One of the most important duties of our candidates is to prepare a will. We spend so much time and energy and make many sacrifices for our families, but most parents haven’t taken the time to provide for their loved ones in case something were to happen to them.
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When writing your will, think about what you want your family’s life to be like when you’re no longer there.
From here you can create a plan and a set of wishes to ensure your family is taken care of.
Sello admits that he did not have a will, but he kept promising himself that he would fulfill one.
I was relieved because I knew from the beginning that not making a will was irresponsible. I am happy that I have something like this now and it protects my children’s interests in case anything happens to me.
You will have different needs depending on your circumstances.
PROVIDING YOUR FAMILY
Sello is married, father of two and the main breadwinner of the house. As part of his succession planning, he needs to consider how he will provide for his wife and children.
Sello is married in community of property, which automatically means that half of the joint property will go to his wife. This includes any property or business he may own. He would then have to decide how to allocate the remainder of the shared property. In his will, he could choose to leave all his property to his wife, with the understanding that he would provide for the children until they became adults. He may even include a clause stating that his inheritance will not be part of any future marriage of his wife. The benefit of leaving your inheritance to your spouse is that all death taxes are avoided. Inheritance tax will only apply if the surviving spouse dies.
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The other option is to create a testamentary trust for the children. This is a trust that will only come into force upon his death. The foundation would pay a monthly amount to meet the children’s needs until they reached a certain age. A death-related trust should be considered by single parents or should be specified to allow for the possibility of both parents dying at the same time.
Sello also needs to consider his retirement funds. These are not specified in his will, but rather are determined by the pension fund’s trustees.
The beneficiary needs to provide guidance to the board of trustees by filling out the nomination form. A portion of the retirement fund will be paid to his or her legally and financially dependent children.
Since the children are not yet minors, the trustee may award the case to the spouse to provide for the children. Alternatively, Sello may request in the nomination form that his share be paid to the testamentary trust.
Sello also needs to make sure he has enough liquidity to support his family. If his retirement fund and other assets are not sufficient to meet the needs of his spouse and children, he should consider additional life insurance. Life insurance only pays out to the listed beneficiaries, so it’s important for Sello to consider who he wants to leave his life insurance to. He can make his wife the full beneficiary or allocate part of the payment to be paid to the children’s testamentary trust.
Raymond has two children from separate mothers. It is very important that Raymond appoint a professional guardian as this can lead to complications. Raymond needs to prepare for these children as they will be seeking alimony from his estate. They would also make a claim against any retirement funds he might have. He or she needs to make sure that children are included in the beneficiary nomination form, as they will have dependents both legally and financially.
One way to provide for Raymond’s children is to include life insurance as part of estate planning. He can nominate mothers as beneficiaries, alternatively create wills for his children in his will. However, the costs of maintaining a testamentary trust need to be considered. For less than R1 million, it may not be worth the additional costs of maintaining a trust.
Even though Zihle is not married and has no children, it is still important for her to have a valid will and estate plan. As her advisor Anton Battiss explains, Zihle has assets that must be transferred to whomever she chooses and liabilities that must be met in the event of her death, ensuring that her family is not left in debt.
Since he also provides for his sisters, he should preferably have life insurance to ensure that they are provided with funds for their future living expenses and education in the event of his death.
Zihle must notify her employer’s pension fund that her sisters are her financial dependents to help the trustees decide who should receive retirement or group living benefits.
DIE WITHOUT A WILL
If you do not have a valid will in case of death, you will not be able to decide who will inherit (receive) your assets when you die, and this process will be decided by the Master’s office in terms of intestate succession law. Zihle’s mother died without a will, causing a delay in the liquidation of the inheritance and additional administration.
Financial advisor Anton Battiss says that if Zihle’s mother had prepared a will, it would have created an opportunity for her daughters to provide for themselves. For example, through life insurance, Zihle’s mother could have ensured that there were sufficient funds in the estate to cover death-related expenses, such as property transfer costs, executor fees, master’s fees, and liabilities.
She could also ensure that she had funds to cover her daughters’ future school needs and living expenses.
This would have prevented the unfortunate cycle of debt that Zihle is currently in. When a liquidity gap occurs at the time of death, family members may be forced to sell assets or incur unnecessary estate expenses. He could also appoint a guardian to look after younger children. Having a valid will would ensure that the transfer of assets such as a house would be completed more quickly.
NOMINATE AN EXECUTIVE: This is the person responsible for administering the deceased estate.
By appointing an executor, you avoid unnecessary delays in the administration of your estate. It is advisable to appoint a professional executor who can act independently and does not interfere with family politics.
If you have your will prepared professionally, you will have the opportunity to negotiate fees rather than leaving your family alone.
An executor is entitled to receive a fee of up to a maximum of 4% (including VAT) of the assets he/she will manage.
The trustee is also entitled to 6% of the income raised and collected after the deceased’s death.
NOMINATE LEGACIES: You need to stipulate who will receive your assets and in what proportion.
This is also an opportunity to bequeath certain items to individual beneficiaries. If you leave all your assets to your spouse, no inheritance tax is payable.
If you leave your assets to someone other than your spouse, for example your children, no inheritance tax will be payable on the first R3.5 million of your estate. After this, inheritance tax of 20% applies.
A minor child may not receive an inheritance directly and these funds may be paid into the Intestacy Fund unless a trust is established. Include an alternative heir in case the person you nominate passes away.
APPOINT A WILL: If you have young children, you should stipulate who will care for them. This is especially important for single parents.
TEMPORARY TRUST: This is a trust created upon your death for minor children. Funds will be held in the trust until the child reaches the age of 18 or another predetermined age; For example, you can choose age 25.
It is best to nominate a professional trustee who is emotionally uninvolved and financially astute.
SIGNATURE: In addition to your own signature, your will must be signed in ink and witnessed by two witnesses who are not beneficiaries of the will and are 16 years of age or older.
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