Setting the record straight: common myths about Wills
In the realm of personal finance, wills are often clouded by misconceptions that can jeopardise not only individual legacies but also a family’s well-being. The consequences of not having a will go beyond asset distribution; it can lead to complicated legal processes, financial strain, and leave pivotal decisions such as guardianship up to the courts.
Given these high stakes, demystifying the prevalent fallacies about wills is imperative.
Wills are for the rich and wealthy.
A will is not only about sharing your assets; it also allows you to state your last wishes in terms of caretakers for your children or pets. Importantly, it legally puts in place the people who will help continue your financial journey, whether it’s your parents, your children, your spouse, your partner, or other relatives, a will helps to enforce your wishes.
Without a will, the State automatically redeems your estate.
"There is a common misunderstanding that if you die without a will, your estate will automatically be given to the State. However, it's important to clarify that before this course of action is initiated, the State diligently endeavours to locate your living relatives. It is only after 30 years post-death without any heirs coming forward that an estate has the potential to be handed to the State,” says Faeeza Khan, Senior Specialist: Legal Marketing, Liberty.
"The Intestate Succession Act determines the heirs of your estate and aims to distribute the deceased estate to close relatives first,” she adds.
For example, if a child was abandoned by their parents at birth, then as an adult amassed a sizeable estate and passed away without a spouse or child, the Act dictates that the biological parents of the deceased will inherit the estate in equal shares. This might not have been the intention of the deceased.
“Should you pass away without a will, you do not get a say about who will inherit your assets. The Intestate Succession Act will dictate who your heirs are.”
A will is simply a written document with a deceased’s wishes.
There is also a perception that one can take any document stating a deceased’s wishes to a court for approval.
"While legislation does make provision for the High Court to be able to declare a document that doesn’t comply with the necessary legal requirements valid, it is not guaranteed that the court will come to this finding, and in addition, this is a costly and time-consuming process," explained Khan.
For the will to be considered valid, it needs to meet the following requirements:
- It must be in writing.
- Testator/Testatrix (the person who has made the will) must be 16 years or older.
- Must be signed by the Testator/Testarix in the presence of witnesses.
- The Testator/Testarix must have a sound mind.
- It must be signed by two witnesses in the presence of the Testator/Testatrix.
- The witnesses must be 14 years or older and competent enough to give evidence in a court of law.
Your local will covers your international assets too.
"International assets are also not necessarily covered by a local will, so the ideal way of dealing with this is to have a will drafted in the same jurisdiction as your overseas property, should you own something like this.”
At this point, financial structures like endowments become important. These are often used by high-net-worth-individuals who might also have complex tax requirements at death. An endowment can be used to manage both overseas and local assets, and in the case of offshore assets, can make the transfer of these assets much simpler upon death.
It's worth speaking to a financial adviser to see how you can structure your assets and will accordingly.
My debt will be written off when I die, so my assets can be shared with my loved ones.
In terms of the estate winding up process, all creditors of the estate are paid first, meaning the estate must be solvent to meet all expenses and debts. Executors can only pay loved ones once creditors are settled. Ultimately, the estate needs sufficient money to be wound up and sometimes the only way to do this is for the executor to start selling assets.
"This is why life insurance can be the perfect complementary tool to ensure that creditors can be paid so families can inherit. It's an affordable and effective way of injecting cash into your estate to cover these possible costs and any other debt," explained Khan.
Your passing should not place a burden on your family or loved ones. A valid will, backed up by a sound plan made with your financial adviser, will make sure that you leave a legacy they will be proud of when remembering you.
Addressing the misconceptions about wills is not just a matter of correcting misinformation; it is a critical step toward making informed decisions that affirm our priorities and values. In this sense, a well-considered will serves as more than a legal document; it becomes a lasting imprint of our life's intent.