Having a valid will is crucial
The words “last will and testament” have a chilling finality that many of us might prefer to ignore. However, failing to prepare for death means leaving behind a family uncared for, says Keith Setaka, legal counsel, Absa Financial Services.
Having a valid will is critical because it allows you to specify exactly how you wish to distribute your assets to your beneficiaries following your death. It also ensures the process is simple and painless for them.
The latest figures released by the Masters of the Court reveal that over 70% of the South African working population do not have wills. That means many workers die intestate and risk their assets, pension and life policies payouts going to the wrong people.
Yet, it doesn’t have to be like that. Working with a professional to draft a will is a fairly straightforward process and many institutions do it for free or at a fraction of the cost if they’re nominated as executors.
A professional consultant will ensure your will meets all legal requirements and that your estate is set up in a tax-efficient way to prevent assets being eroded by estate taxes. In addition, he or she will assist you to ensure there is adequate liquidity in the estate to meet obligations during the winding-up period and advise you on nominating an executor.
Simple estates with only one or two properties and a cash inheritance could take six months to wind up, while complex estates could take years. Typically, the minimum time it takes to administer an estate is six months.
Depending on what you have specified in any life insurance policies you have, the proceeds will be paid directly to your named beneficiaries or into the estate account.
If minors are beneficiaries, their benefits will be transferred to the Guardian’s Fund administered by the Master of the High Court, which pays out when they reach the age of 18. You can set up a testamentary trust through a will to protect your dependants’ inheritance until they meet certain conditions, for example, when they reach a particular age.
The obvious risk to dying intestate is to have your assets inherited by the wrong person because of a lack of instructions. It also might take considerably longer to wind up the estate.
If you die intestate, your estate and assets will be administered in terms of the Intestate Succession Act. According to this Act, succession is determined by relationship, namely spouses and descendants, and the process is a lot more complex. These rules of intestate succession also apply if your will is found to be invalid.
You have to live in South Africa at the time of death for these rules to apply – or the laws of the country you reside in will apply.