When last have you updated your will?

This may seem like an extremely innocuous question. But it can have far reaching consequences for you and your family.

• Life happens to all of us, for better or worse.
• People come into our lives, and people leave our lives.
• Financial circumstances and asset bases most certainly change.

All of these factors have fundamental effects pertaining to the manner in which your estate will be executed on death.

Many people put off reviewing or updating their will because it reminds them that death is a natural consequence of life. Most often a will is drafted at an important life event, such as marriage, then placed in the bottom drawer, never to be looked at again.

There is nothing more sad than having to execute a will knowing that it was not in accordance with the final wishes and circumstances of the deceased. It is important to note that the executor has no discretion on terms of the manner in which the assets of the deceased are distributed to heirs. Their sole function is to act on what is written in the will, apply appropriate legislation and wind up the estate accordingly, no discretion is allowed.

The marriage regime also has a material effect on a couple’s asset base. In South Africa, many couples are married by Ante-Nuptial Contract with the accrual provision. This practically means that on the death of one of the spouses, their assets are combined and split according to the accrual percentage, normally 50/50. This means that the surviving spouse has an accrual claim against the estate, or vice versa. Often this calculation is ignored when drafting a will and the monetary effect is has on the estate.

Liquidity is also a major factor to consider. On death, with certain technical provisions, the deceased is deemed to have disposed of all assets for capital gains tax purposes. The CGT effect of this event together with estate duty can often come to a fairly large amount. This is specially relevant to a last dying spouse. How are these taxes going to be paid from the estate and has a liquidity calculation been done?

Many South Africans now own offshore assets as part of their wealth base. These assets, on death, may be subject to a different regulatory jurisdiction and estate rules. In some circumstances, an offshore will may be required. Has one been drafted?

Some assets are not included in the estate, such us retirement annuities and pension funds. Have beneficiary nominations been made in terms of these assets? Has their cash flow effect been included in the wishes of the deceased in term of the overall distribution of his/her wealth?

Many South Africans have material assets in Trusts. Often there are loan accounts between the deceased and the Trust. What is the optimum manner for these loans to be settled and does the will cater for this? Who replaces the deceased as a Trustee on the Trust?

These questions, and a good few more, need to be reviewed on a regular basis with your financial and fiduciary advisor. We strongly advise you not to put your heirs at risk, but to have the courage to address these matters front and centre. At Activ8 we believe in designing an holistic solution that personally caters for your wishes, and places your family at the centre of all our planning. Make an appointment to see an Activ8 advisor.