April 2, 2020

What goes into a will

The primary purpose of a will is to regulate the succession of your assets when you die.  However, other matters may (and should) also be regulated in your will. 

If you do not have a will, your estate does not simply go to the state, as is popularly believed.  Intestate succession is dealt with in the Intestate Succession Act, which provides as follows:

  • If you are married when you die and have no children, your surviving spouse will inherit your estate;
  • If you are married with children when you die, your estate will be divided equally between your spouse and your children (i.e. if you are married with 2 children, your spouse and each child will receive 1/3 of your estate), subject to the proviso that your spouse must receive at least R125,000.00 in assets or money (which means that each child’s share will reduce);
  • If you have no spouse but have children when you die, your estate will be divided equally among your children (or your grandchildren if any of your children have predeceased you); 
  • If you have no spouse and no children when you die, your estate will devolve upon your parents.  If you have no parents, then it devolves upon your parents’ descendants, i.e. your siblings or your nephews and nieces if your siblings have predeceased you.

It is important to have a will, as succession under the Intestate Succession Act may have undesired consequences.  Also, a will makes the process of winding an estate up simpler.

The following needs to be dealt with in a will:

  • You need to appoint an executor:
    • This is the person who winds up your estate, by reporting it to the Master of the High Court, obtaining valuations of your assets, selling what is necessary, claiming payment of money due to you, paying your debts, submitting final tax returns, accounting to the Master of the High Court and distributing your estate to your beneficiaries.
    • This is typically a legal process, so the executor is usually an attorney; however you may appoint a lay person (such as your spouse) as executor; the executor will then have to appoint an attorney as his/her agent in order to secure an appointment from the Master of the High Court.
    • Executor’s fees are generally 3,5% of the gross value of the estate.  However, the Master of the High Court may direct a lower fee if he is of the view that the fee is too high for the work required, or may authorise a higher fee if it is not sufficient compensation for the work required.   We assess the amount of work required and charge a fee based on that.  It has never been necessary for the Master to interfere with our fees.
  •  You need to provide for specific bequests or legacies.  This is when you leave specific assets (or classes of assets) or specific sums of money to people.  If you leave a specific asset to a person and then sell that asset while you are alive, the bequest simply falls away; the legatee is not entitled to the value of the asset.  If the legatee dies before you, the bequest also falls away, unless you have specified a substitute in this event. 
  • You need to appoint heirs:
  • Heirs receive whatever is left of your estate after your debts have been paid and the specific bequests distributed.
    • There is no restriction on who you may appoint as an heir.  In South African law we have freedom of testation.  There is no minimum portion that you have to leave to your spouse or children.
    • You can appoint any number of heirs.  You can stipulate that they each receive an equal share of our estate or that they each receive a specific percentage.
    • Unlike ancient Roman law, heirs do not inherit your debts.  It is the executor’s duty to settle your debts and distribute the surplus to your heirs.   If there is not enough value in your estate to cover your debts, your estate is wound up as an insolvent estate.  The assets are sold and the cash realised is distributed proportionately to your creditors.  Your heirs will not receive anything, as there will be no surplus.  But your heirs will not have to pay the shortfall.  
    • This is the case even if your heirs have received money following your death from insurance policies or retirement funding where you nominated them as beneficiaries; this money is theirs and is not available to your creditors. 
  • You may attach conditions to bequests or the appointment of heirs:
  • For example, you could bequeath your holiday home to a particular child subject to the condition that he/she pays your other children a stated amount of money or a percentage of the value of the asset (this is called a bequest price).
    • You might also leave a property to your children subject to the condition that your spouse (or any other person) has the right to use the property, either for the rest of their lives or for a set period of time (this is called a usufruct).  This is a commonly used tool in cases where a person wants to ensure that a spouse or parent has a home, but wants his or her children to ultimately benefit from the property.     
    • Our freedom of testation is so wide that you can impose any condition that you wish in your will, provided it is not immoral or contrary to public policy.  However, once you die your will is cast in stone.  There may be unforeseen changes in circumstances may after your death that make the conditions onerous.  Resist the temptation to rule from the grave, as this could impose unforeseen and undesired adverse consequences on your loved ones.
  • If your heirs (usually children, but could be anyone) are likely to be under an age where you think they will be mature enough to handle money, you may set up a trust in your will:
  • You will appoint trustees who will look after your children’s inheritances until they reach an age when you think they should receive their inheritance (although the legal age of majority is now 18, you can determine the age – 25 is common, but it could be 21, 30 or anything.  It may also be staggered where your heirs receive their inheritances in stages at specific ages);
    • We generally recommend 3 trustees – the person who will be involved in the children’s day to day life (their guardian), a family member who is a bit more remote and who the children will not live with and an independent unconnected person, usually a professional such as an attorney;
    • The trustees have the authority to pay maintenance to the children’s guardian, education expenses, travel expenses, to advance money to the heirs, to buy them personal use assets such as cars and homes.  So your children are not destitute whilst some old fogeys sit on a fortune!
  • You may appoint guardians for your minor children (under 18) in your will.  Although the final say on guardianship lies with the courts, your wishes will carry a great deal of weight and will generally be given effect to, unless previously unforeseen information comes to light or factors have arisen that disqualify your nominated guardians.  It is a good idea to consider who you want to look after your children if you should die, and to make that wish known in your will.  Also, if your wishes are known it takes pressure off your family. 
  • In your will you can stipulate whether you must be buried or cremated.   As your will only takes effect on your death, if you want to stipulate that you must not be kept alive by artificial means, this must be done in a “living will”, which is in effect an instruction to your loved ones and your care givers.         

Wills contain standard provisions, such as a condition that benefits that your heirs or legatees receive will not form part of a joint estate, that your heirs need not account for gifts that they received from you during your lifetime, etc.

It is quite common for couples to have a joint will, which regulates their affairs in the event of their simultaneous death or one of them dying before the other.  There are effectively 2 wills in one document, which can be effective.  

Although we find it morbid to contemplate our mortality, death stalks us like a thief in the night.   We see many instances where loved ones are left in dreadful circumstances due to a lack of planning on the part of the dearly departed.

It doesn’t matter how young and healthy you are, make sure that your will is up to date!

Robin Twaddle

Robin Twaddle & Associates Inc.

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