In a time where everybody wants to find DIY solutions to save time and money, the temptation to draft your own Will is understandable. However, experts warn that this is one area where professional advice is not just beneficial but crucial.
Sharon Hamman, Senior Legal Adviser at Momentum, stresses the importance of seeking professional advice when drafting a Will, highlighting the complexities of estate administration and planning.
The valid Will versus the executable Will
Most people do not know the legal requirements for a valid Will. However, most DIY templates and apps will guide the user in the right direction and one of the biggest dangers of going on this Will drafting journey on your own is to end up with a perfectly valid Will that is not executable.
Being executable means the executor can fulfill all the instructions and wishes contained in the Will successfully, having sufficient funds to settle debt, administration costs, and bequests. A Will is an integral part of your financial plan and by obtaining expert advice from a financial adviser, the result will be a valid and executable Will.
Understanding intestate succession
South African law has specific rules for intestate succession – i.e. what happens if someone dies without a valid Will. You may find these rules may not align with your plans when it comes to distributing your assets. Without a valid Will, your estate will be divided according to a set formula, which may be vastly different from your wishes. This means your assets could end up with relatives that you had no intention of benefiting, rather than the loved ones you intended to inherit.
Death and taxes
As the common saying goes, the only two certainties in life are death and taxes, and in many instances, these two go hand-in-hand. Death is a potential trigger for Capital Gains Tax and your worldwide estate may be subject to estate duty, ranging from 20% to 25% of the net estate value. This is an important consideration when drafting an executable Will.
An unexpected Capital Gains Tax and estate duty liability can result in the executor having to sell assets to pay the taxes or looking toward the beneficiaries to fit the bill. A financial adviser can help you navigate the intricacies related to death and its tax consequences, helping you structure your estate to minimise or at least plan for the tax liabilities. This is important for those with larger estates or complex financial situations.
Guardianship and minor children
For parents of minors, appointing a guardian and making provisions for their care and maintenance is a critical aspect of estate planning. A DIY Will might overlook these essential elements, leaving your children vulnerable. A professional can help you draft a Will that ensures your children’s needs are met, both financially and emotionally.
The role of trusts
Trusts are popular estate planning tools in South Africa. Trusts can provide long-term financial security for your beneficiaries and preserve wealth for future generations but need to be set up correctly. A poorly drafted Will could undermine the benefits of a trust, leading to legal complications and unintended financial consequences for your heirs.
A professionally drafted Will can create a trust for your minor children to ensure their inheritance is protected for their future, ensuring that it is only your minor children that can benefit from the funds and not anyone else. The same rings true for elderly parents and disabled heirs.
While DIY Wills may seem like a cost-effective solution, the potential risks and complexities associated with going it alone. A financial adviser or reputable fiduciary or trust company can help you create a valid and executable Will that reflects your unique circumstances and protects your loved ones. By seeking professional advice, you can rest easy knowing that your final wishes will be honoured, and your family’s future secure.
