Will Planning Shutterstock 751069228 (Resized 970X460)

Drawing up a Will is a crucial step in securing the future for our loved ones and ensuring your assets are distributed according to your wishes. However, navigating the process of drafting a Will can be a complex and overwhelming task. In order to avoid potential complications and ensure that your final wishes are executed smoothly, it is important to be aware of common mistakes that can occur during the process. By understanding these pitfalls and implementing the right strategies, you can create a comprehensive and legally sound Will that provides peace of mind for you and your family. In this article, we will explore some common errors to avoid when drawing up a Will and offer you valuable insights and practical advice to guide you through this important task.

Leaving your worldly assets to a testamentary trust for minors

We often see all encompassing residual clauses where people leave the residue of their estates to minors in testamentary trusts. If the Will is applicable to worldwide assets, this clause can have the effect of enforcing the liquidation and repatriation of offshore assets in order to transfer those assets into a South African testamentary trust for those minors. Very often, the client has gone to great lengths to externalise funds and does not intend for any repatriation of assets back into South Africa. It is best to ensure that offshore assets are considered separately and that an additional offshore Will be drawn up to cater for these assets, or that specific instructions be included in a local Will if the intention is to keep these assets abroad.

Not understanding your marital regime and how that affects the division of your estate.

It is essential to understand how your estate will be divided on death between yourself and your spouse, by automatic application of the law according to your marital regime. This needs to be calculated before you elect how to distribute what is effectively your share in the estate in your Will, or what comprises your separate estate. Be sure to understand the implications of different marital regimes, such as in-community-of-property or out-of-community-of-property estates, either with or without the application of the accrual system, and the effect it has on your estates upon the death of either yourself or your spouse.

Making cash bequests

It’s best to exercise caution when making cash bequests in your Will where you have a residuary heir. This means that specific cash bequests that are made to specific beneficiaries are, unless specified otherwise, net of estate taxes and costs. This results in the heir that receives the ‘residue’ of your estate carrying the estate taxes and costs and thus they may receive less than what you intended for them. This should be calculated to ensure that the numerical outcome is aligned with your wishes.

Not planning for liquidity deficits in your estate

Most clients have a Will drafted without understanding the mathematical implications of their instructions. It is recommended to have your estate taxes, including estate duty and capital gains tax, as well as estate costs calculated to understand how much of the estate will be eroded and if there is enough cash in the estate to cover these costs without the executor having to sell off assets such as immovable property etc’. Liquidity deficits can be solved by taking out life policies or instructions to your executor in your Will to sell off certain assets to provide for this liquidity.

Not understanding the fact that retirement funds fall outside of your estate.

Understanding how the various retirement funds are paid out to your nominated beneficiaries and dependents can be part of a valuable estate plan, and careful consideration of the planning that takes place outside of your estate can assist in ensuring that the nominated beneficiaries receive benefits from a process that is not subject to your Will nor tied up in the process of the administration of your estate. The different retirement funds are subject to different rules so it is advisable to acquaint yourself with the manner in which your benefactors will receive these assets in terms of the legislation and fund rules.

Incorporating these insights and avoiding these pitfalls can help you create a Will that not only adheres to your wishes but also minimises potential complications for your loved ones, providing you with the peace of mind that your estate will be handled effectively.

Sasfin's fiduciary services are dedicated to assisting you in crafting a strategy for wealth retention and preservation. Our responsibility is to ensure that your estate planning is meticulously organised, facilitating a seamless transition of your legacy. Learn more here https://bit.ly/3RCf3l8

About the Author

Sarah Simson
Head: Fiduciary, Sasfin Wealth

Offcanvas Title

Default content goes here.