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WILLS & TRUSTS QuotesYou work very hard to build the life that you have for yourself. Having a will helps secure your legacy, ensuring that your estate is divided per your wishes. While this may be the case, sadly, most South Africans die intestate without having a will in place. Thankfully, drafting a will has never been cheaper and more accessible.
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WILLS & TRUSTS
Why Do You Need a Will?
Many people fail to realise that everybody that dies has an executor for their estate. Estate planning can be a highly complex topic to navigate. Because death and the winding up of an estate is not something most of us come across every day, it is tough for us to get to know the ins and outs of the matter. Furthermore, most of us do not like to think about it often. Setting up an Estate Plan (what happens to your assets and liabilities when you die) is crucial to ensuring that your wishes for your estate are secured. A will and trust are vehicles used to see your estate plan through.
WILLS & TRUSTS
How Does It Work?
What Is a Will?
A will is a document that encapsulates your wishes for dividing your assets when you die. A good estate plan considers your liabilities to see your assets transferred to your dependents and loved ones. Without an estate plan, your directives may not come to fruition because of money owed to creditors, executor’s fees, and taxes. For instance, a good estate plan will identify and create the necessary liquidity to ensure that all parties claiming against your estate get settled, leaving your assets unencumbered to transfer to your loved ones as per your wishes set out in your will.
What Is a Valid Will?
You are eligible to draft a valid will if you are above 16 and are of sound mind. A will drafted by a person who is not of a sound mind and incapable of comprehending the results of their decisions will be deemed invalid. To witness a will, you must be 14 years old or older. You also have to be of sound mind, understand the consequences of your actions, and be able to testify in a court of law. Your signature should appear at the bottom of each page and the end of the will. You also must sign your will in the presence of two or more competent witnesses who must witness accordingly.
Can a Minor Be a Beneficiary?
Yes, I minor can be a beneficiary in your last will and testament. This, however, does not make it a good idea to do so; control over your bequest will ultimately fall to their guardian. It is better to use a testamentary trust to transfer wealth or provide financial security for a minor. Since trustees will administer this trust, it will be much more likely to serve its intended purpose. The trust will mature and be dissolved once the child reaches the age you stipulated, after which they can take control of the trust. A testamentary trust is the most uncomplicated trust to create and manage, offering you peace of mind.
What If I Don’t Have a Will?
Everybody who dies has an executor for their estate. If you die without a will, the state will appoint an executor for you. Such an executor knows nothing about you or your wishes, so they will defer to standard rules for winding up an estate, which may not align with your desires. If you get a will drafted, you choose who you want to be your executor. Your executor knows your wishes and how to go about winding up your estate accordingly. Your Perennity Financial Adviser will help you create an Estate Plan to enable the wishes expressed in your last will and testament.
What Is a Trust?
A trust is a legal structure/vehicle you can use to transfer money, property, or assets to your nominated beneficiaries. A trust is managed by trustees whom you may appoint. You may use a trust to secure your legacy even while alive, and you can use a trust as part of your estate plan. Inter Vivos trusts are created while you are alive and can be powerful tools to create generational wealth if set up correctly; these kinds of trusts are often misused and can result in legal vulnerability. A testamentary trust is made through your will and can be used to create financial security and transfer your assets to your loved ones.
How is a Trust Managed?
An inter vivos trust is a trust created and administered while you are alive. Your death invokes a testamentary trust via a will. Common law and the Trust Property Control Act govern South African trusts. Trustees appointed to the trust further administer the trust. An inter vivos trust must be set up per the trust’s deed. A testamentary trust is set up in terms of your will. Any will or trust (Inter Vivos or testamentary) needs to be drafted with the assumption that it will be challenged legally and must be able to withstand such a legal challenge.
How To Create A Trust
To create an inter vivos trust, you must lodge the relevant documentation with the Master of the High Court. You will need to submit a trust deed, registration fee, acceptance of trusteeship by every trustee you have nominated, and the ID copies of every trustee you have appointed. After receiving your documentation, the Master will register your trust and issue a letter of authority to your nominated trustees. Remember that trust is a vehicle for succession planning. In other words, there needs to be a straightforward transfer of wealth that takes place via a trust to avoid potential legal challenges.