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"A father dies suddenly. His family is sitting around the desk of his attorney for the reading of the will. The attorney thanks all of them for coming and then reads out his Last Will and Testament.
"I, being of sound mind, make the following gifts. To my beautiful wife, I leave my house, my Manhattan apartment, and R10m in cash. To my hardworking son, I leave my Lexus and R8m in cash. To my amazing daughter, I leave my Jaguar and R8m in cash.
"And to my brother, who always told me in no uncertain terms that 'health' is so much more important than 'wealth', I leave my exercise bike and treadmill."
Whether or not you're planning to have the last laugh, it's crucial that you have a will in place, as once you've 'kicked the bucket', you won't be in a position to decide who gets what.
There may be a few questions you have about how it all works. Here are the answers to some of the more popular questions we get asked about wills and estate administration.
"I, being of sound mind, make the following gifts. To my beautiful wife, I leave my house, my Manhattan apartment, and R10m in cash. To my hardworking son, I leave my Lexus and R8m in cash. To my amazing daughter, I leave my Jaguar and R8m in cash.
"And to my brother, who always told me in no uncertain terms that 'health' is so much more important than 'wealth', I leave my exercise bike and treadmill."
Whether or not you're planning to have the last laugh, it's crucial that you have a will in place, as once you've 'kicked the bucket', you won't be in a position to decide who gets what.
There may be a few questions you have about how it all works. Here are the answers to some of the more popular questions we get asked about wills and estate administration.
What happens if I don't have a will in place?
If you don’t have a will in place, the South African Law of Intestacy prescribes what would happen to your assets on your death. You will have no control over who inherits the hard-earned fruits of your labour. If you have minor children, their portion of their inheritance would be paid over to the guardian’s fund. The court would appoint the guardian for them and this may not be the person you wished to care for them. You would not be able to decide who the executor of your estate would be, and this means you could end up incurring unnecessary expenses and fees for your estate.
I have a will, but it was drafted many years ago. Would it still be valid?
Yes, it may still be valid. However, your will should change as you change. There have been many legislative changes over the years, which may affect the bequests and validity of your will. Your will, along with your estate plan, should be reviewed annually to ensure that it fulfils and complies with your wishes, is practically viable and complies with the law.
Can I draft my own will?
Yes, you can draft your own will. As we all know, paying a lawyer to draft your will can be expensive. However, it's cheaper than having to pay a lawyer to deal with your estate should your will be invalid. There are many formal requirements that must be met for a will to be valid and recognised. If any of these requirements are not met, your will – or a portion of it – could be invalid. We suggest that a qualified professional assists you in drafting your will.
I want to make changes to my will. How do I do this?
A will can be amended by codicil (an addendum to a will that explains, modifies or revokes all or part of the will). However, there is always the risk that a codicil gets detached from the original will. There have been instances when the codicil has not been correctly drafted and/or executed, and contains conflicting provisions. There have also been instances where executors have simply forgotten to read the codicil. Therefore, in order to avoid unnecessary conflicts and complications, it's easier to replace your will in its entirety, should you wish to make changes.
Should my spouse and I have a joint will?
A joint will is a will of two persons, contained in a single document.
If drafted correctly, and massing (a type of merging of estates) occurs, a surviving spouse cannot unilaterally amend the contents of the will in relation to the massed estate. This inevitably results in protecting the entitlement of the original heirs in terms of the joint will.
However, a joint will has its disadvantages. It is inflexible after the death of the one spouse and does not cater for a change in circumstances. If the surviving spouse needs to sell property that is ultimately bequeathed to other heirs in the joint will, he or she may be unable to sell this property, resulting in a financial crisis for him or her.
If drafted correctly, and massing (a type of merging of estates) occurs, a surviving spouse cannot unilaterally amend the contents of the will in relation to the massed estate. This inevitably results in protecting the entitlement of the original heirs in terms of the joint will.
However, a joint will has its disadvantages. It is inflexible after the death of the one spouse and does not cater for a change in circumstances. If the surviving spouse needs to sell property that is ultimately bequeathed to other heirs in the joint will, he or she may be unable to sell this property, resulting in a financial crisis for him or her.
Who should I appoint as my executor and can I agree on an executor’s fee upfront?
The executor of your estate should be someone you trust, ie family members and/or a close friend. You can appoint more than one executor of your estate.
The administration of a deceased estate can be complicated and require a lot of work. For this reason, many people appoint a professional executor to act alongside their family members.
