YEARS OF EXPERIENCE
Ant has been involved in the drawing up of Wills for some thirty years, and over the years has developed an interest and expertise in the preparation of Wills ranging from simple Wills to complicated Estate Plannning Wills.
In view of the Estate Duty consequences of dying, the protection of beneficiaries and the orderly devolution of one’s estateit is important that people with medium-sized to large Estates carefully plan their Estates carefully to take advantage of certain rebates, structures and protection mechanisms that are permitted in law.
In principle, in South Africa, all Deceased Estates need to be assessed for Estate duty. The current primary Estate Duty rebate is R3.5 million. This is a similar concept, for example, to the “nil rate band” in the United Kingdom.
Recent developments in legislation have ensured that each spouse in a relationship is entitled to the R3.5 million rebate, making a total of R7 million available as a Primary Rebate rebate between spouses. Although the average South African couple does not have a joint Estate exceeding R7 million, people often overlook the effect of Life Insurance Policy proceeds which can add considerable assets to the picture on the death of the first-dying spouse.
Prior to 1 January 2010, it was very common for Wills to be structured in accordance with a fairly simple plan in terms of which a spouse would bequeath up to R 3.5 million of assets to a Will Trust, or even an Inter Vivos Trust, and the residue of the Estate to the surviving spouse.
In terms of Section 4(q) of the Estate Duty Act, any bequests to a surviving spouse are free of Estate duty.
This structure ensured that no Estate Duty would be paid on the death of the first-dying spouse, as the R3.5 million primary rebate would be diverted to a Trust, and the residue would devolve upon the surviving spouse. This ensured that the full R3.5 million rebate was utilised in the Estate of the first dying.
Since 1 January 2011,new legislation has permitted a roll-over of the unutilised portion of the first-dying spouse’s primary rebate, and so the types of simple structures referred to above are no longer strictly necessary. In many instances, however, spouses still elect to utilise such structures in their Wills, as a protection against creditors, protection against the surviving spouse him or herself/children, and for certain tax benefits.
There is a possibility that some of the tax advantages of using Trusts in Estate Planning might be watered down somewhat once, and if, new legislation is introduced flowing from the current review of the South African tax system in general.
Estate Planning is extremely important for all South Africans of reasonable wealth. Estate planning, however, should not be viewed as an event, but rather as a process. The process needs to be reviewed on a regular basis, and clients are always encouraged to remind themselves to review their Estate plans on their birthday each year.
Estate Planning is an holistic process. It should involve the Estate Planning expert, the client’s Accountant, the client’s Financial Planner, and preferably, both spouses. It is unwise to embark upon an Estate Planning exercise without involving all these players, as it is imperative to ensure that all such advisors are familiar with, and contribute in their own particular way to, the Estate Planning process.
It is an interesting fact that many South Africans of reasonable wealth still do not have a Will.
One of the most important reasons to have a current Will is to ensure that an Executor is appointed to your Estate, that Guardians nominated for minor children, and to ensure that one’s Estate devolves upon those persons who are intended to benefit from the Estate. A full presentation on the benefits and formalities pertaining to Wills, and Estate Planning, is available on request in PowerPoint format.
A “Brochure Will” can be completed on this website by any person requiring a simple Will. Submission of the completed application form will enable a simple Will to be prepared for such person which will be emailed to such person for signature. There is no charge for the preparation of a “Brochure Will”.
Traditionally, it was not usual for attorneys to charge fees for drawing Wills, but these days, it is more common than not for attorneys to charge for this important service. Prior to an amendment to the Attorney’s Act some time ago, only Attorneys were allowed to charge for the drawing up of a Will. Financial Institutions, Accountants and other professionals regularly drafted Wills, but did not charge for them as they were not entitled to do so, in terms of the Attorneys Act.
Since this amendment to the Act, however, it has become usual for Financial Institutions and other professionals to charge for the drawing up of a Will – and Attorneys have consequently adopted a practise of charging for Wills as well. The charge for a Simple Will is generally very low, but, in more structered Estate Planning Wills, a substantial amount of time is often taken in obtaining the necessary information to enable the plan to be compiled, and these Wills are then generally charged on a time and attendance basis.
In taking instructions to draw Wills, Ant likes to compile a brief summary of a person’s assets and liabilities, in order to ascertain the nature and extent thereof – and only thereafter, to apply the intentions of the person to the devolution of his or her Estate.
Ant believes that it is not prudent merely to take instructions from a client to draw a Will in accordance with the client’s wishes, without first analysing the extent and nature of the Estate assets and liabilities, particularly with a view to establishing the liquidity of the client’s Estate, in the event of the client’s death. Liquidity is an important issue, both from an Estate Duty point of view, and as far as the cost of Administration of the Estate is involved. Even where no Estate Duty is payable, there is usually a considerable amount of liquidity required to cover the Administration costs of the Deceased Estate.