Ashly DhaniEstate planning is a crucial aspect of financial security and peace of mind, yet many overlook its significance until it is too late.
In this article, we explore how estate planning can give your spouse peace of mind, minimise legal complications, and ensure financial stability in the months following your passing.
The location of your will
In the event of your passing, it is essential for your spouse or a family member to report your death to the Master of the High Court within 14 days. One key document that must be submitted is your original will, along with any codicils or supporting documentation.
While you may wish to keep the contents of your will confidential, it is essential to inform your spouse (or close family member) of its location. Ideally, the original will should be stored in a fireproof safe to protect it from destruction or tampering.
Wherever you decide to keep your original will, ensure that your spouse and/or executor are aware of its location. If your surviving spouse cannot locate the will, they will need to contact banks, insurers, attorneys, financial advisors, brokers, or other service providers to find it.
Knowing its location will expedite the appointment of your executor, which in turn will accelerate the winding up of your estate, providing peace of mind and financial security for your loved ones.
Review your will
Take a moment to read through your will to ensure there are no unintentional errors. Specifically, confirm that your will is clearly dated and explicitly revokes all previous wills you have made, ensuring any previous wills are physically destroyed.
If you have a foreign will, make sure it addresses your foreign assets, while your South African will should cover your local assets. Make sure that your will includes a clause that deals with the residue of your estate, as failure to include such a clause can result in your dying partially intestate.
Be sure that your spouse played no part in writing or typing your will, as this could disqualify them from benefiting from your estate. Additionally, confirm that your spouse did not sign as a witness to your will.
Review and verify that you are still comfortable with the person or organisation you have appointed as executor — and that the appointed executor is still alive. Remember, certain assets, such as retirement funds and life insurance policies, are not governed by your will, so avoid mentioning them to prevent confusion.
Collate your legal documents
If your spouse is left scrambling to find documents necessary to wind up your estate, this can lead to frustration and unnecessary delay. At a minimum, the Master will require a copy of your ID, birth certificate, marriage certificate, antenuptial contract, title deeds to any immovable property owned in your name, and the trust deeds of any trusts.
Other documents that will greatly assist the process include a copy of any divorce or maintenance orders, a copy of your passport, Sars tax reference number, share certificates, vehicle registration papers and firearm licences.
Check your beneficiary nominations
Double-check the beneficiaries on your various policies to ensure they accurately reflect your wishes, including any group life cover.
Beneficiary nomination is not just about who receives the proceeds but also how they are treated in your deceased estate, their role in creating estate liquidity, and their estate duty implications. If the purpose of a life policy is to provide liquidity in your estate, consider nominating your estate as the beneficiary.
This will ensure that the proceeds are paid directly to your estate upon your death, although keep in mind that this payout may be subject to estate duty.
When nominating your spouse as the beneficiary on a domestic life policy, the proceeds are deductible from the gross value of your estate and, under Section 4(q) of the Estate Duty Act, are not estate dutiable.
Be careful about nominating minor children as beneficiaries, as children under the age of 18 in South Africa have limitations on how they can receive their inheritance.
A lump sum bequeathed directly to a minor without a natural guardian is likely to be managed by the Guardian’s Fund until the child reaches legal age. To avoid this, consider establishing a testamentary trust in your will and nominating your minor children as beneficiaries of the trust. By naming the testamentary trust as the beneficiary of your life policy, the proceeds will go directly to the trust for your children’s benefit.
Understand your marital regime
The nature of your marital regime forms the foundation of your estate planning, so ensure you fully understand your marriage contract.
If you are married in community of property, keep in mind that only half of the joint estate is yours to bequeath, and it’s important that your will reflects this.
If you are married with the accrual system, it is important to understand the implications of the accrual should you die. For instance, if you pass away leaving your surviving spouse with a smaller accrual than yours, they will have a claim against your estate for their share of the accrual.
Conversely, if your estate’s accrual is smaller than that of your surviving spouse, your estate will have a claim against their estate for its share of the accrual.
Note that if you and your spouse bequeath your respective estates to each other, the accrual should not give rise to any liquidity shortfall in the event of either of your deaths. However, if you intend to leave some or all of your assets to a third party, this could create liquidity problems for your deceased estate or financial problems for your surviving spouse.
If you are married out of community of property without the accrual, you are free to bequeath your estate as you please, although it is important to remember that your spouse may have a right to claim maintenance from your estate if you have not adequately provided for them in terms of your will.
The Maintenance of Surviving Spouses Act makes provision for a surviving spouse to claim against the estate of their deceased spouse to the extent that they are unable to meet those needs with their own means and earnings.
Bequeathing immovable property
If you intend to bequeath immovable property, careful estate planning is essential to avoid complications or unintended consequences.
For example, if you are married in community of property, any immovable property is jointly owned by you and your spouse, meaning that you cannot bequeath the entire property to a third party in your will, as you effectively only own half of it.
Therefore, if you plan to leave your 50 percent share to a third party, it’s essential that you fully understand the consequences for your surviving spouse.
Similarly, if you are married with the accrual system and jointly own a property, you need to consider the implications of bequeathing your share to someone other than your spouse.
Additionally, if you intend to use personal servitudes such as usus or usufruct, seek expert advice when drafting your will.
The rights of property possession are a complex area of law that can be easily misunderstood by a layperson. Proper planning and professional guidance will help ensure your intentions are clearly reflected and legally sound, protecting both your wishes and your loved ones.
Have a plan for your online presence
A digital will can greatly benefit your surviving spouse by providing a record of all your online accounts and subscriptions, along with login credentials, usernames, and passwords. It can also include instructions on how you want these accounts managed after your passing, especially social media accounts.
Your digital will should detail your bank and share trading accounts, online shopping accounts, social media pages, subscriptions, and login details for your various devices. This ensures your digital presence is handled according to your wishes. — Moneyweb
Bongani Ndlovu