An investment in estate planning and the drafting of a Last Will and Testament is an investment in putting a plan in place which can be carried out in an orderly and efficient manner in the event of death.
This is of paramount importance in safeguarding the interests of dependants and loved ones, particularly the surviving spouse and minor children of the deceased, who may find themselves in a vulnerable financial position following the death of a breadwinner.
Even in a case where a person has no financial dependants a Will minimises delays and costs when it comes to the administration of the estate of the deceased.
Administration of an estate where there is a valid will in place
Besides the benefit of knowing that adequate provision has been made for the smooth administration of the estate in the event of death, the regular review of a Will draws attention to a potential cash shortfall in an estate or inadequate liquidity which can then be remedied or a plan put in place to eliminate the need to sell assets to pay creditors.
A well-considered and correctly drafted Will can go a long way to minimise Estate Duty and Capital Gains Tax which are taxes levied against the estate of a deceased person and which arise as a result of death.
An Executor is nominated in terms of the Will of the deceased and is the person who will take responsibility for the administration of the estate of the deceased.
Making the correct choice of Executor is crucial in ensuring that the interests of beneficiaries are protected and that the administration process is carried out by somebody who has the necessary knowledge and skill.
The Executor may be a professional person who has the necessary experience to attend to the administration of a deceased estate or if the nominated executor is not an experienced professional person, the Master of the High Court will require that person to appoint an agent to assist him and to administer the estate on his behalf.
Guardianship of minors is another important area that may be covered in a Will. A clause can be included confirming a person’s wishes as to who should be appointed as Guardian of minor children left without a legal guardian as a result of the death of that person.
This is an important indicator to the Court as to who the deceased considers to be a suitable person to raise his children.
The Will can also be utilised to make provision for the inheritance of minor children (under the age of eighteen years) who stand to inherit.
This is done by means of a Testamentary Trust which is created in terms of the Will after the death of the deceased. The inheritance of minor children is transferred into the Testamentary Trust and is administered by the Trustees who are also nominated in the Will.
This ensures that the inheritance of children is administered by suitably experienced and trustworthy people appointed in the Will and that the assets in the Testamentary Trust are available for the purposes of maintenance and education while the child is a minor.
What happens when a deceased person does not have a valid will in place?
In the event that there is no valid Will in place when a person passes away, his estate is administered in accordance with the provisions of the Intestate Succession Act 81 of 1987 which sets out who the beneficiaries are and what portion of the estate they stand to inherit.
There are a number of major disadvantages to dying without a valid Will:
- The deceased has no control over who inherits and what each beneficiary receives.
- The deceased has no control over who the Executor will be that attends to the administration of his estate and the Executor may need to obtain a bond of security in order to be appointed as such resulting in additional costs to the estate.
- Since minor children are not be permitted to receive their inheritance until they reach the age of majority and due to the fact that in the absence of a Will no provision has been made for a Testamentary Trust for the administration of the inheritance of the minor, such inheritance must be paid to the Guardian’s Fund until such time as the minor reaches the age of majority.
The result of this is that the funds may not be administered to best advantage and such funds are not available for the purposes of maintenance and education of the minor child.
The failure to have a valid Will in place and indeed the failure to regularly review and update a Will can result in a large number of often unintended consequences which can affect the beneficiaries and dependants of the deceased negatively.
Everybody, irrespective of how complicated or simple their affairs are, must consider and plan for the eventuality of death in order that those most dear to them are adequately taken care of.