You are Here > Home > Financial planning > Common mistakes when drafting a Will and how they impact your wishes

Common mistakes when drafting a Will and how they impact your wishes

Sep 13, 2017

By Kezia Talbot, Legal Advisor and Remay de Kock, Legal Adviser at BDO SA.

It is officially National Wills Week. Wills can get quite tricky – there are several common mistakes that are made when drafting a Will that can have a serious impact on your wishes.

Do you have a valid WillOne of the most difficult aspects we have had to deal with in recent years, is to ensure that clients realise the importance of having a valid Will in place. The most difficult part is probably to make sure clients understand why we “sell” the concept of having a Will. Many people’s first reaction to this topic is that there are many other more pressing issues that have to be dealt with – tax, education, investments (for the short and long term), holiday funds, etc. These are things which have to be handled in the present in order to ensure a stable and secure future. The second reaction is that there are excessive – and “unnecessary” – costs associated with drafting a Will. If I know to whom I want my estate to devolve, why do I need to pay avoidable costs?

If we rely on the client’s perception of dealing with a means to an end to ensure a stable and secure future, the importance of having a valid Will in place is one of the foundations to achieve this. When drafting a Will you ensure that your affairs are in place in order to guarantee a smooth process of administration, but you also ensure that sufficient means are met in order to guarantee that your family will be looked after at your death. Thus, you are essentially ensuring a game-plan in order to suffice for current and future events.

When dealing with new clients and their estate planning needs, we often have to deal with Wills which are not only outdated, but as a result of changed circumstances reflect neither the client’s current affairs nor their wishes. A properly drafted Will warrants a process where you are certain of a document which is in line with your current circumstances and any changes are in line with your wishes.

Whether you already have a valid Will or not, these are some of the most important the factors to consider:

Executors

When nominating an executor, ensure that successive nominees are mentioned in case of failure, for whatever reason, of the first nominee. I have come across situations where the spouse passed away, followed by their children. There were no other family members and the administration process suffered heavy delays as a result thereof.

Defining heirs

To avoid confusion, heirs should be appropriately defined considering their relationship to the Testator and identity number, in order to easily identify them during the administration of the estate. A bequest of “R100 000 to Chris Marx” is insufficient taking into account the fact that there are three people with the same name related to the Testator.

Successive heirs

Testators all too often do not provide for alternative heirs in the event of the heirs predeceasing the Testator. Although the Testator’s intention might be to have a specific person or class of persons inherit failing the others, if this is not clear from the Will, your executor will have to refer to the Wills Act to provide for a solution – a solution which might not be consistent with your wishes. To avoid these situations, ensure that provision is made for alternate heirs for all bequests mentioned.

Provision for minor children

When dealing with minor children, a lot of confusion exists as to the proper manner to deal with this situation. Proper advice needs to be obtained to confirm if a Trust is to be established for their benefit or if funds can be paid directly to the guardian. In most cases it is advisable to make provision for a Testamentary Trust, but each case needs to be assessed on its own merits, depending on the facts of each situation. Remember, if you do not make provision for a Trust or insert a clause that funds can be paid directly to a guardian, then all funds payable to a minor will be paid into the guardian’s fund.

Foreign assets

If you own foreign assets, it is of the utmost importance to ensure that you properly deal with these assets. When considering if a South African Will alone is sufficient for your worldwide estate, consider the following common law rule which is used in most scenarios: when dealing with movable assets, such as bank accounts and investments, the law of the Testator’s last domicile governs the validity and distribution thereof, whilst, when dealing with immovable property, the law of situs thereof is used to govern the validity and distribution thereof.

Witnesses

Your Will needs to be signed by yourself and two witnesses in your presence and in the presence of each other. Ensure that the witness signing the Will is not a beneficiary, executor, guardian, trustee in terms of the Will or any spouse of the aforementioned persons. Should any of these persons sign as a witness, although not invalidating the Will, they will be disqualified from receiving any benefit stipulated therein.

