A will to protect your family

Anton Battiss says, ensure loved ones are provided for should something happen to you

Follow six ordinary South Africans as they take up the Absa/City Press Money Makeover Challenge and undergo a money makeover boot camp over the next six months. Each candidate has been allocated their own Absa financial adviser. The candidates will be required to complete certain financial tasks and to stick to the budgets set out for them. Personal finance expert Maya Fisher-French shares their stories

One of the most important tasks required by our candidates is to write up a will. We spend so much time and energy on our families and making many sacrifices for them, yet most parents have not taken the time to ensure that their loved ones are provided for should something happen to them.

When writing up your will, think about what you want your family’s life to look like when you are no longer there.

From there you can create a plan and a set of wishes ensuring that your family is taken care of.

Sello admits that he did not have a will, but he had kept promising himself he would get one done.

“I feel relieved because I knew it was irresponsible of me not to have done a will all along. Now I am happy that I have one, and it protects my children’s interests should anything happen to me.”

Depending on your circumstances, you will have different needs:

Providing for your family

Sello is married, has two children and is the main breadwinner. As part of his estate planning, he needs to consider how to provide for his wife and children.

Sello is married in community of property which means that, automatically, half of the joint estate would go to his wife. This would include any property or business he may have. He would then need to decide how to allocate his remaining portion of the shared estate.

In his will, he could elect to leave all his assets to his wife, with the understanding that she would provide for the children until they were adults. He could even include a clause that his estate would not form part of any future marriage his wife may enter.

The benefit of leaving your estate to your spouse is that all death taxes are avoided. Only on the death of the surviving spouse would estate duty apply.

The other option is to create a testamentary trust for the children. This is a trust that only comes into effect on his death. The trust would pay a monthly amount to provide for the children until they reached a specific age. A testamentary trust should be considered by single parents or specified to allow for the possibility of both parents dying simultaneously.

Sello also needs to consider his retirement funds. These are not stipulated in his will but, rather, determined by the trustees of the retirement fund. He needs to provide guidance to the trustees by completing a beneficiary nomination form. A portion of his retirement funds would be paid to his children as they are his legal and financial dependants.

As the children are still minors, the trustees may pay the proceeds to his wife to provide for the children. Alternatively, Sello could request in the nomination form for their portion to be paid to the testamentary trust.

Sello also needs to ensure he has enough liquidity to provide for his family. If his retirement funds and other assets are not sufficient to provide for his wife and children, he needs to consider additional life cover. Life cover only pays out to the listed beneficiaries, so it is important that Sello consider who he wishes to leave the life cover to. He could make his wife the full beneficiary or he could allocate a portion of the payout to be paid to the children’s testamentary trust.

Providing for children from another relationship

Raymond has two children from separate mothers. As this could lead to complications, it is very important that Raymond appoint a professional executor. Raymond must make provision for these children as they will have a claim against his estate for maintenance.

They would also have a claim against any retirement funds he may have. He would need to ensure that the children were included on the consider the costs of maintaining a testamentary trust. For an amount of less than R1 million it may not be worth the additional costs of maintaining a trust.

Even a young person needs a will

While Zihle is not married and does not have any children, it is still important for her to have a valid will and an estate plan in place. As her adviser Anton Battiss explains, Zihle has assets that should be transferred to whomever she chooses, as well as liabilities that should be covered at her death, ensuring that her family was not left with debt.

As she is also providing for her sisters, she should preferably have life cover in place to ensure that, if she passes away, there are funds available to them for future living expenses as well as their education.

Zihle must inform her employer’s retirement fund that her sisters are her financial dependants in order to assist the trustees in determining who should receive any retirement or group life benefits.

Dying without a will

If you do not have a valid will at death, you will not be able to decide who inherits (receives) your assets at death and this process will be decided by the Master’s Office in terms of the law of intestate succession. Zihle’s mother died without a will, which has resulted in a delay and additional administration in winding up her estate.

Financial adviser Anton Battiss explains that, if Zihle’s mother had drawn up a will, she would have created an opportunity to ensure that her daughters were provided for. For example, through life cover, Zihle’s mother could have ensured there would be enough funds in the estate to cover death-related expenses such as property transfer costs, executor’s fees, master’s fees and liabilities.

She could also have ensured that there were funds to cover future schooling needs and living expenses for her daughters. This could have prevented the
unfortunate debt cycle that Zihle has found herself in now.

Whenever there is a liquidity shortfall at death, family members can be forced to sell assets or incur unnecessary estate expenses. She could also have nominated a guardian to look after the minor children. Having a valid will would have ensured that the transfer of assets, such as the house, would have been finalised sooner.

What to include in your will

1Nominate an executor: This is the person who is responsible for administering the deceased estate. By nominating an executor, you prevent unnecessary delay in the administration of the estate. It is advised that you appoint a professional executor who can act independently and is not caught up in family politics. If you have your will professionally drawn-up, you have the opportunity to negotiate the fees then, rather than leaving your family to do so. An executor is entitled to remuneration of up to a maximum of 4% (including VAT) of the assets that the executor will administer. The executor is also entitled to 6% of income accrued and collected after the death of the deceased.

2Nominate heirs: You need to stipulate who will receive your assets and in what proportion. This is also an opportunity to bequeath specific items to individual beneficiaries. If you leave all your assets to your spouse, there is no estate duty payable. If you leave your assets to someone other than your spouse, for example children, there is no estate duty payable on the first R3.5 million of your estate. After that, estate duty of 20% applies. A minor child may not directly receive an inheritance and these funds may be paid to the Guardian Fund unless a trust has been created. Include an alternative heir should the person you nominate pass away.

3Nominate a guardian: If you have young children, you must stipulate who will take care of them. This is especially important for single parents.

4Testamentary trust: This is a trust that is formed on your death, for minor children. The funds will be held in the trust until the child is 18 or some other predetermined age, for example, you could select the age of 25. It is best to nominate a professional trustee who is not emotionally involved and is financially astute.

5Signature: Apart from your own signature, your will must also be witnessed and signed in ink by two witnesses who are not beneficiaries of the will and are aged 16 or older.

Find out more about the contestants and their advisers here:

Meet the 2023 contestants

Meet the 2023 advisers

If you really want to get your finances in order, you have to start tracking your spending. If you cannot commit to that, it is unlikely you will be able to reach your goals.

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