Avoiding common mistakes when drafting a will

Financial planning is not only about covering your assets and growing your wealth, it is also about managing your affairs in the event of death. Once you have spent time and effort in crafting a valid will then it’s easy to tweak it as your circumstances change.

How your will is drafted depends on your personal and family situation, as well as the value of your estate. Whether you are a multi-millionaire or have just a few heirlooms, it is crucial to have a will in place to ensure that your loved ones are protected. Suraj Lallchand, Head of Standard Trust Limited, has provided a list of mistakes that people often make when drafting a will. Here is how to avoid some of the most common ones.

Forgetting to review your will every year

“Life circumstances change from month to month, let alone every year, so it is important to ensure that you update your will on a regular basis. Life events that will affect your will include getting married, divorced, moving to a different location, having a child, selling an asset or even losing or gaining a business. Unless you review your will at least once a year, you run a very serious risk of it being totally misrepresentative of your wishes and assets when you die. It is a good idea to choose a specific date every year to review what you have written.

Forgetting to include a “Fideicommissum residuary” ("leftovers") clause

Your will's residuary clause can either cover the "leftovers" of your estate (if you want to be very explicit in your will about who will get what property), or it can actually be the main clause you use if you just want to treat most, or all, of your estate as one big pool to be divided up among your main beneficiaries. It can also be useful if you do not want to specify certain assets in your will at that time.

Regardless of your strategy, should you forget to include a residuary clause to cover property that you don't specifically mention elsewhere in your will, you will have died partially intestate, meaning that only some of your property is covered by your valid will. In this case, the law will dictate how any property that you have not otherwise mentioned will be distributed, and to whom.

Forgetting contingencies

If for example you have named four beneficiaries in your will and one of them dies before you do, you will need to name a back up. You will also need to name a contingent personal representative who can serve in that all-important role if the person whom you've designated is unable to carry out the activities.

The person or organisation that you have nominated as an executor must also be revised. Work with your bank/financial planner/attorney on a number of "what if" scenarios. (For example, what if your appointed executor becomes insolvent? Or what if the value of your stock portfolio falls dramatically; how does that affect what you want to do in your will?) When you do your annual will review, be sure to make any necessary changes to keep unfavourable statutes from coming into play.

Getting too detailed

If you state specific rand amounts in your will, you risk having your estate being distributed in a way that you may not have intended. Instead, use percentages wherever possible, particularly for the larger shares of your estate among your beneficiaries.

Let’s assume that your estate is valued at R1, 800,000 when you draft your will, and you decide to leave most of it to your only daughter, except for R180, 000 that you want to go to your sister. Your daughter will get 90 percent of your estate. But when you draft your will, you don't state the particular percentage in your will; but instead, you state that R180, 000 will go to your sister. You may think that your daughter will get more if the estate grows in value. However this may not be the case. What if for some reason the value of your estate decreases because of an unexpected dip in property prices or an unforeseen tax liability? When you die, your estate could have dwindled to R185, 000. By using rand amounts instead of percentages your sister will still get R180, 000, but your daughter will get very little.

Keeping secrets from your Adviser/Lawyer

Mr Lallchand says “Make sure you tell your adviser /attorney everything that you can think of, even personal, painful, or embarrassing secrets that may affect the claim. Do you have money offshore? Do you have a stash of cash in a shoebox in your garage? Make sure he or she knows about this too.”

Make sure your will is properly signed

This is perhaps the most common mistake. The will is rendered invalid if the signatures and witnesses are not in order. It is advisable to seek guidance to ensure it’s valid. A properly drafted will, will give you and your loved ones peace of mind.