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IS YOUR WILL

UP TO DATE?

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Stanley Broun

Head of Fiduciary and Tax

Your last will and testament is one of the most important documents you’ll ever sign. It should be regularly reviewed, especially if your circumstances change. We’ve provided a handy checklist to help you take stock and determine whether you need to make changes to ensure your will is still valid and up to date.

Since you last updated your last will and testament, significant changes may have taken place in your life, including marriage, divorce, the birth of a new family member, or the death of an heir. Your asset base has likely increased, and you may have diversified your investments offshore. If you now have assets located outside South Africa, you may also need to have an offshore will in addition to your local will.

The following questions will help you determine whether your will needs to be updated:

  • Is the date of signature on your will more than five years ago? If it is, you should see a fiduciary specialist to update your will. Personal circumstances often change over the course of a few years.
  • Does your current will revoke previous wills drawn up by you? Your will should have a clause that specifically states that it revokes previous wills or other testamentary dispositions made by you.
  • Do you have wills that deal separately with your South African and non-South African assets? The administration process is easier if the wills are separated. South African legal terms used in wills are often different to those used in other countries in which you may have assets. In addition, some jurisdictions have forced heirship rules instead of our wide powers of testamentary disposition. Read more about the importance of drafting a separate offshore will here.
  • If your answer to the previous question is yes, does each will that deals with the respective assets in and outside South Africa clearly state that it deals only with those assets, and that it revokes only wills dealing with the respective assets situated in the particular jurisdiction? If not, one will may unintentionally cause the provisions of the second will to conflict with those of the first. Even worse, one will can revoke the other, resulting in you potentially dying intestate in respect of certain assets.
  • Have you established the cash requirements in your estate? Cash shortfalls may delay the winding up of your estate, and/or may cause some of your assets to be sold. Cash shortfalls may be the result of outstanding liabilities in your estate, including bonds over fixed property, suretyships signed by you that are now being claimed against your estate, transactional debt, medical and last illness expenses, executors’ fees, estate duty and capital gains tax on death, or cash bequests in your current will.
  • Have you nominated guardians to your minor children in your will? The nomination of guardians indicates your wishes in this regard. A conversation should be had with the nominated persons to ensure they’re aware of this (and in agreement).
  • Have you directed that bequests to minor children (younger than 18 years) be handed to their legal guardians or kept in trust until they reach majority age? If not, bequests to minors may be paid into and controlled by the Guardian’s Fund until the children are majors.
  • Have you exempted the nominated executor as well as the trustee(s) of a trust created in your will from the requirement to provide security to the Master of the High Court? If not, the Master may require them to furnish security, which may be expensive and cause them to reject appointment as such, leading to possible delays.
  • Have you considered the consequences of your marital regime on your death (if married)? A marriage in community of property may mean that the entire estate is frozen on death of the first spouse. Furthermore, you can only dispose of your half of the assets in your communal estate in your will. The accrual system may also have unintended consequences.
  • Have you dealt with loan assets in your will? You can bequeath loan assets in your will to the persons owing you the loan amounts, thereby cancelling the loans – with the effect that these persons won’t have to pay the loan amounts to your estate on your death.
  • Have you considered the effect of US or UK situs assets, and the potential liability for inheritance taxes in the US and the UK on your death? Assets situated in the US or in the UK, such as fixed property, shares listed on an exchange and unit trusts, may cause your estate to incur inheritance taxes in those jurisdictions at much higher rates than in South Africa.
  • Do you maintain your parents or provide towards their maintenance or medical expenses? You should consider how these expenses will be paid when you’re not there to do so. Your parents can be maintained from a testamentary trust or as a condition to a bequest in your will.
  • Do you have a maintenance liability towards a previous spouse or to children in terms of a divorce order? Depending on whether the liability carries on after your death, you should provide for payment in terms of your will to avoid your estate having to make monthly payments for years to come.
  • Do you have bank accounts in overseas jurisdictions? If so, are you the only account holder or do you hold accounts jointly with someone else? If you hold a bank account in joint tenancy with your spouse, the bank will on receipt of your death certificate remove your name from the account, and it will carry on in the name of your spouse. Special attention should be given to bank accounts held in civil law countries (almost all EU countries, and the UK) as the administration process in these countries can be extremely complex.
  • Do you own business interests? If so, have you provided for continuity in the business? You can enter into a buy-and-sell agreement with an associated life policy to provide the liquidity to your business partner to buy your share of the business. Alternatively, you should provide for succession in your business in terms of a shareholders’ agreement or a bequest in your will.
  • Have you nominated beneficiaries for the proceeds of life assurance and/or pensions benefits? Proceeds will normally pay out to nominated beneficiaries outside your estate, and won’t be subject to executors’ fees, providing beneficiaries with liquidity at an earlier stage without having to wait for the administration process of the estate to take its course.
  • Have any of your children ceased to be South African tax residents, and formalised their exchange control emigration? If so, you’ll need to ensure that any bequest to your children is made directly to them and not to a South African trust, as it could have punitive tax consequences for them.

If you’d like to update your last will and testament, or need expert advice on any of these questions, please contact Stanley Broun on +27 (0)11 778 6648 or stanleyb@privatewealth.sanlam.co.za, or Sue Cousins on +27 (0)31 560 3654 or suec@privatewealth.sanlam.co.za.

Expert advice is crucial in dealing with cross-border estate and tax planning.

Stanley Broun has spent 10 years in Fiduciary And Tax.

Stanley Broun

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