Category Life Insurance

Where there’s no will there’s little way

06 April 2018 Roy McMurchie, PPS
Roy McMurchie, Head: Fiduciary Services at PPS.

Roy McMurchie, Head: Fiduciary Services at PPS.

Guitar guru Jimi Hendrix’s death in 1970 led to 30-years’ worth of bitter court battles. Bob Marley’s estate which was valued at USD 130-million[1] was dissolved intestate, when in 1981 the reggae singer lost his battle with cancer.

In both cases, sizeable estates were left without instruction on who the beneficiaries were and what they should inherit.

Unfortunately, these types of situations are far too common. Based on current statistics, that the industry has agreed on, it is estimated that as little as14% of South Africans do not have a proper will in place.

Dying without a will leaves your assets in the hands of an executor not of your choice, who will distribute them to beneficiaries in terms of the Intestate Succession Act. This is an eventuality that strikes fear for those with assets that will need to be allocated upon passing.

In the absence of a will (intestate) as opposed to where one is in place (testate), the estate is administered and distributed to persons that are deemed to be beneficiaries by the Intestate Succession Act. [2] This piece of legislation allocates the Master of the Court to oversee the appointment of an executor of the estate. The distribution of the assets as required by law is thereby based on your failure to allocate your assets as per your wishes. This could also lead to a long drawn out legal process.

“So many people pass away without a valid or current will in place,” says Roy McMurchie, Head: Fiduciary Services at PPS, “and the result is that you are not able to decide how your assets should be distributed.”

Potential court action and assets not being distributed according to your wishes aren’t the only challenges. According to McMurchie, it creates a delay in the distribution of the assets, and can diminish the value of the estate due to the additional fees, such as legal costs being incurred. It also creates additional stress for the families impacted.

Families are also not authorised to deal directly with SARS, attorneys, insurance providers etc. These institutions will only deal with the executor once formally appointed by the Master.

“A considerable concern for parents is that they will not be able to select and appoint the guardian for their children. Dying intestate creates uncertainty regarding the children’s’ guardianship, and if there are custody battles, or a lack of potential guardians, the state is then responsible for deciding where they should be placed,” says McMurchie.

The release of funds for dependents will also be restricted and assets that the heirs expected to receive, may not necessarily be forthcoming, adds McMurchie. A minor’s inheritance will be placed in the Master of the High Court’s Guardian’s Fund until he attains majority, in an intestate estate.

McMurchie says everyone has the ability to draft a will from the age of 16. “It is important to ensure that you keep your will updated and that it caters for your current circumstances.”

Specific lifestyle events which could trigger the need to update your will include the following:

- Starting your working career;
- A change in marital status, getting married or divorced;
- A change in your assets, such as purchasing a home;
- The addition of new family members, including the birth or adoption of a child;
- Dependency of family members, especially those with special needs;
- Death of a family member or beneficiary; or
- The establishment of a business.

McMurchie explains, “Even though a person may not have assets, circumstances may change quickly, for example receiving an inheritance from parents or grandparents. This is why everyone should have a will.”

It is always important to seek the advice of a professional when drafting a will. “Holistic financial planning is something everyone should experience, and it is important that a will is drafted with your financial planner and is included as a part of your financial plan,” concludes McMurchie.

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