Too many of us, writing a will can seem daunting, let alone reviewing it on a regular basis. Writing a will not only provides you with peace of mind but it also gives you control over what happens to your money, property and personal possessions after your death – rather than leaving the law to dictate who gets what.
Despite seeming a little daunting, the process of writing a will is straightforward and does not have to be expensive. Yet, shockingly, around two thirds of adults have yet to make one, potentially leaving their loved ones with costly and divisive legal battles during what will already be a difficult time.
Below are several reasons why you should regularly review your will.
1. On divorce you have three months to amend your will
In the event of divorce there is a general assumption that the client intends to disinherit their ex-spouse. In South African law, this assumption is valid for a period of three months. However, if you have not amended your will and you pass away after the three months period has expired, you will be deemed to have intended for your ex spouse to inherit.
One can only imagine the pain and chaos this can cause where an ex spouse inherits the deceased’s entire estate, while the current wife and children are left destitute. It is therefore vital to review your will in the event of divorce.
2. Do you wish to leave instructions regarding funeral arrangements or any last wishes?
A will is not only a document that gives instructions about bequests and inheritances. It is also the last opportunity that you may have to give directions regarding your affairs. You may wish to direct that you be cremated or that you do not wish to be kept alive artificially for longer than a certain period. While these are only guidelines for those left behind, it can make these decisions easier to make in a time of turmoil.
3. Create a testamentary trust for minor children
A testamentary trust is easily formed in a will. The instructions in the will become the clauses of the trust and may provide for such matters as guardianship of minor children, how capital and income are to be distributed and to whom, as well as appointing trustees to manage the trust affairs. Creating a testamentary trust will provide your dependants, with peace of mind that they will be taken care of in the event of premature death. You also have the added advantage that you do not have to lose control of the assets during your lifetime as would be the case with an inter vivos trust.
4. Structure your affairs in the most tax effective way possible
By structuring an effective estate plan, you can take advantage of reducing any potential estate duty, capital gains tax or income tax that may be incurred. There are many estate planning tools that can create opportunities for you. Consider the benefits of trusts, usufructs and donations.
5. Give effect to your intention
Your will is the last opportunity to communicate how you would like your assets to be divided amongst those you leave behind. Without a will, the law of intestate succession will dictate how the estate is divided and may cause heartache and financial strain for dependants. By using your will to give effect to your intentions firstly, you could then build an estate plan around this. There is no purpose in building a tax efficient estate plan that does not meet your intentions.
6. Make sure that there is sufficient liquidity in the estate to avoid the unnecessary sale of assets
An integral part of any estate plan is a liquidity calculation. This will show you what the cash position is, should you pass away. Cash will be required to settle any claims by creditors, maintain dependants and pay any taxes due to SARS. It would be traumatic to have to sell the family home to provide cash to settle up an estate duty bill, or to inherit a large portfolio of shares that have to be sold in haste at a time where the stock market is falling and the true value is not realised.
7. Your personal circumstances may have changed
A will should be reviewed once a year as part of a holistic review of your financial plan. However if circumstances change make sure that the will is reviewed before this if necessary. Changes such as the birth of a child, change in marital status or change in employment may mean that you need to make changes. A small change does not mean that the entire will needs to be re-drafted. A codicil (or addendum) can be drawn up making the change simply and efficiently. A codicil must conform to the same rules as a will so make sure it is in writing, signed by the testator and witnessed by two valid witnesses.