Business Brief

“One’s Will is possibly the most important document of one’s lifetime”. ~ The Drafting of Wills, Harry Barker.

Assisting clients in establishing or reviewing and updating their Wills is probably the best way to ensure they minimise unhappiness and conflict among their family members because there are clear instructions on distributing their assets.

Given the horror stories we hear daily about family feuds over a deceased’s assets, one would think that most people would conclude their Wills in a hurry. Shockingly, statistics obtained in 2022 from the Master of the High Court of South Africa show that less than 15% of South Africans have a Will when they die. 

Everyone wants their family members and loved ones to be cared for when they are no longer alive. Sadly, their best intentions are often lost in translation.

The topic of estate planning is often avoided and perhaps it is because people do not want to deal with the thought of death. Estate planning is, however, a vital part of sound financial planning because it forms the basis of the legacy they would like to leave through their Will.

What is estate planning?

Investopedia defines estate planning as “the preparation of tasks that serve to manage an individual's asset base in the event of their incapacitation or death”. The estate planning process generally starts with the drafting of a Will.

In a case where there is a Will in place, we often find that drafting and planning mistakes can either render it impractical for specific provisions to be carried out or, worse still, for the laws of Intestacy (Intestate Succession Act 81 of 1987, pre-determines the heirs) to apply. This can lead to unintended and lengthy consequences, to the detriment of loved ones left behind.

Steps to take to preserve your legacy

To ensure your client’s legacy is not lost in translation, you should advise them to take a more considered approach to their estate and financial plans. They need to understand the legislative directives and implications and have a valid, signed Will in place.

• The first step is to consider a financial plan carefully. This plan is critical in mapping your client’s financial journey and the best way to get there. As an adviser, you also need to assist your client to pre-determine the future financial needs of their family and loved ones.
• By assisting your client in drafting a Will, they can be assured that their beneficiaries reap the rewards of their life’s work and that it will be distributed, protected and managed according to their wishes. Their circumstances may change; therefore, you should advise them to revise their Will at least once a year or when they experience a significant life-changing or financial event.
• Estate planning ensures that your client’s inheritance will be managed and fulfilled according to their wishes. A carefully considered estate plan results in the family’s wealth being preserved and shared across generations. By embarking on this process, your client can ascertain whether or not their chosen heirs are prepared to take over this responsibility.

What to consider when doing an estate plan

1. The marital regime, including your client’s marital status and nuptial contract, impacts their estate plan. The marital regime can limit their estate plan, so they must carefully consider the consequences of their marital status. Understanding their marital regime’s impact will allow them the opportunity to plan carefully for death’s consequences.
2. Consider the objectives and needs of their beneficiaries carefully and link that to the role they play from a maintenance perspective and costs related to the estate. This could include:
   • the funding of children’s education;
   • replacement of income of their spouse; and/or
   • estate administrative cost, taxes and liabilities.

The age of the beneficiaries also plays a crucial role. A minor’s inheritance (under 18 years old) should preferably be placed in a testamentary trust. One should consider whether the capital and/or income is released when the minor reaches the age of majority or at a specific age thereafter. If no provision is made to create a trust, the inheritance is paid to the Guardian’s Fund (which is administrated by the government) and released to the beneficiary at the age of 18 years.

3. Succession planning is essential for your client’s business and may reduce the angst of deciding who will inherit it. Not only will this result in the company’s wealth being preserved but in a smoother transition of ownership and management.

a. The proper structure, wording, signing and other legal requirements around a Will are all points a professional specialist knows to guide someone to ensure that their last wishes will be legally executable.

Given all of the above and many other reasons, it is clear that proper estate planning and the professional drafting of a valid Will is indeed one of the most important life plans an individual should implement.

Are your client’s instructions clear and does their plan make sufficient provision for their loved ones, or will their final wishes be lost in translation? Encourage your clients to discuss this issue with you or a fiduciary specialist. Knowledge is power, especially when used wisely.

By Advocate Anneke le Roux, PPS Fiduciary Services: Senior Fiduciary Specialist

Disclaimer: Kindly note that this does not constitute financial advice; the information provided is purely informational. In terms of the Financial Advisory and Intermediary Services Act an FSP should not provide advice to investors without an appropriate risk analysis and thorough examination of a client’s particular financial situation. The information, opinions and communication from the PPS Group or any of its subsidiaries, whether written, oral or implied are expressed in good faith and not intended as investment advice, neither do they constitute an offer or solicitation in any manner. Professional Provident Society Insurance Company Limited is a licensed insurer conducting life insurance business, a licensed controlling company and an authorised financial services provider.