The Importance of a will in an Estate Plan

A will is the cornerstone of any prudent estate plan. Yet all too often, people who have died leave behind wills which are out of date, copied from an inappropriate template or, worst of all, bought off the shelf at your local stationers.

A will must be designed to meet each person’s unique circumstances, taking into account all relevant factors including your personal, family and financial situation. It should preferably be drafted by a specialist in the field. No person should die without having a valid and carefully thought out will in place if they wish to reduce the burden on those they leave behind.

It is important to ensure that your estate devolves according to your wishes. In certain circumstances, not addressing certain issues in a will can result in serious prejudice to ones’ heirs. For example: if you bequeath a sum of money to a minor, in the absence of an express provision in the will to the contrary, the bequest must be paid into the Guardian’s Fund until the child reaches majority. While the Fund was created for good reason, to protect the interests of minors, there is no possibility of growth in the value of the investment in the Fund. Imagine what the purchasing power of R100 000 bequeathed to a three year old child would be when it was finally paid out 15 years later. The solution to this problem is to make adequate provision in the will for secure custody and investment of the bequest.

Further, failing to specify issues like guardianship of minor children (an issue which may also be dealt with in a will) can also lead to unwanted and unhappy results for children.

From an estate planning perspective, a carefully thought out will allows a testator to ensure the smooth transmission of assets to the heirs, for example, specifying how an estate that consists largely of one indivisible asset such as a farm or a manufacturing business will be shared amongst several children and a spouse. There are ways to achieve this without causing distress and financial hardship to beneficiaries. In most circumstances, the most appropriate place to properly plan the devolution of these assets will be a will.

What about the common situation where one or more beneficiaries lives overseas and others live in South Africa? Depending on the nature of the assets in the estate, the will should provide for the orderly devolution of the assets in the most efficient manner, taking into account the locations of the beneficiaries and issues such as exchange controls etc.

Frequently, a sound estate plan will involve a trust, either a separate trust created while the planner is still alive or one established in terms of the will. In either case, the will remains the central document in the plan. Moreover, as a family trust created during the life of a donor is relevant only to assets actually owned by that trust, it is not a substitute for a will and the creation of a trust should always be linked to the creation of a carefully thought out, and complementary, will.

Planners should remember that their circumstances change from year to year. A will is not a document that can be executed and then forgotten about until the fateful day. Rather, it should be reviewed every year as a matter of course, as well as every time there is a significant change in the planner’s circumstances. Serious illness, the death of a beneficiary, a large inheritance, sale of a major asset, retirement and other circumstances like these should prompt the planner to pull out the will and review it.

Who should be appointed as executor? The ideal person is someone who is competent to wind up the estate, otherwise the Master of the High Court might refuse to appoint the person and appoint someone of the Master’s choosing. The person you choose should preferably be someone with sufficient commercial know-how who is also familiar with the family situation.

In summary, while taking the time to sit down to craft and finalise a will may seem like an administrative annoyance, it is a vital task that must be handled carefully and preferably with appropriate professional assistance. There is an annoying cliché: “failing to plan is planning to fail”. This piece of pithy wisdom is however very true of estate planning: failure to estate plan adequately will in many cases lead to extremely negative consequences for those you love; something that should be avoided at all costs.