WILLS AND ESTATES
WHY IS IT IMPORTANT TO HAVE A WILL?
To ensure that your estate devolves efficiently, cost effectively and with a minimum of delay upon your chosen beneficiaries, it is important that you draw up a valid will and that you seek professional advice in doing so.
Your will must take many things into consideration, the most obvious being the nomination of heirs and the appointment of an executor to administer your estate.
A trust can be created to control any assets being awarded to a minor child and it is also possible to stipulate your choice of guardian to care for your minor children in the event of the untimely death of your spouse and yourself.
However, issues which are less apparent but of paramount importance, should always be considered in conjunction with the drafting of your will.
- Will there be sufficient liquidity in your estate to pay your debts and at the same time provide for the financial security of your family?
- Do you have business interests which may be vulnerable?
- Can estate duty be minimised?
- Is your mortgage bond covered by insurance (NB)?
- If applicable, where will the funds come from to meet your obligations in terms of a divorce order?
- Capital Gains Tax, and the very topical issue of offshore assets.
If you have an inter vivos trust, the trust deed may need to be reviewed, in particular with regard to the appointment of suitable trustees to manage the trust after your death.
Any or all of these aspects may have relevance for you, and by seeking the best possible professional assistance you will be able to identify problem areas, investigate solutions and achieve the peace of mind of knowing that you have done everything possible to streamline your financial affairs and to ensure that your will is a sound legal document.
DOES MY WILL NEED TO BE AMENDED REGULARLY?
Yes. Events which shape one's life, such as marriage, the purchase of an additional property or a first property, the birth of a child, the death of a loved one or perhaps a divorce, all lead to a change in personal circumstances
SHOULD I CREATE A WILL TRUST?
which may require the updating of your will.
At strb Smith Tabata Buchanan Boyes we have up to date electronic systems to assist in keeping your will current.
A Will Trust, as the name implies, can be created within your Will and does not require any further formalities. Such a Trust comes into operation upon your death and may have a number of advantages, for instance:
• you can ensure your minor beneficiaries receive their inheritance only once they are mature enough to manage it responsibly;
• you can protect your surviving spouse and children by ensuring that they receive income or capital in predetermined amounts while your assets continue to remain intact;
• you can confer various tax benefits on your beneficiaries; and
• in general, cash and assets left in Trust can be used for a variety of specific purposes where you have appointed Trustees with a sympathetic insight into the needs of your beneficiaries.
WHAT IS AN INTERVIVOS TRUST AND HOW CAN IT BENEFIT ME?
An inter vivos trust is an entity which is set up by you during your lifetime and is effective as soon as you have complied with certain formalities.
Such a trust can be a useful tool in planning your estate with a view to minimising the estate duty that will be payable on your death. Estate duty is currently payable at the rate of 20% on the amount by which the value of your net estate exceeds R1.5m, subject to certain rebates. By acquiring assets in the name of an inter vivos trust as opposed to in your personal capacity, you can ensure that any increase in the value of such assets over the years will be the property of the trust and will not form part of your dutiable estate.
We are able to advise you whether, depending on your personal circumstances, the creation of an inter vivos trust would be advantageous for you.
HOW IS A DECEASED ESTATE WOUND UP?
The law prescribes a number of steps to be followed in winding up the estate of a deceased person:
- An application must be made to the Master of the High Court for the appointment as executor of the person or persons who have been nominated as such in the Will
- Once Letters of Executorship have been issued by the Master of the High Court an advertisement is placed in a local newspaper in the area(s) in which the deceased lived during the twelve months preceding death, and in the Government Gazette. This advertisement calls on creditors and debtors to lodge their claims and settle their debts within 30 days from the date on which the advertisement appears. Thereafter all estate assets are collected and all debts settled.
- All assets which the deceased owned at date of death must be dealt with, including but not limited to, immovable property, cash, investments, shares, unit trusts, and any personal property.
- As soon as there is more than R100, 00 in cash in an estate, an estate banking account must be opened.
- A Liquidation & Distribution Account must be drafted and lodged with the Master of the High Court as soon as possible after expiry of the initial advertisement. This Account details the assets awarded and collected and the liabilities and claims against the estate paid, and sets out the distribution to beneficiaries in terms of the will.
- As soon as the Master of the High Court has approved the Account, a second advertisement must be placed in the same publications detailed above notifying interested parties that the Account will lie open for inspection for 21 days from the date on which the advertisement appears at the office of the Master of the High Court and where applicable, a copy thereof at the office of the Resident Magistrate in the area in which the deceased resided during the twelve months preceding death. Any person wishing to lodge an objection against the Account may do so during this 21 day period.
- If no objections are lodged against the Account, distribution is made to the beneficiaries, and the estate finalised.
Due to the complexity of this process, it is advisable to seek the assistance of a professional person involved in estate administration. This will ensure that the administration is carried out as quickly and efficiently as possible.