Eight essential tips to make estate planning easier

By Willie Fourie, Head of Estate and Trust Services, PSG Wealth.

 Estate planning doesn’t need to be overly complicated, yet there are common mistakes we see people make that can have devastating outcomes for those left behind.  Here’s what you need to be aware of.

Watch your wording

A misunderstanding with wording in your will can result in the opposite of what was intended. If the executor of the estate and heirs to the estate have conflicting views about a will’s provisions (which can often happen), they will look to the Master of the High Court of South Africa (who must confirm the validity of the will) for a decisive interpretation of any contentious clauses.

Common wording blunders include; “I bequeath my farm to my son and the cash in my bank account to my daughter”

The timing of the parent (testator) passing becomes crucial here. The son may in this instance inherit the farm without the proceeds of the current harvest as it may have been banked. He would have to wait until the next harvest to have any funds to replant the fields or to pay the day-to day expenses, while the daughter will have liquid assets (cash) to spend as she pleases.

“I bequeath my motor vehicles to my son and my investments to my daughter”

In instances like these, how does one treat the collection of vintage motor vehicles that the testator invested all spare cash in over the years? These and other curious questions will be answered by the court and your wishes may well be for naught if wording conflicts arise.

Select your executor with care

Often a layman is appointed as executor but using friends or family as executors should really be avoided due to the complex nature of winding up estates. A trusted professional, such as an estate practitioner or lawyer is often better placed due to their understanding of the process. As wills must be carefully worded to avoid misinterpretation, well-informed executors play a large role.

Watch out for your witnesses

Getting an heir to sign as a witness on your will automatically disqualifies them from inheriting from your estate. Witnesses may not be beneficiaries of any kind.

Your legal heirs take priority

If your beneficiaries are not, by law, heirs to your estate because of your financial responsibilities, your inheritance will instead go to your rightful heirs. Nominating your favourite friend over your estranged kin may become null and void depending on what is seen to be your duty by the court. Generally, there are three considerations here that can contest freedom of testation, which essentially means you can do what you like. These are claims for maintenance from dependents, or a surviving spouse, or claims in terms of the accrual system created by the Matrimonial Property Act.

Don’t do it yourself

Drafting a will without professional assistance can actually do the opposite of protecting your assets or ensuring your estate reaches those you want or need it to. Sure, you can easily download a template or purchase one at your local stationary store, but working with a qualified adviser to draft your will keeps your wishes for your assets safe, for sure. Including your estate planning in your financial planning overall takes care of the big picture and is best done with the guidance of a professional.

Keep the structure simple

Creating a complex structure within your estate, such as a ‘usufruct’ in favour of a surviving spouse, is a common mistake. In this case, the word ‘usufruct’ is often mistakenly used where a right to occupy a property (habitatio) is granted to another person. If the intention is that the person may only live in the property themselves but may not live somewhere else and rent it out, it is a lesser limited right than a ‘usufruct’. There are countless complexities involved in estate planning that a professional would better interpret or include as needed.

Remember to update it

It won’t matter what you want if it’s not in writing and failing to make updates to your will when your circumstances change is a common mistake. The most recently dated version of your will is the one that is valid, so if you forget to update your beneficiaries after you get married or divorced, or someone passes away, your wishes might go amiss. Any important updates need to be carried through correctly, which is why including your will in your financial plan – that should be reviewed at least on an annual basis – means that no changes in your life go uncaptured.

Don’t put it off

The worst error of all is not having a will altogether. Far too many people die intestate where your possessions are then divided in terms of a prescribed formula as contained in the Intestate Succession Act. If you don’t currently have a will in place, set up an appointment to get this done asap.

Taking strides towards having your estate planning in order can make the future a little less daunting for both you and your loved ones.



Latest


15 Sep 2020
Despite COVID-19, SA investors expect higher future returns

Even as COVID-19 halted the longest economic expansion on record and plunged the world into deep recession, South African investors…

Despite COVID-19, SA investors expect higher future returns

Even as COVID-19 halted the longest economic expansion on record and plunged the world into deep recession, South African investors expect to make an average annual total return of 12.67% – almost 2% higher than the global average predicted returns of 10.9%. This was revealed in the recently released Schroders’…

15 Sep 2020
Are cryptocurrencies here to stay?

The recent news that cryptocurrency giant, Digital Currency Group, has acquired cryptocurrency exchange company, Luno, has once again highlighted the…

Are cryptocurrencies here to stay?

The recent news that cryptocurrency giant, Digital Currency Group, has acquired cryptocurrency exchange company, Luno, has once again highlighted the rise of cryptocurrencies as a possible alternative to the current global financial system. According to Old Mutual Investment Group Director of Investments, Hywel George, Bitcoin, as well as a number…

10 Sep 2020
How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key…

How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key that dubbed America “The land of the free”, which stuck, to the unforgettable Mel Gibson monologue where an army of painted Scots were willing to trade their lives for the…

08 Sep 2020
Investing offshore opens a world of possibilities

By: Standard Bank Wealth International South Africa accounts for less than 0.5 percent of the world’s gross domestic products, or…

Investing offshore opens a world of possibilities

By: Standard Bank Wealth International South Africa accounts for less than 0.5 percent of the world’s gross domestic products, or GDP. Investors who therefore expand their horizons beyond local borders have access to the other 99.5 percent, which makes a strong case for diversification and investing in international markets.  There…


Top stories


10 Apr 2020
When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved…

When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved to be most enterprising in acclimatising to challenges as they arise.

13 Apr 2020
Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19…

Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19 environment and what form a global market recovery will take.

13 Apr 2020
SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The…

SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The draft Bill, together with its explanatory memorandum, provides clarity with regards the tax relief measures President Cyril Ramaphosa announced on 23 March.

13 Aug 2020
Cancelling your medical aid should be a last resort

“South Africans are faced with many challenges during this tough time and we are aware of the financial implications the…

Cancelling your medical aid should be a last resort

“South Africans are faced with many challenges during this tough time and we are aware of the financial implications the lockdown has placed on everyone,” says Lee Callakoppen, Principal Officer of Bonitas Medical Fund.  “The pandemic has put a spotlight on the need for quality healthcare, which means a decision…


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za