Category Life Insurance

A valid Will is imperative if you want to secure the succession of generational wealth

10 October 2022 Tony Hakime, Senior Manager at Standard Bank Trust Limited

The great generational wealth transfer is happening now.

By the year 2030, more than $15 trillion in wealth will be transitioned from one generation to the next (from Baby Boomers and Generation X to Millennials and Gen Z), according to a report by Wealth-X. If you want to pass on wealth accumulated for the benefit of intended beneficiaries and future generations, you will need to ensure that you have a valid Will in place.

This is the key function of a Will – ensuring your legacy is fulfilled in the way you wished it to be. A Will, which forms part of the financial and estate planning process, provides you with the power to decide how your assets impact the lives of your loved ones after you are no longer here.

One of the biggest threats we are facing globally and increasingly in Africa too, is that poor financial planning is preventing families from passing their wealth on from generation to generation. The Master of the High Court’s latest figures show that more than 70% of South Africans don't have a last Will in place, which could be attributed to several factors. The idea of drafting a Will may invoke a sense of death and human instinct is to steer clear of that prospect.

It is important to remember however that estate planning is not necessarily about death, but it is a means of structuring your assets in such a way while you are still alive to benefit your loved ones in the future.
As we go through life, we collect possessions and build wealth that will need to be distributed when we are no longer around. If we don’t take the time to draft a Will, we will have no say as to where our assets go.

Many people may be of the assumption that everything will automatically go to their spouse or, failing that, their children. But this may not necessarily be the case. If you do not have a Will, there is a certain formula, which applies in South Africa, that will be followed, where the laws of intestate succession apply.

If you die intestate, the following rules apply:

• If you are survived by a spouse but not by children, your spouse shall inherit your estate.
• If you are survived by a child but not a spouse your child or children shall inherit your estate.
• If you are survived by a spouse and children, your estate will be divided between your spouse and children in such a manner that your spouse will inherit the greater of R 250 000 or a child’s portion. A child’s portion is calculated by dividing the monetary value of the estate by a number equal to the number of children of the deceased who have either survived him or her or have died before him or her leaving descendants surviving him or her, plus the number of surviving spouses.
• If you are not survived by a spouse or children but by parents your estate will devolve in equal shares between them.
• If you are not survived by a spouse, children and survived by one parent and your deceased parent left a descendant your estate will devolve one half on your surviving parent and one half on the descendant of your deceased parent.
• If you are not survived by a spouse, children, parents and one of your deceased parents left a descendant your estate will devolve upon the descendant of your deceased parent.
• If you are not survived by a spouse, children, parents or descendants of a deceased parent then your estate will devolve upon your nearest blood relation.
• If you are not survived by a spouse, children, parents or descendants of a deceased parent or any blood relation then your estate will devolve upon the state after a specified period.

This should be strong motivation for individuals to ensure that they have a Will in place. Another important consideration is to ensure that your Will is in fact valid. Scribbling your wishes on a piece of paper is not good enough. Drawing up a Will needs careful consideration and most times; it will require the help of a professional to ensure its validity.

Rather seek out the advice of an experienced fiduciary person, who will help you with an estate planning exercise. The drafter of the Will should be experienced in the law of succession to ensure that the Will’s interpretation is clear and that there is no uncertainty about the unwinding of the estate.

A Will should also be regularly reviewed to consider a person’s various life stages (such as marriages, births, the acquisition of assets, divorces) to ensure that the Will is up to date and is adjusted for any life changing events.

While finalising the details of your last Will, an Inter Vivos trust could be considered as part of your estate planning. Assets placed within a trust can ensure that wealth passed down to beneficiaries and is not squandered along the way.

Of the various reasons you should have a Will, having full control over the wealth you leave your family for generations to come is one of the most important. Knowing that your loved ones will be taken care of and that your hard-earned assets and savings will go to the people you want, through correct planning you will benefit future generations, and ensure you leave a legacy.

At Standard Trust Limited, we provide Will drafting and safe custody which gives effect to your wishes and ensures that your legacy is protected, and your Will is kept safe and confidential. Assistance and guidance are provided on the drafting of your Will through a network of specialists and financial planners. This also ensures that Wills are correctly executed and that all required signing formalities are adhered to.

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