that, when a bank provides a free or cheap Will, it will appoint itself as executor of the estate. When it comes to winding up the estate, the bank will charge the estate the maximum executor’s fees provided for by the Administration of Estates Act. The maximum is 3.5 percent of the gross value of your estate and six percent of any income (including interest on investments) that is paid into the estate after your death. On top of all these fees, the estate will pay VAT.
It is not easy to determine what does and doesn’t go into your estate, and exactly what your estate’s liabilities will be. You need to know, for example, which policies will pay directly to a beneficiary and which will pay into your estate. When it comes to the liabilities, you need to know what capital gains tax, executor’s fees and estate duty liabilities you may incur.
Insufficient cash could result in the executor being forced to sell assets in the estate that were left for someone in particular.
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Author: Corné Loots