Estate planning matters: Why you must have a will
You owe it to those you love to put proper estate planning in place.
Many people think that estate planning is for the wealthy or those who are fast approaching retirement. In some cultures, it’s even taboo to speak of when you will no longer be around, but in fact it’s an empowering rite of passage that protects you and those who matter to you. Once you appreciate the benefits of estate planning, you’ll no doubt agree that you should consider it now, rather than later.
Estate planning is more than just signing a will. It’s a process to make sure that your assets are managed correctly and will be shared fairly among the people you care for, after your outstanding financial commitments have been settled. Your estate refers to all assets that have financial value, like property, cars, investments and your personal belongings.
Do you need a will?
Yes. A last will and testament is one of the most important documents you’ll ever sign. If you’re over the age of 16, you’re eligible to create a will and detail how you’d like your belongings to be distributed. It allows your family to grieve without worrying about the division of your estate, which can sometimes lead to ugly feuds. Your will allows you to have the final say on everything from how your funeral should be conducted to the distribution of your assets.
You can craft your will to:
- protect the inheritance of an heir by way of a testamentary trust,
- nominate a guardian for any of your children under 18 years of age,
- nominate an executor or executors to attend to the administration of your estate according to your will, and
- nominate a trustee or trustees to be responsible for administering any trusts on behalf of the beneficiaries according to a legal agreement.
A will does not override the beneficiary nominations on policies like life insurance, investments and retirement annuities. Choose these beneficiaries and the beneficiaries of the rest of your estate carefully, to include all those you want to be taken care of in the event of your death.
Dying without a will, called dying intestate, can be traumatic for those you leave behind
Estate planning is not a one-and-done exercise. It requires you to take stock of your life regularly and stipulate any changes to your wishes. After major life events like a break-up with a long-term partner or the death of a relative, you should reassess the beneficiaries named in your will and your insurance policies and make changes where necessary.
What are the costs of creating a will?
Most financial service providers and attorneys will be happy to draft your will in accordance with your wishes for free, on condition that they are named the executors of your estate, which allows them to claim a percentage of the estate as a fee. Nedbank offers will drafting and safe custody services for all clients, and Nedgroup Trust will execute the estate so your loved ones can mourn your passing without the anxiety of administration and red tape.
Of course, you can also get an expert to draft your will and name an executor of your choosing, but in that case, you will generally pay a fee.
The advantage of having your will drafted by a professional is the expertise they bring to the process, even while you’re still alive. By managing your assets optimally across a variety of financial instruments, for example, your financial adviser can structure your estate legally to reduce the tax owed upon your death and leave more for your heirs. And because our estate planning consultants are experts in this area, they know exactly what steps to take when executing a will and completing the paperwork.
What happens if you die without a will?
Dying without a will, called dying intestate, can be traumatic for those you leave behind. Your estate will be administered according to the Intestate Succession Act 81 of 1987. It will be divided among your surviving spouse (if you were married), your children, parents and siblings according to a set formula and in a specific order of preference.
According to the law, your surviving spouse may rank higher in the order of preference than your parents or your children. This is another strong motivation to make a will. If you wish to leave specific items or amounts to loved ones or organisations, your will should name these bequests explicitly.
If you’re ready to draft a will or want to know more about estate planning, chat to an experienced Nedbank professional by calling 021 416 6000 or send an email to NGTS@nedbank.co.za
Learn more with the free estate-planning course on MoneyEDGE.