Liquidity constraints

Remember that before any distributions can be made to your heirs, all liabilities – both before and after death – have to be paid. Thus, when attending to your Will, think about the consequences of the bequests:

  • Will you have sufficient funds available to settle your debts?
  • What are the consequences if funds are not available?

If no other alternatives are available, assets will have to be sold from the estate, or heirs will have to have liquid funds available, adding pressure to their financial capabilities, in order to settle outstanding debts so as to prevent assets, which may have a sentimental value, from being sold from the estate. Take cognisance of your policies, investments, retirement annuities and how these assets fit into your wishes at death. If you have a policy with a beneficiary nomination, then these funds will pay directly to the beneficiary, regardless of your Will. Testators tend to forget these funds and do not even take them into consideration when attending to the Will. These funds might prove to be useful in establishing surplus liquidity in your estate.

Tax consequences

Taking into account liquidity constraints and your ability to settle taxes which arise at death, be aware of the tax implications of each of your bequests. If you wish to bequeath your entire estate to your spouse, as it entails a tax free distribution, you are probably not completely doing this for the right reasons. Remember that you are in effect only delaying payment of taxes and that your spouse will have to take responsibility for all taxes payable thereon at their death. The section 4A abatement of R3.5million is also at your disposal, thus fully utilise your tax relief before making decisions which do not correlate with your actual wishes.

Drafting a Will entails an understanding of all factors which may have an influence on your bequest. Consider speaking to a fiduciary specialist to guide you through the dynamics of proper estate planning, taking into account all of the above, and how it impacts your wishes regarding your family and loved ones.

This article was based on a press release issued on behalf of BDO South Africa.

Related articles:

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

How your marital regime affects estate planning

Christel Botha, fiduciary services manager at Alexander Forbes, looks at the impact that various marriage contracts have in the event of the death of a spouse. The month of love has arrived, and many couples will be getting married, or planning a wedding. It makes...

Video: Review your will

Last week was National Wills Week, which is always a great reminder to review your will. If you don’t have one, make sure you prioritise this immediately. To find out more about what should be in your will and what makes a will valid, I am speaking to Monica Moodley,...

Listen: Know the difference between good, bad and ugly credit

Is there such a thing as good credit? What forms of credit should you avoid at all cost? In this podcast, Maya (@mayaonmoney) and Mapalo (@womanandfinance) discuss the good and dark side of credit and whether the concept of the lay-by will come back into fashion as...

Income protection for ‘gig workers’ – finally!

By Elmarie Samuel, Senior Technical Marketing Specialist at life insurer FMI (a Division of Bidvest Life Ltd) South Africa’s gig economy is booming. More people than ever before are earning a living as so-called ‘gig workers’ - working as independent contractors,...

Unmarried couples must ensure they have a valid will

By Elmien Pols, Private Client Trust In these interesting times in which we find ourselves, it is not unusual for people to live together, have children, buy properties and run a business together without formalising their relationship, either through marriage or a...

Listen: How to invest for your kids

Whether you are saving for your child’s education or investing for their future, it's tough to know where and when to invest. When is a tax-free investment appropriate? Should you invest in your child’s name? And where should you save for those school fees? Maya...

Don’t let financial jargon throw you off your game

In the hope of assisting investors to make better sense of the current financial climate, Debra Slabber, Business Development Manager of Morningstar Investment Management South Africa, explains some of the financial jargon that is often used during market downturns....

Video: Pay back that payment holiday

We've seen many financial institutions offer their customers a debt payment holiday during these trying times. And while it may seem like a welcome relief, be careful because it might end up costing you a lot more than you realize. According to the Old Mutual Savings...

COVID-19: When would your income protection pay out?

If you get COVID-19, will your income protection or life insurance cover you? And what can you do if you can’t pay your premiums because the pandemic has affected your income? These questions are top of mind right now as the lockdown affects millions of South...

A better – and very different – future

By Samantha Steyn, Chief Investment Officer, and Yanga Nozibele, Investment Associate, Cannon Asset Managers Following the endless stream of Covid-19 headlines, extended lockdowns and associated economic hardships, we are all suffering from Armageddon fatigue. It is...

Pin It on Pinterest

Share This