An executor may charge up to 3.5% of the value of the gross assets of the estate, as well as a commission of 6% on all income collected after death to the date of wrapping up the estate. However, in most instances, this fee is negotiated and can be agreed upon upfront.
The administration of a deceased estate can be complicated and require a lot of work. For this reason, many people appoint a professional executor to act alongside their family members.
An executor may charge up to 3.5% of the value of the gross assets of the estate, as well as a commission of 6% on all income collected after death to the date of wrapping up the estate. However, in most instances, this fee is negotiated and can be agreed upon upfront.
I have a valid will. What would happen when I die?
When you pass away, your estate would need to be registered with the Master of the High Court (the Master) in South Africa. Once the Master receives the prescribed documents, he/she would issue a letter of executorship, which authorises the executors of your estate to act and wind up your estate in terms of your will. Your executors would then be able to begin the transfer of assets, payment of taxes and wrapping up of your estate. Most estates take about a year to be wrapped up. However, this can be significantly extended if your executors are not familiar with the process and don't have professional help.
READ MORE: Death and taxes - Situs explained
READ MORE: Death and taxes - Situs explained
I have assets offshore. Do I need a separate will to deal with these assets?
It is possible to have one will, which includes your worldwide estate. However, each country has its own laws and procedures that need to be followed when wrapping up an estate. This often leads to administrative difficulties and lengthy delays.
If you have a separate will for your offshore assets, your offshore estate would essentially be wrapped up independently from your South African estate, saving your estate time and money.
In addition, if you have immovable property abroad, it is almost always advisable to have a will dealing with the immovable property.
For example: A South African individual owns property in the UK. A valid worldwide South African will would be recognised in the UK. However, in accordance with private international law, property situated in the UK will pass in accordance with UK law.
So, in this example, many practitioners would argue that best practice is either to have a separate UK will or at least to take legal advice in the UK to check whether the provisions contained in a worldwide will would work, and if the dispositions are efficient for UK inheritance tax purposes.
READ MORE: Moving your assets and funds offshore – what are the options?
If you have a separate will for your offshore assets, your offshore estate would essentially be wrapped up independently from your South African estate, saving your estate time and money.
In addition, if you have immovable property abroad, it is almost always advisable to have a will dealing with the immovable property.
For example: A South African individual owns property in the UK. A valid worldwide South African will would be recognised in the UK. However, in accordance with private international law, property situated in the UK will pass in accordance with UK law.
So, in this example, many practitioners would argue that best practice is either to have a separate UK will or at least to take legal advice in the UK to check whether the provisions contained in a worldwide will would work, and if the dispositions are efficient for UK inheritance tax purposes.
READ MORE: Moving your assets and funds offshore – what are the options?
What is a probate and when is it needed?
A grant of probate is the offshore equivalent of a letter of executorship in SA. Some foreign jurisdictions will not allow certain types of assets, which are within their jurisdiction, to be dealt with by an executor without a grant of probate being issued by their courts.
I have left my offshore assets to my children, who live in SA. Can they keep them abroad?
Yes, they can. However, they would need to notify the SA Reserve Bank (SARB) of the inheritance within 30 days of receiving the assets. Provided that the funds were legitimately held for Reserve Bank purposes, the SARB would allow them to retain the funds abroad.
Drafting a will is a vital part of your estate planning puzzle. It is the instrument that will be used to determine how your assets will be passed on to the next generation once you are no longer around to orchestrate this. Not only does it need to be valid and enforceable, but it also needs to be drafted eloquently enough to ensure that your wishes are fulfilled, the future generation is protected, administrative delays and excess costs are avoided, and your estate plan as a whole is seamlessly implemented.
About the authors
Rene van Zyl
Investec Advisory: Tax & Fiduciary
Rene completed her law degree at the University of Stellenbosch and is an Admitted Attorney of the High Court of South Africa. She joined Investec Wealth and Investment as a Tax & Fiduciary Expert in July 2017. Rene has been instrumental in building the Tax and Fiduciary offering for Investec since then and is a founding member of the team.
Elizabeth Fick
Joint Team Leader – Investec Advisory, Tax & Fiduciary
Lizzie is an admitted attorney and is completing her final year Masters in Taxation (MComm). She specialises in the drafting of local and offshore wills, estate and succession planning, Trust and Company law, local and offshore trust and company administration, Exchange control regulations, Tax law, and opinions, as well as cross-border structuring and planning.
