Death is a certainty for everyone and usually a devastating time for families left behind. During this time, and possibly for years after, it is possible to ease families’ burden through effective estate planning.
South Africa’s National Wills Week 2019 takes place between September 16-20 to emphasise the importance of drafting a will as part of a comprehensive estate planning process. Ecsponent is supporting this initiative, not just for Wills Week, but for the month of September, by offering information and the opportunity for you to have your will drawn up for free.
Floris Slabbert, Director of Ecsponent Financial Services says, ”Many people think estate planning is something to be started in middle age. Yet an unexpected death at any age can leave relatives with the burden of having to wind up an estate and deal with assets and liabilities, including business interests, without the guidance of a legal, valid and executable will and comprehensive estate plan.”
In the absence of a proper estate plan, managing a deceased estate can be a very complicated and costly process. One complication is that assets are frozen until the Master of the High Court has issued letters of executorship. An estate plan is there to provide a contingency plan, which will make cash available at the time of death until estate execution can get underway.
Essentially, an estate plan is a set of financial goals and a strategy for achieving them, as well as a timeframe for the plan and a list of people who will execute this programme in the event of death. An estate plan is important for individuals of any age, marital status or wealth bracket, and is always tailored to that individual’s personal lifestyle and objectives.
“Usually, the goals of an estate plan is to preserve any wealth created during the person’s lifetime, to pass it on to family and succeeding generations, as well as to provide liquid funds for executing the estate plan at the time of death and minimise taxes such as estate duty. An estate plan is always flexible and can be updated as circumstances and lifestyles change.” Slabbert adds.
There are various ways a suitably qualified estate planner can help to ensure that an estate is liquid at the time of death, that a person’s spouse and children can be taken care of, and wealth preserved in accordance with the person’s wishes. One of the most important tools to achieve this is a last will and testament.
Although a will is not the only element needed to execute an estate plan successfully, it is one of the most important tools an estate planner will use to meet the individual’s goals and ensure efficient administration of the deceased estate. Anyone older than 16 years can validly execute a will.
“When a person has a last will and testament drawn up by an estate planner, the person becomes the ‘testator’, and every testator has a lot of freedom in deciding how to dispose of their property at the time of death as they see fit,” says Slabbert.
“A will is not a generic form. Rather, it is a unique document intended to ensure any accumulated wealth is used for the maximum benefit of spouse and dependents at the time of death. It is also there to appoint heirs and distribute assets. Without a will in place, the estate will be dealt with in accordance with the law of intestate succession,” Slabbert adds.
The result could be that the person’s assets are divided up and transferred among spouse and dependants differently from what they would have wanted, because there is no legal document to indicate their wishes.
“Importantly, where there is no last will and testament in place, there is then no executor appointed. This means the office of the Master of the High Court will require nominations from interested parties and will appoint someone from among these nominations. This often causes significant delays in winding up an estate and may incur unnecessary costs which will be taken out of the estate value,” Slabbert warns.
Usually, the executor and trustee are a family member, or an accountant or attorney. “Where the person appointed is not familiar with all the legal steps to be taken, the Master may require a certificate from a qualified person like an accountant or attorney to say they will assist,” he says.
An executor is typically paid for this service according to the testator’s wishes in the will. Or, if there is no stipulation of remuneration in the will, they receive 3.5% of the value of the estate’s gross assets, or 6% of the value of the income accrued and collected from the date of death.
“Duties of the executor include reporting the deceased estate to the Master of the High Court, notifying all creditors of the deceased’s passing, collecting all monies owed to the estate, paying all creditors and legatees, accounting to all interested parties and the Master, and distributing the heirs’ inheritances. This is no small undertaking for the average person,” Slabbert says.
A legatee is the recipient of a specific bequest from an estate, while an heir is someone who benefits from the residual value of the deceased person’s estate. “Proper estate planning will help the testator understand the residual value of bequests once liabilities have been taken care of, as well as how the wording of the will can affect which assets fall inside their estate,” Slabbert says.
Drawing up a will and determining how it will work in accordance with an antenuptial contract or how other legislation will override certain wishes, for example, is a specialised skill. For the month of September, Ecsponent Financial Services is offering a free will drafting service around the country. Anyone wishing to draft a new last will and testament or update an existing document can visit during September, with no cost or other obligations involved. Or connect via the website https://www.ecsponentlimited.com/why-do-i-need-a-will/
“We urge everyone to make use of this valuable service offer and help ease the load on their families in the future,” Slabbert ends.
For more information contact – https://www.ecsponentlimited.com/why-do-i-need-a-will/