07 Sep The solution to the potential shortcomings of a will
Wills should be approached with caution.
We get that costs – both in creating the Will and ultimately winding up the Estate – are a key decision driver. But what if we told you there was a way that could potentially mitigate certain costs, taxes, and delays after you die and allow your family immediate access to the inheritance you bequeathed to them?
Ignorance should never be a factor when it comes to drawing up a Will. We urge you to research your options so that you understand the consequences of your choices before you decide (or die).
Some people blindly follow historical family protocols. Others think, “What the heck, I’ll be dead, so I really don’t care!” and then there are others who’d like to make it as uncomplicated and stress-free as possible for their heirs. That’s where you’ll find my expertise invaluable.
A Will makes provision for the distribution of your assets when you die. We’d like to offer you a significantly more efficient route than having a Will as the sole vehicle and expression of your wishes when you die. Here’s why:
- A Will offers no asset or disability protection for the originator while s/he is alive.
- A Will is inflexible once you die. If all your assets are in the Will, they cannot be transferred or accessed to accommodate a changing family structure or circumstance until the Estate has been fully wound up. How often have you heard of a widow being financially stranded while this is in progress?
- A Will requires the Executor you appointed to begin the laborious process of winding up your Estate through the Master of the Court.
- If you’ve appointed a trusted family member or friend as your Executor, is s/he of steely resolve and familiar with the legal process? Yes, you will save Executor fees but for the uninitiated, it can be a minefield of red tape, of finding documents and following a maze of legal processes. Ticking multiple boxes takes time and patience and the Master’s office is consistently under pressure which can affect efficiencies. I estimate it may take one to three years to complete the process, depending on the complexities of the Will.
- If a financial institution helped you create your Will, they will also wind it up for you and subtract their Executor fees from the total value of your Estate at 3.5% + VAT: e.g. per R1 million (x 3.5% = R35 000 + R5 250 VAT = R40 250)
Most companies acting as Executors work from a Progress Sheet that contains many sections and sub-sections of requirements that need to be met. The process is painstaking, and whilst there’s no doubt that the fee is hard earned, it’s still a significant chunk out of one’s Estate!
- Your passing will also trigger Capital Gains Tax + Estate Duty. Numerous parameters apply to many variables so these must be accurately calculated.
- It’s easier for a third party to challenge a Will.
- Assets in other countries may have to be wound up in that country.
THE LIVING TRUST OPTION
This alternative is quite revolutionary, it entails structuring a Will and a Trust that work in harmony to your advantage, even while you’re alive. Mental incapacitation is particularly difficult if all you have is a Will. In this instance, a Power of Attorney is deemed invalid and a Curator will be appointed by a Judge to handle your affairs. The consequences could be disastrous.
If you have a Will and a Living Trust, a Curator will not be required as the Trustees of the Living Trust will simply follow the instructions of the Deed you drew up with your lawyer, even in the case of mental incapacitation. Access to money need not be a problem providing your assets are in the Trust and when you die, the Trust will live on. This circumvents the involvement of the Master’s office altogether. Everything continues smoothly and expediently.
Apart from the convenience and ease of flexibility during life and beyond, a Living Trust:
- Also provides for asset protection.
- Saves Executor fees (they no longer apply).
- Offers greater protection from potential third party attacks.
- Dispenses with Estate-related complications associated with assets in other countries.
A Living Trust Centred Plan will still attract donations and Capital Gains Tax which I shall discuss in detail with you should you like to book an appointment. I urge you to consider a Living Trust in conjunction with a Will. It is so much more straightforward when you die, and yields results faster for the benefit of the beneficiaries. If you seriously consider the cost-to-benefit ratio, a Living Trust is the better option.
End of life contingencies are never pleasant to talk about, but reality requires that we do. An empowered legacy is way better than a complicated Will littered with hoops and heartache!
Allow me to review your Will and make suggestions as to how a Living Trust could best be structured alongside your Will – strategic in intent and clearly detailed to ease the angst of the people you leave behind.
DR MERVIN MESSIAS – JD (Juris Doctor) / BA, LLB University of the Witwatersrand
TEP (Trust & Estate Practitioner) / MTP Master Tax Practitioner – S.A.)
Book an appointment with my Executive Assistant, Jutleth Mkhonza. Email email@example.com or call +27 (0) 11 783 0108