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Estate planning: The value to your surviving spouse of putting your affairs in order

Most South Africans are Covid-fatigued but, as the trajectory of the third wave continues upwards, it’s only natural to think about how the possibility of sudden death would impact those we leave behind and how they would manage financially in our absence.

If you’ve got a will tucked away, you’ve taken the first step towards making provision for your spouse and your family, but there’s a lot more you can do to prepare your affairs should tragedy strike. Specifically, if you’re married, a primary estate-planning goal should be to protect your surviving spouse from further heartache.

Tell your spouse where your will is located

In the event of your passing, your spouse or a family member will need to report your death to the Master of the High Court within 14 days, and one of the documents that will need to be submitted is your original will, plus any codicils or supporting documents. While you may want to keep the contents of your will confidential, it is always advisable to let your spouse know where your original will is located. Ideally, an original will should be kept in a fireproof safe to protect it against destruction or tampering.

Wherever you choose to safekeep your original will, make sure your spouse and/or your executor know where it is kept. If your surviving spouse cannot locate your will, she will have to make enquiries with your bank(s), insurer(s), attorney, financial advisor, broker, or other service providers to try and locate it. If she is unsure as to whether a will exists, she may be additionally burdened with the implications of what your intestate death may mean for her financial future.

Remember, many banks and financial institutions are running on skeleton staff while the majority of their staff work from home, and this can result in added delays in trying to locate your will. Knowing where your will is stored will speed up the process of getting your executor appointed which, in turn, will expedite the winding up of your estate.

Double-check your will

Take a moment to read through your will to ensure that no unintentional errors appear. Specifically, make sure that it is clearly dated and that it clearly revokes all previous wills made by you, and that any previous wills have been physically destroyed.

If you have a foreign will in place, be sure that it specifically deals with your foreign assets and that your South African will specifically deals with your local assets.

Make sure that your will includes a clause which deals with the residue of your estate, as failure to include such a clause can result in you dying partially intestate. Ensure that your spouse played no part in the writing or typing of your will, as this could exclude her from benefiting from your will.

In addition, be sure that your spouse did not sign as a witness to your will.

It’s also a good idea to check that you are still comfortable with the person or organisation you have appointed as executor and, further, that the person appointed as executor is still alive. Certain assets, such as retirement funds and life policies are not dealt with in terms of a will so, to avoid confusion and uncertainty, do not mention them in your will.

Collate your legal documents

If your spouse is left scrambling to find documents necessary to wind up your estate, this can lead to frustration and unnecessary delay. As a minimum, the master will require a copy of your ID, birth certificate, marriage certificate, a copy of your ante-nuptial contract, title deeds to any immoveable property owned in your name, and the trust deeds of any trusts. Other documents that will greatly assist the process include a copy of any divorce or maintenance orders, a copy of your passport, Sars tax reference number, share certificates, vehicle registration papers and firearm licenses.

Check your beneficiary nominations and liquidity goals

Double-check the beneficiaries that you have nominated on your various policies to ensure that they still accurately reflect your wishes, and don’t forget to include any group life cover in this process. Remember, beneficiary nomination is not merely about who gets what, but about how the proceeds of each life policy are treated in the context of your deceased estate, the role that they plan in creating estate liquidity, and the extent to which they are estate dutiable.

Where the purpose of the life policy is to provide liquidity in your estate, it is advisable to nominate your estate as the beneficiary to the policy so that, in the event of your death, the proceeds will be paid directly to your deceased estate, keeping in mind that such payout will potentially be subject to estate duty. Where you have nominated your spouse as the beneficiary on a domestic life policy, the proceeds are deductible from the gross value of your estate and in terms of section 4(q) of the Estate Duty Act, are not estate dutiable.

Be cautious of nominating your minor children as beneficiaries on a policy. Remember, in South Africa, children under the age of 18 are limited in how they can receive their inheritance.

Where a lump sum is bequeathed directly to a minor child with no natural guardian, the money will be housed and administered by the Guardian’s Fund until the child reaches legal age. As such, it is advisable to make provision for a testamentary trust in terms of your will and to nominate your minor children as beneficiaries to the trust. By nominating your testamentary trust as the beneficiary on your life policy, the proceeds will be paid directly to the trust for the benefit of your children.

Understand the impact of your marital regime

The nature of your marital regime will form the foundation of your estate planning so be sure that you fully understand your marriage contract. If you are married in community of property, only half of the joint estate is yours to bequeath, so be sure that your will takes this into account.

If you are married with the accrual system, it is important to understand the implications of the accrual should you die. For instance, if you pass away leaving your surviving spouse with a smaller accrual than yours, she will be able to claim against your deceased for her share of the accrual. On the other hand, if your estate’s accrual is smaller than that of your surviving spouse, your estate can claim against her estate for its share. if you and your spouse bequeath your respective estates to each other, then the accrual should not give rise to any liquidity shortfall in the event of either of your deaths.

However, if you intend leaving some or all of your assets to a third party, this could create liquidity problems for your deceased estate or financial problems for your surviving spouse. If you are married out of community of property without the accrual, you are free to bequeath your estate as you please, although it is important to remember that your spouse may have a right to claim maintenance from your estate if you have not adequately provided for her in terms of your will. The Maintenance of Surviving Spouses Act makes provision for a surviving spouse to claim against the estate of her deceased spouse to the extent that she is unable to meet those needs with her own means and earnings.

Immoveable property

If you intend bequeathing immoveable property, be careful in your estate planning to ensure that no complications or unintended consequences arise. For instance, if you are married in community of property, any immoveable property will be jointly owned by you and your spouse, meaning that you cannot bequeath the entire property to a third party in terms of your will, as you effectively only own half of it. If you intend bequeathing your 50% share in the property to a third party, you will need to fully understand the consequences on your surviving spouse of doing so.

Similarly, if you are married with the accrual and jointly own a property with your spouse, you will need to understand the implications of bequeathing your share of the property to someone other than your surviving spouse. If you intend making use of personal servitudes such as usus or usufruct, be sure to get expert advice with drafting your will as the rights of property possession is a complex area of the law that a lay person can easily get wrong.

Create a digital will

Something that your surviving spouse will benefit greatly from is a digital will, which is essentially a record of all your online accounts and subscriptions together with login credentials, usernames, and passwords. It can also include instructions as to how you want these accounts handled after your passing, specifically when it comes to social media accounts. A digital will should include details regarding your bank and share trading accounts, online shopping accounts, social media pages, subscriptions, as well as logon details to your various devices.

ADVISOR PROFILE

Eric Jordaan

Crue Invest (Pty) Ltd

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