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Expat Wills

The importance of a Will

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Did you know that approximately 86% of South Africans haven’t made plans for their death? For some reason setting up our last will and testament makes us think about our own mortality, and so we tend to put it off. All too often though, this is only attended to when we know that we are about to die from a life threatening disease. For example:

If you don’t have a Will in place when you pass away, you die ‘intestate’. What then happens is the courts take over and create a ‘Will’ on your behalf, according to the laws of the country, and divide the assets between the spouse and children. While all this is happening, funds for your burial and loved one’s day-to-day expenses can be frozen for months by the court if your bank and brokerage accounts are in your name only. Apart from the time-consuming hassle and inconvenience you are going to put your loved one’s through, dying without a Will could also result in costing the Estate thousands in unnecessary expenses. And this is in addition to the standard Estate administration costs; up to 3.5% (plus VAT) of the total value of assets in the Estate.

Something else to be aware of is ‘slapping’ together a Will, and I’ll give you a true-life example of why you shouldn’t. Monty and Muriel got married and drew up their own Will in their study and appointed each other as Executors of their Estates. The marriage turned sour and Monty and Muriel divorced. Monty later remarried and had a child with his new wife, Magda. Sadly, Monty passed away shortly afterwards. Mary, as the Executor of the Will, turned down Magda’s claim against the Estate for monies to help support and raise the child. In this example, Magda eventually received her dues, but only after a very prolonged and painful battle.

Now here’s another scenario (a parent’s worst nightmare). John and Mary drafted their own Will and made their best friend Executor of their Estates. Not long after the birth of their second child, John, Mary and their best friend were on their way home one Saturday night from a rugby test match when they were tragically killed in a motor vehicle accident. Their two children, aged six months and two years old, were left in the care of no one, as the last time John and Mary had revised their Will was prior to the birth of their children and as such, no guardians had been appointed.

These two examples highlight one of the biggest flaws when drafting a Will; people don’t make use of qualified advisors or Trust companies. Your financial advisor is one of the few people that will know when circumstances in your life change – or he should be – and will definitely remind you to update your Will if this was done by him in the first place.

Secondly, the execution of your Will should not depend on one person. By making use of a financial advisor (even if you use a bank, a financial advisor will be appointed to assist you) or Trust company, you are ensuring that your Will is backed up by an organisation.

So even if your advisor passes away, your Last Will and Testament will be finalised and carried out as per your instructions.

A key benefit of having your Will drawn up by a financial advisor is that they will expertly guide you into leaving a neat, practical and enforceable Will, and not a legacy of disaster. ‘Small’ little mistakes, like the one that took place in my first example, will also be avoided. There are also many other legalities to look out for that can have grave consequences, such as leaving cash to people in your Will. These amounts must be paid out in full first before the remainder can be inherited by your spouse or children. So your loving gesture of leaving R500 000 to your sister or favourite charity could result in assets (like a house) having to be sold if there isn’t enough cash available in your Estate, thus leaving your family without a home. Rather stick to percentages when allocating your fortune and ask for advice when tackling this issue.

Another thing you need to be very aware of is the witness signatures on your Will. As a broad guideline, it’s always good to have two witness signatures on each page of the document – and stay away from family members! Any family or guardians who could possibly inherit should not sign as a witness to your Will, to avoid any contest on the inheritance. Even your aunt’s little brother’s cousin is not a good idea as a witness.

Problems will be eliminated if you make use of a financial advisor or reputable Trust company. I always like to start my financial planning with clients by reviewing their Will. It is the cornerstone of making sure that the amount of life cover needed will be sufficient for factors such as inheritance and Estate duties.

A last but very vital point is that once you have gone to all the trouble of drafting a Will with your advisor, please complete the process by signing the document and keeping it in a safe place, such as with the Trust company.

Until next time, take care and enjoy life!

* Fictitious names used in examples provided.

Publish date: 17/09/14 15:27
Source: DO IT NOW MAGAZINE , Peter Fairbanks, Article from the August 2012

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