Is your estate in order?
23 May 2022
Planning for the future is the best gift you can give your family
We are all going to die one day. Although most of us avoid thinking about it, planning now for the scary, but inevitable event of your death will make things much easier for your family.
Making sure you have a funeral plan that provides for a dignified burial may be the first step you take, but there is so much more to consider. These considerations must be stated in your last will and testament.
Decide what happens after you die
This needs to cover what happens to you, and what happens to your assets, family and other people who will be impacted by your passing.
You must specify what happens to your property (both movable and immovable), and how guardianship of your minor children should be handled.
You must also name an executor, and it is his/her job to make sure that your wishes are carried out. Bear in mind that there is a lot that goes into winding up an estate, and an executor is entitled to charge a fee of 3.5% (where no other agreement is in place) on the value of assets on the estate and 6% on any income accrued and collected after your death. The executor is also entitled to charge VAT if VAT registered or if the agent appointed to assist in administering the estate is VAT registered.
What happens to you?
Do you want to be buried or cremated? Have you found a burial plot and is it booked and paid for? Do you want a memorial service? Does your estate have enough readily accessible cash to pay for your funeral?
Many of us have specific ideas about what should happen to us after we have passed away, but since you won’t be around to make sure things are carried out the way you would have liked, you need to detail your wishes in your last will and testament.
If your assets are tied up in illiquid property (for example a house that would take time to sell and turn into cash) you should consider a funeral policy to pay for the immediate costs related to your death and funeral.
What happens to your property?
You must nominate the beneficiaries of your estate. Generally South African law of succession applies the principle of ‘freedom of testation’ which allows you to do whatever you like with your worldly belongings, as long as these actions are legal. The exceptions that can affect this include:
- Claims for the maintenance of dependants;
- Claims by a surviving spouse (in terms of the provisions of the Maintenance of Surviving Spouses Act); and
- Claims in terms of the accrual system created by the Matrimonial Property Act.
What happens to your family?
The most important consideration when drawing up a will is what will happen to your minor children in the event of your death. Your will should specify guardianship for your children. A guardian will be making financial and personal decisions for your children when you cannot. Children have a right to claim maintenance from a deceased parent’s estate. Any maintenance order already in place will also be binding on the deceased estate.
An ex-spouse does not have a claim for maintenance against the deceased estate, except where the divorce order specifically states that the maintenance order is binding on the deceased estate. This would be included in the divorce order together with a provision that the order will terminate upon the death or remarriage of the ex-spouse, whichever occurs first.
A joint last will and testament
If you are married it is advisable to set up a joint last will and testament. This will ensure that your estate is left to the surviving spouse, or in the event of a simultaneous death how your joint estate should be split amongst your nominated beneficiaries. You can use this template to set up your joint last will and testament.
Dying without a will
If you die without a will you are said to have died intestate. This can be very difficult and time consuming for your beneficiaries. You estate will be divided as follows:
- Division of your estate amongst your spouse and children. If there are no children, the spouse will get it all. If there is no spouse, it will be divided amongst the children.
- If you have no surviving spouse or children, your estate generally goes to your parents.
- If you also have no surviving parents, it goes to your brothers and sisters.
- If your brothers and sisters are predeceased, it will go to their children.
- If none of these can be tracked down it will extend further in the family and if no family can be found it will eventually go to the state (which never happens because somewhere, somehow there is a family member).
Due to the long process of tracing possible beneficiaries this can take years to conclude, so be kind to your family, and give them the gift of a fully completed and witnessed last will and testament.
While it is fairly easy to set up your last will and testament yourself, it is always best to request professional advice from an expert in estate matters, such as a lawyer or financial adviser.
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Speak to a legal advisor to help you plan for the future by drafting a will and testament.
Article sourced from Legal&Tax.
See also:(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)