As per the famous quote by Benjamin Franklin, “In this world nothing can be said to be certain, except death and taxes.”
Nobody wants to think about losing a loved one, especially when we are young and healthy. Unfortunately, it is a reality that we have to face at some stage. When this happens, the last thing your loved ones should be concerned about, is the administration of your estate.
Let’s look at Anton’s circumstances. He is a fit and healthy 32 year old man, married with two young children. He owns a house with an outstanding mortgage, the furniture in the house, a car and a savings account. He is under the impression that he does not need to have a Will as he is still young and will not leave a huge estate behind, and in any event, should he pass away, his wife will inherit all his assets…right?
Should Anton pass away without leaving a valid Will, his estate will be divided in terms of the Intestate Succession Act 81 of 1987. What this means for Anton’s family (as in the scenario above), in terms of the Intestate Succession his wife will inherit R250 000 or a child’s share of his estate, whichever amount is the greater, and his children will each inherit a child’s share. A child’s share is calculated by dividing the value of the estate by the number of children and surviving spouses. Suppose the value of Anton’s estate amounted to R1 200 000, a child’s share will then be calculated as R1 200 000 ÷ 3 (his two children and his wife) = R400 000. His wife and each of his two children will inherit R400 000. The child’s share is then greater than the minimum of R 250 000 stipulated by the Act. If the value of Anton’s estate amounted to R300 000, his wife will inherit R250 000 and his two children R25 000 each.
Despite the fact that this situation does not reflect Anton’s wishes at all, the possibility exists that the executor of his estate may have to sell the family home to pay off the outstanding mortgage. (Kindly note that this is not always the case, just a possibility depending on the circumstances.)
It is extremely important to consult an expert for help and assistance with the drafting of a Will. As your living conditions change, you will also have to update your Will regularly to give effect to your changing needs or wishes.
First of all a Will enables you to express your wishes clearly. Anton will be able to specify that his wife is to inherit his entire estate, which could enable her to possibly utilize the cash in his savings account to pay a part of the outstanding mortgage. This could literally mean the difference between keeping and losing their family home. It is important to ensure that no ambiguity arise from your wishes, as you will not be here to explain your true intent.
Anton might feel different in a few years’ time and now wish to include his children in his Will. He can then create a Testamentary Trust in his Will for the benefit of his minor children. His Will can indicate among others, the Trustees of the Testamentary Trust, who will manage the Trust Assets on behalf of his minor children, as well as the age when their inheritance should be paid out to them.
Furthermore, an expert will be able to give Anton advice on the costs associated with the administration of an estate and the importance of having sufficient cash available in the estate to settle any debt and costs payable during the course of the estate process. This will ensure that the surviving spouse is not forced to sell assets to pay debt.
Anton will also be able to appoint an Executor in his Will who will be responsible for the administration of his estate. Since the estate process is a specialized task, it is recommended to appoint an expert in this field. However, a surviving spouse may be appointed as executor of an estate, who can in return consult with a specialist for assistance.
The death of a loved one is a painful experience, it is important to do everything in your power to make the administration of your estate as carefree as possible for your loved ones.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.
Article credit: http://mhilaw.co.za/Blog/?p=822