Thy will be done

Drafting a will is a person’s final say on how their belongings, also called their estate, are to be divided. It holds implications for those that are financially dependent on the late testator and requires careful consideration while someone is alive. A person’s death can also have consequences if they own a business.

During your lifetime you have absolute control of your estate and can therefore exercise any intention you wish to, says Donice Perkins, estates administrator at law firm Van Deventer & Van Deventer. When you pass on, this ability falls away.

The importance of getting a will

A will is an opportunity for testators to decide exactly what is to become of their estates (assets and liabilities) upon their death, explains Simon Dippenaar, managing partner at law firm Simon Dippenaar & Associates. A will is a basic estate planning tool which, together with suitable insurance policies, is the best way to protect a testator’s assets and ensure that dependents are taken care of after their death, he says.

A will allows its testator to list other wishes in addition to setting out how their assets should be divided, says Wernher Bock, senior partner at Hannes Pretorius Bock & Bryant Attorneys.

These wishes could include bequeathing certain assets directly to persons or organisations and who will take care of the testator’s minor children. It could further include measures for the management of the financial affairs of minor children or grandchildren until they reach an age at which the testator feels they will be able to manage their own affairs. Or it can include disinheriting individuals who would otherwise stand to inherit if you had no will (for example, ex-spouses).

This leads us to the question of what happens when someone dies without a will?

This will result in your estate being wound up according to law, which may not be the result you had intended when you were alive, says Dippenaar. When a person dies without leaving a valid will, says attorney Shaun Benater, “the estate will devolve in accordance with the Intestate Succession Act.This essentially takes away one’s freedom of testation.”

Freedom of testation is something that most people don’t know about, says Elmarie Neilson of Neilsons Attorneys. She highlights that in South Africa, we have “freedom of testation”. This means that you are entirely free to decide to whom you want to leave your assets. Perkins cautions, however, that leaving verbal instructions or having the intent to execute a will, but never actually doing so, is insufficient.

When to draft

As soon as a person has assets to their name or they have children, they should consider drafting a will, or having a will drafted by a professional on their behalf, advises Claire Thomson, director at Witz Inc. She says the amount of assets does not need to be substantial or large – it could be an amount of money in your first savings account or it could be something much larger, such as a house or a car.

Jennifer Fung, director at Fluxmans, says when a life event like marriage happens, it is important to take one’s marital regime into account (in or out of community of property and with or without accrual) as it may be that the immovable property does not only belong to the testator.

“If spouses are married in community of property, then they will only be able to bequeath their half share,” she says. “They should also consider, if they are married or living with someone, what will happen to that other person when the homeowner dies.”

A will must also make provision for the event of both spouses dying simultaneously, or in commorientes. Fung says that if the surviving spouse was to be the heir, then the will should make provision that a substitute beneficiary is appointed. “This is another reason why a will is important.”

In terms of movable property, it is important to consider which beneficiaries may have a sentimental attachment to certain items, according to Fung. She is of the view that if one beneficiary is much wealthier than the others, it may be more equitable to consider giving the other beneficiaries more.

What to bequeath?

“You simply need to decide who is either most in need of any particular asset, or who would be best able to utilise it and who would possibly value and appreciate it most,” advises Aidan Fayle, partner at Goodrickes Attorneys.

Neilson always advises clients to make a special provision that any immovable property that they own at the time of their death be sold and the cash divided among their heirs. Any of the heirs will have first option to purchase the immovable property.

“The reason for this is to avoid disputes with the future of the property: Disputes arise as to whether the property should be sold, or one heir wants to move in but cannot pay rent, etc.”

It would be prudent to know the location, extent, and value of all assets and the liabilities, if any, to each and to keep a list for the will, advises Dippenaar.

In terms of sophisticated assets such as intellectual property (IP), Neilson and Thomson advise that intellectual property should be left to a specific heir who will deal with it intelligently. Thomson says that IP is unfortunately often overlooked in wills and could be lost if dealt with inappropriately. “IP is an important aspect to include in a will, especially in respect of copyright, which often vests in the author of the work automatically in terms of the Copyright Act.”

Who to nominate as the executor of your estate?

“When choosing a trusted person to be the executor of your estate, considerations to take into account include whether the chosen person will be able to handle the estate during a challenging time and whether the chosen person is [capable of taking] on the appointment,” says Bock.

This must be someone you trust and who will have the sense to refer your will to a trusted professional, says Dippenaar.

“Invariably, the Master of the High Court will insist that the person you nominated as the executor appoint a professional person as an agent if they are not a professional themselves.” Even if the executor is a relative or friend, they would still need to appoint an attorney or an accountant to administer the process, says Fung.

Executor fees

From experience, Perkins says that “an executor skilled in the field of deceased estate administration will save much time and hassle and can be well worth the fee”. In terms of the Administration of Estates Act, an executor is entitled to remuneration, which is payable from the estate.

An executor is entitled to charge a maximum of 3.5% of the gross value of the assets in an estate as well as 6% of the income accrued and collected after the date of death, explains Fayle. Neilson says that “it is a good idea to negotiate a reduced fee upfront with the executor. It is important to stipulate this agreement in the will.”

In terms of what is excluded from fees, Bock says that the calculation of executor fees is based on the gross value of the estate. “Assets that do not attract executor fees are insurance policies with a beneficiary nomination; policies where the deceased is not the owner and payable to the estate; usufructs used by the deceased prior to passing away; and retirement fund benefits.”

This article originally appeared in the 21 May edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.