A very important estate-planning tool is structuring your wills correctly.
The primary consideration in deciding on the contents of your will should be the distribution of your estate in the manner you desire. Secondary considerations would include factors such as estate duty, the quick and smooth administration of your estate and the protection of the assets of your estate from creditors and mal-administration. Structures such as trusts can be used to address some of these concerns.
Drawing up a will is not a simple process. It is governed by legislation that sets out the legal requirements for a valid will. For instance, if a will does not comply with certain basic requirements, such as being properly signed, dated and witnessed, it may be invalid. The best way to ensure that a will is valid is to ensure that experts draw it up.
Why do you need a Will?
1. Ensure that your wishes are properly dealt with
2. Protect the interests of your spouse and children
3. Ensure the ease of administration of your estate
4. Maximise the benefits to your heirs by limiting the taxes and duties that will be paid by you.
A will should be reviewed regularly and whenever your personal circumstances change, for example change in marital status or the birth of a child.
The Key Requirements for a Will
Ordinarily, the following issues will be dealt with in any will:
1. The testator’s personal details;
2 .Revocation of any previous wills;
3. Issues regarding executors and in particular:
- The appointment thereof
- The exemption of an executor from furnishing security
- The powers given to the executor
4. Specific bequests of the testator
5. Distribution of the residue of the estate
6. The formation of a trust, if appropriate
7. General provisions
Your spouse or family members will, inter alia, need to know the following in order to facilitate winding up of your estate:
1. Where your will is kept
2. Details and location of life insurance policiesDetails of all investments and bank accounts
3. A list of all other assets
Deciding on Your Executor
Your executor will act on your behalf to ensure that your final wishes are carried out fully. They will also manage any outstanding financial issues that your estate might have, such as the payment of taxes and claims.
Your executor should be someone you and your family know and trust. In addition, that person must be able to understand your financial and tax affairs and be competent to enact your wishes in an objective manner.
Because a member of the family or a close friend may not be able to act objectively when facing an emotional situation, it is prudent to nominate a professional – your accountant – as an executor.
In addition to the trust factor, there is also a financial benefit from having an existing professional relationship with your executor. In certain circumstances, the Master of the High Court requires a bond of security from your executors which, theoretically, protects the assets in your estate from being misappropriated. Having such a bond is costly and impacts on the final value of your estate. So, having an existing relationship with your executors, will instill the confidence in you to state in your will that you dispense the requirement of the executors having to furnish such security.
How Many Executors are Necessary?
Depending on the size of your estate, the number of executors may vary but you should, at least, nominate two people.
How Much Power Should be Given to an Executor?
To make it easy for the executors to administer your will in the most efficient manner, it is desirable to give them full power to run your estate as if you were still alive. This needs to be stated in your will.
Who Becomes Executor if One Dies Without a Will?
If you die intestate, without a will, an Executor Dative will be appointed by the Master of the High Court. This is usually a surviving spouse or next-of-kin. Should an “outsider