First and foremost, have a will.
Appointment of executor
Many people are not aware that the executor’s fee of 3.5% (plus 15% VAT if applicable) is negotiable. Consider including a sliding scale for fees, based on a declining fee as the extent of your assets included in your estate increase. As your loved ones will probably deal extensively with the appointed executor, it could make this inherently painful process a little easier if someone known to the family is appointed, if possible.
Revoking of previous will
Always ensure that your will has a clause revoking all and any previous wills. You don’t want to make an already admin-intensive process even more complicated.
Substitution of heirs
You should consider providing for alternative heirs should any of the appointed heirs pass away before you. This could also be addressed each time you update your will, which should be on a regular basis.
Make provision for guardians over minor children. Don’t forget to discuss this with the intended guardian(s) and obtain their permission.
It may be sensible to consider a bequest to the guardians, to assist with things that might impact their ability to become the guardian of your children.
This could include things such as house renovations and a vehicle in case the situation requires it. If possible, arrange for the minor children to remain together as a family unit.
Minor children heirs
Make provision for minor children’s inheritance to go into a testamentary trust. If this is not provided for, their inheritance might end up going into the Guardian’s Fund, which makes the process of gaining access to funds much more complicated.
Trustees of testamentary trust
To ensure that the administration of the trust is properly performed, it is sensible to appoint three (an uneven number is intended) trustees to avoid a stalemate when deciding on distributions to be made. It is practical to appoint a trustee who has a business or legal background, a trusted friend of the family and one of the guardians of the minor children.
It is advisable that your will be drafted in conjunction with your financial plan. This will ensure that you have ample liquidity to settle all debts and any expenses (estate duty and executor’s fees). A liquidity problem could result in the executor having to sell assets to generate income to pay these expenses. A simple method to avoid a liquidity shortfall would be to make the estate a beneficiary of a life policy.
It is often the case that major assets, such as property, vehicles etc are bequeathed to more than one heir. This could result in disagreements among heirs and could be addressed by the testator or testatrix (man/woman whose will it is) discussing their bequests with heirs prior to drafting the will.
Validity of the will
Ensure that the will is properly and duly drafted, and signed by the testator or testatrix in the presence of two witnesses, who will also need to sign the will.
Note that a witness to the signing of the will cannot inherit.
Bequests of assets
If possible, refrain from using rand values in a will, as these values could change substantially over time. If practical, rather use a percentage value instead.
If beneficiaries are appointed on life policies executor’s fees can be saved, as the proceeds are paid directly to the beneficiaries and are not processed through the administration of the deceased estate. Keep in mind that there needs to be enough estate liquidity (cash) to cover all expenses as previously mentioned.
When drafting a will, keep in mind that there may be claims for child maintenance against the estate in case of financially-dependent children, parents or other parties. Spouse maintenance also needs to be considered.
Include a clause referring to the bequest of the residual of the estate. This will cover all assets not specifically mentioned in the will.
When bequeathing assets that are subject to outstanding debts, such as property and vehicles, consider whether the corresponding debt linked to the asset is also bequeathed.
We always advise clients to consider discussing the content of a will at a family gathering so that all heirs understand the considerations of the testator/testatrix when drafting the will. It is possible that one sibling inherits a bigger slice of the proverbial pie, owing to other siblings having received benefits during the lifetime of the testator/testatrix.
A clearly drafted will that expresses your wishes will help circumvent any unnecessary misunderstandings after you are no longer able clear these up.