A will cannot reflect your last wishes if it was drawn up 40 years ago. It might be your last will, but it is not your last wish.
Since a will is the one document that affects all the assets you have accumulated over the years, it can have far-reaching consequences for your loved ones when you die. That is why it is important that this document complies with legislation and that it serves and protects the interests of all your heirs and parties concerned.
Drawing up of a will involves different stages. First, assess what needs to be done. Second, plan accordingly. Third, implement those plans by changing your will so that it meets the needs of your current situation. You might need to set up certain structures, such as trusts, and so on.
The final stage is to maintain and revise your will on a regular basis so that it always complements your current life situation and, most importantly, that it keeps up with legislation changes.
It cannot be emphasised enough that you need to assess your will on a regular basis because of changes to case law, new legislation, economic conditions and changes in your personal life.
- Loans and estate duty: A recent court ruling, Bothma Family Trust v Commissioner for SARS (ITC1793), has meant that you need to amend your will to ensure that the bequest of a loan account, including any amounts owing to you by a child, does not create a capital gain with unnecessary negative effects.
- Inheritance not protected when married in community of property: Du Plessis v Pienaar NO and Others 2003 (1) SA 671 (SCA) showed that inherited assets of a wife married in community of property would not receive protection from her husband’s creditors even if the benefactor stipulated that it was not to form part of her joint estate with her husband.
In this case the husband was sequestrated and it was ruled that debts are incurred by persons and not their estates and that each spouse in a marriage in community of property is liable for debts incurred by either one of them and that creditors are entitled to look at the estates of both debtors, including separately owned property, for the recovery of debts. Consequently, the daughter lost her inheritance. This could have been avoided if her inheritance was bequeathed to a trust.
l Changes to tax exclusions: According to recent legislation changes, the primary deduction for estate duty has been increased from R2 500 000 to R3 500 000 and the capital gains tax exclusion for estates has increased from R60 000 to R120Â 000. As of January 11 2006, a juristic person in the capacity of a trustee of a trust inter vivos may also be a member of a close corporation. The amount that each individual can donate per tax year free from the payment of any donations tax has also increased to R100 000. All these changes mean that there are many planning techniques available to reduce estate duty at your death, but you will benefit from it only once you have applied it to your current will.
l Revise your asset worth: Economic conditions, such as the growth in the equity market, the increase in the interest rates, as well as the good growth in the value of your fixed property require a revisit of the contents of your will. You need to work out if the income on your surplus capital, after all you debt has been settled by your estate, will be sufficient for your spouse to maintain the same standard of living.
l Divorce and wills: If you die three months subsequent to a divorce without changing your will, your former spouse will still inherit your entire estate if he/she was your sole heir throughout the marriage. Should you die without a will, your assets will be divided in accordance with the stipulations of the Intestate Succession Act and certain people, who you might not have identified as beneficiaries, may in fact inherit your assets.
So, do not underestimate the importance of your will. Take the time and seek expert advice so that your will is drawn up in such a way that no one can doubt your real intentions. Keep it accurate and simple — and, most of all, be certain that it reflects your last wish.
Berrie Botha is CE of Sanlam Trust