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A Will alone is not enough – 4 crucial considerations to safeguard your financial legacy

17 January 2024 Momentum Financial Planning

Ulanda Weilbach, Head of Financial Planning and Advice from Momentum Financial Planning outlines the most important things to consider when creating or updating your last will and testament.

It’s a new year and with it comes a fresh opportunity to take a hard look at your financial plan. Although this has a huge implication on how you live your own life, this is also the time to understand how your financial journey benefits those who depend on you. So, the three key questions arise: do you have a will, is it up to date, and most importantly, is it valid?

It's astonishing to learn that 35% of wills end up ineffective because the deceased's estate falls short of meeting its desired intensions leaving grieving loved ones without the intended inheritance. The responsibility of ensuring a secure financial future for your loved ones’ rests squarely on your shoulders.

Any trustworthy financial adviser understands the critical importance of a will that not only outlines your wishes but also includes provisions for the orderly winding up of your estate. Such a document becomes a crucial element in a comprehensive financial plan, providing the emotional support that a family needs during a time of profound sadness. It's a reminder that proactive estate planning is not just about assets but also about safeguarding the well-being of those you hold dear.

When it comes to personal financial planning, many individuals tend to view a last Will and testament as the ultimate safeguard for their assets. While having a legal and executable Will is undoubtedly a fundamental aspect, it should be considered merely the starting point rather than the be all and end all of your financial strategy. Let’s explore four reasons why:

A Legal, executable Will is the foundation
South Africans often perceive the creation of a Will as a means to secure the future distribution of their assets. While this is undeniably true, a Will should be seen as the cornerstone of a more comprehensive financial plan.

What it does is set out how your estate should be distributed, providing clarity and legal validity to your wishes. This all hinges on ensuring all legal requirements of a Will are met. More than that, while it may be legally valid, your Will should always be applicable to your current financial situation and obligations.
But what happens when you simply don’t know what you are doing?

Advice for success
In the complex landscape of financial planning, the guidance of a knowledgeable adviser is invaluable. Financial advisers play a pivotal role in developing a holistic plan that extends beyond the provisions of a Will. They can assess your financial situation, offer expertise in Financial Planning, and provide insights into strategies tailored to your unique circumstance. This should go a long way to avoiding the major pitfalls.

The cost of winding up your estate
South Africans must consider the practicalities and costs associated with winding up an estate. From legal fees to administrative expenses, these costs can be substantial. A well-structured financial plan includes provisions for covering these expenses without compromising the overall financial health of the estate. Advisers can assist in developing strategies to ensure the seamless and cost-effective winding up of your estate.

Why is it important to have an executable will?
There are a few challenges that one may face when trying to wrap up an estate without the help of a professional, compounding what is already an emotional time for those you leave behind.

These include:
• If, for some reason, your Will cannot be found, is not signed, or witnessed correctly it can cause a great deal of confusion and added stress for your loved ones. An incorrectly signed or witnessed Will can be declared invalid and your estate will be divided according to the laws of intestate succession.
• If your estate is too low in value, i.e., less than R250 000, your family will have to deal with the Master directly as it will be too expensive to appoint a professional executor.
• If you failed to provide for liquidity issues like cash shortfalls or there is insufficient cash available to settle estate winding up fees and debt before you died, your loved ones will have to shoulder the burden of those costs.
• In the case of an insolvent estate with no provision made for settling debts upon your death, all your assets like your house and car will have to be sold to repay your debts before your loved ones can inherit anything.

A legal and executable Will is undoubtedly a crucial element of financial planning for South Africans. However, it should not be viewed in isolation. Rather, it should serve as the foundation upon which a comprehensive and dynamic financial plan is built. Engaging with a knowledgeable adviser, avoiding common pitfalls, prioritising beneficiaries, and planning for the costs of winding up your estate are integral components of a successful financial strategy. By embracing these principles, where there’s a Will, there’s a way.

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