Thy will be done: How to secure your financial legacy

Thy will be done: How to secure your financial legacy

If you don’t have a valid will, the good news is that you can have one drawn up for free this month.

First published in the Daily Maverick 168 weekly newspaper.

A heightened awareness of mortality in the wake of higher death rates has translated into many taking an increased interest in their financial legacy. A recent Sanlam study by Brand Atlas reveals that 44% of economically active South Africans have either amended or created wills in the past 18 months. However, Sanlam says 54% of South Africans still do not have a last will and testament.

This is worrying when held up against the life insurance statistics recently released by the Association for Savings and Investment South Africa (Asisa), which show that more than one million policyholders across the life insurance industry died between 1 April 2020 and 31 March 2021. Hennie de Villiers, deputy chair of the Asisa Life and Risk Board Committee, says the beneficiaries of the 1,023,083 policyholders would have received death benefits of R47.58-billion. This represents a 64% increase in the value of claims paid by life insurers when compared with the previous 12-month period.

“The prevalence of South Africans without wills is concerning. What has been positive is that we’re seeing a psychological shift, with different demographics starting to invest in estate planning. It’s no longer seen as ‘reserved’ for the rich,” says Moremadi Mabule, head of wills operations at Sanlam Trust.

Mabule says that, in the past 18 months, 35% of people updated their wills, while 9% drafted their will for the first time. Nearly 50% of the first-timers came from lower income groups, which suggests that South Africans from across the economic spectrum are starting to put more consideration into their financial legacies.

According to the study, white men aged 50 and above consider tax efficiency a lot more than 25- to 39-year-olds, who are more interested in controlling how their assets will be dispersed. Only 46% of women indicated that they had wills in comparison to 54% of men. Mabule says one of the reasons will ownership is so low may have a lot to do with the perceived difficulty of drafting a will. Nearly half of the respondents who didn’t have a will said it was because they hadn’t got around to it, while 56% of those who did have a will had drafted theirs with a financial adviser or a bank.

“Many people speak to a financial adviser once they acquire a mortgage bond. Although you are not required to take up a will, in most cases a bond triggers an automatic need for a will and for credit life cover. Many people end up drafting wills in this way – and then forget these exist!” adds Mabule.

Of the respondents polled, 90% said they either did not believe they had enough assets to warrant having a will or simply hadn’t got around to it.

Why you need a will

Drafting a will doesn’t have to be expensive and it means you have the comfort of knowing that your loved ones will be provided for, and your assets distributed according to your wishes, when you die.

Kobus van Schalkwyk, head of legal for Standard Trust Limited at Standard Bank, points out that if you die without a will, or “intestate”, your assets are distributed according to the Intestate Succession Act, and this could contradict your wishes. For example, if you are single and you die without a will, your estate will fall to your parents on a 50-50 basis. But if one of your parents is dead, that parent’s share of your estate will go to their descendants or your siblings. And if you don’t have any blood relatives, your assets will be forfeited to the state.

Van Schalkwyk says a clear, well-written will can ensure that family arguments over your estate are avoided.

“In rare cases, the courts may allow a will to be contested, but there must be reason to believe that the will is not valid; for example, if the person who executed the will was not of sound mind or was unduly influenced by a third party,” he says.

If your minor children do not have a natural guardian (a surviving biological parent), you can nominate the person you want to take care of your children in the event of your death. However, if you have no will, your children could end up with a guardian you might not have approved of.

 What constitutes a valid will?

There are several requirements for your will to be considered valid. It must be signed by the testator or owner of the will and two additional witnesses on every page, including the last page. The two witnesses cannot be beneficiaries of your will, which means they must be independent witnesses.

Banks, lawyers and financial planners may offer to draw up your will free of charge. However, the terms and conditions attached to such offers usually mean that the bank, lawyer or financial planner is also appointed as executor of your estate. This means they will earn executor fees – usually 3.5% of the gross value of your assets, and this comes to 3.99% with VAT. If you leave behind assets that will generate an income after your death, such as rental property or interest-bearing assets, the executor of your estate earns 6% (6.84% including VAT) on those assets until your estate is wound up. However, these are the maximum executor fees that can be charged and if you draw up a valid will before you die, you can negotiate lower executor fees. If you do so, make sure to include any negotiated executor fee agreements in your will so that there is confirmation in writing.

If you have a risky job or feel you are at risk of becoming incapacitated for any reason, you should consider a living will. If you are no longer in a position to make decisions for yourself, for example if you are in a coma or deemed non compos mentis (not of sound mind), your living will determines what kind of decisions you would like to be made on your behalf and by whom. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.


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