We all know Benjamin Franklin’s famous quote from 1789: “Nothing is certain except death and taxes.” But what many overlook is the one crucial step that can truly make a difference to your loved ones when you pass away – having a valid, up-to-date will. Without one, your estate faces delays, disputes, and unnecessary stress for those you care about the most. Planning with a will is not just a good idea; it is essential.
No one likes to think about death or planning for what happens after, but taking the time to arrange your affairs and how your estate will be dealt with is one of the most important decisions you can make.
Passing away in South Africa: Intestate or Testate?
When you pass away, your estate administration falls into one of two categories:
- Intestate: You don’t have a will; therefore, the Intestate Succession Act dictates how your estate will be distributed.
- Testate: you have a will. Great, but do you know what your will says? When did you last review it? Was it drafted with proper estate planning in mind? You may have signed a document, and you feel responsible, perhaps even at ease; however, this doesn’t guarantee it will work as you expect.
What happens when you pass away without a will?
- Your assets are dealt with in terms of the Intestate Succession Act, which may not reflect your personal wishes.
- Only certain family members, typically your spouse, children, and parents, inherit, potentially excluding others you may have wanted to provide for.
- The estate administration process can be longer and more complicated, with the Master of the High Court appointing an executor.
- Disputes, delays, and additional legal costs are common.
- Your loved ones face uncertainty and additional stress during an already difficult time.
- For minor children, the Guardians Fund may be appointed to manage the assets, meaning the State effectively steps in to manage their inheritance.
What happens when you pass away with a valid will?
- Your estate is distributed according to your wishes – clear, legally binding instructions.
- You can provide for your loved ones beyond those included in intestate succession law.
- You appoint your preferred executor, helping to streamline what is already a lengthy process.
- Risk of disputes is reduced, speeding up the administration of your estate.
- There is sufficient liquidity planned to cover estate administration expenses and taxes.
- Peace of mind comes with knowing your wishes will be respected.
The risks of a poorly drafted will:
- Ambiguities or errors can lead to your will being challenged and declared invalid – the result: your estate will devolve as if you passed away intestate.
- Insufficient liquidity to cover costs such as professional fees, Master of the High Court fees, transfer costs for immovable property, and taxes.
- Family disputes may still arise despite having a will.
- An executor without the appropriate knowledge or experience may be appointed, complicating the process further.
- Ultimately, a poorly drafted will can cause exactly the chaos you hoped to avoid – why, because there was no proper estate planning thought behind it.
Why a “One Size Fits All” Will doesn’t work
Every family dynamic is unique, and your will needs to reflect that – there is no “one size fits all” will. If your will does not work for your circumstances, you essentially do not have one at all.
Effective planning for estate administration costs and tax efficiency
Ensuring your estate is as tax-efficient as possible is another important consideration. Proper planning helps cover the costs associated with estate administration and estate taxes, such as income tax, capital gains tax, estate duty, and donations tax (if applicable), so your beneficiaries aren’t left with unexpected financial burdens.
Death and taxes are inevitable, but the smooth administration of your estate one day doesn’t have to be left to chance. Now is the time to have a professionally drafted will or to review and update your current one. A valid, well-structured will is one of the greatest acts of care you can leave behind, ensuring your loved ones are protected, avoiding unnecessary disputes, and ensuring your wishes are carried out and are respected.
When was the last time you updated your will? Your will should be reviewed annually or whenever circumstances change.