Why beneficiaries and trustees should have valid wills

By Phia van der Spuy 47m in the past

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It is estimated that the typical individual spends 76 800 hours on constructing their property, but only a few individuals spend any time guaranteeing that their estates will not be diluted by greater than 30% on loss of life via loss of life taxes.

The court docket within the Raubenheimer v Raubenheimer case of 2012 concluded that property planning, wills, succession, and the administration of deceased estates are inevitably linked to the correct drafting of a will, and the next was stated:

“It is a never-ending source of amazement that so many people rely on untrained advisers when preparing their wills, one of the most important documents they are ever likely to sign. This is by no means a recent phenomenon. Some 60 years ago, a high court decried the number of instances in which wills had to be rejected as invalid due to a lack of compliance with prescribed formalities and the regularity with which the courts were being approached to construe badly drafted wills, before urging intending testators ‘in their own interests as well as in the interests of those whom they intend to benefit when they die … to consult only persons who are suitably trained in the drafting and execution of wills and other deeds containing testamentary dispositions’. Despite this, the courts continue all too often to be called on to deal with disputed wills which are the product of shoddy drafting or incompetent advice.”

Dying intestate

In South Africa, if one dies with no will (or with an invalid will), one dies “intestate”. Although, usually talking, one can determine who inherits and who doesn’t, dying intestate will end result within the deceased’s property robotically being cut up between blood kinfolk in a selected order. The property will, subsequently, be divided when it comes to the Intestate Succession Act, and this is probably not the way you needed your property to be cut up. On the Department of Justice and Constitutional Development’s web site, intestate succession is virtually defined.

Importance of a valid will

Most individuals delay addressing their wills as a result of it’s an emotional doc to arrange. However, correct property planning consists of the drafting of a will, which enhances your property plan. Your will should at all times be updated and replicate your present needs when it comes to how you prefer to your property to be distributed upon your loss of life. It is essential to adjust to all the necessities to draft a valid will, failing which it might be open to assault. People who consider they should inherit, however don’t, will attempt to discover a loophole to invalidate the desire. The court docket will at all times take into account the intention of the testator or testatrix. To keep away from any court docket battles after your loss of life, make sure that your will complies with all of the authorized necessities. Otherwise, your needs could not materialise.

Testamentary trusts

Be conscious of the truth that regardless that it’s possible you’ll intend to your property to be protected in a testamentary belief for the good thing about your loved ones upon your loss of life, such beneficiaries could resign or cede their rights if it means inheriting (and abusing) such property personally because of such revocation or renouncement. This is probably not what you supposed. Therefore, be conscious of attaining unintended penalties via your will, comparable to forfeiting property to collectors of one in all your legatees or heirs.

Trust distributions

Estate planners and trustees should even be conscious that when distributions are made to beneficiaries, such quantities or property vest in these beneficiaries. Often distributions are made to capitalise on tax benefits with out the quantities being paid to the respective beneficiaries. These quantities stay payable to the related beneficiaries. On their deaths, the quantities would fall into their estates. It is, subsequently, sensible to attract up wills for belief beneficiaries to whom trustees make distributions with out really making fee.

Be conscious that an individual can have a will solely as soon as they attain the age of 16, so all unpaid distributions to minor youngsters under the age of 16 are handled when it comes to the intestate succession guidelines. The trustees have no say on who should obtain such quantities claimed by the executor on the loss of life of the minor.

Family trusts

As a common rule, don’t appoint your youngsters or grandchildren as trustees whilst you and/or your partner are nonetheless alive. Too usually, youngsters have completely different targets and motives from their dad and mom. They could determine to out-vote their dad and mom, which might result in a substantial amount of pointless stress, particularly when the dad and mom are counting on the belief as their sole supply of revenue throughout their closing years. Rather solely permit your youngsters to take over the administration of the belief once you and your partner (the place related) are not alive or unable to behave as trustees. It is advisable that you simply make an allowance within the belief instrument to nominate follow-up trustees in your will – and that you simply take into account appointing your youngsters to make sure continuity. You may also appoint your follow-up trustees within the belief instrument. However, keep in mind that every time you modify your thoughts as to who your follow-up trustees should be, the belief instrument will have to be amended and submitted to the Master of the High Court, in contrast to a will that may be modified any time.

Keep it present

Your will is a dwelling doc and should at all times be updated and replicate your present needs when it comes to how you prefer to your property to be distributed upon your loss of life. Personal circumstances change which can warrant adjustments to those paperwork. Review your will, along with the belief instrument when your circumstances change (however a minimum of as soon as a year) and replace it the place related.

Phia van der Spuy is a Chartered Accountant with a Masters diploma in tax and a registered Fiduciary Practitioner of South Africa, a Master Tax Practitioner (SA), a Trust and Estate Practitioner and the founding father of Trusteeze, the supplier of a digital belief resolution.


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