In South Africa, recent data shows that over 70% of working South Africans do not have a valid will, leading to various complications for their loved ones when they pass away. This issue is even more striking considering that 85% of South Africans die without a will.
The slow uptake of wills is often attributed to factors such as a lack of financial literacy, uncertainty about the process, and procrastination. Passing away without a will can result in assets being distributed by the Intestate Succession Act, causing unnecessary stress and financial burdens on the deceased family.
For estate planning, Stian de Witt, executive head of financial planning at advisory firm NMG Benefits, emphasise the importance of having a clear, and an updated will to ensure that assets are properly managed and distributed to beneficiaries as intended.
What is the difference between a will and estate planning?
Now the difference between a Will and estate planning is that a will is a legal document that states how you want your assets distributed after your death. It includes your portfolio of property, money, and personal possessions. It also can specify how you want your debts and taxes to be paid, who should take care of your minor or special needs children, and even if you want to be cremated or buried.
Estate planning involves the structuring of assets in the most tax efficient way to ensure protection and preservation of assets from one generation to the next in a proper executable manner.
“Estate planning is an integral part of responsible financial management. However, the intricacies involved often lead to confusion and oversights. That’s why we have launched NMG Wills & Trusts to address as a solution for this, by offering a holistic and personalised approach to estate planning that aligns with each individual’s circumstances”, says de Witt.
There are five things every South African should know about a will, says de Witt.
Easy to draw up: Drawing up a will is an easy process. You simply must be of sound mind and legal age, and you must sign your will in the presence of a witness who is not a beneficiary of your estate.
Must be regularly updated: Your will must reflect your circumstances and life changes – like new family members or changed marital status. Updating your will ensures that your assets are distributed according to your wishes and avoids disputes that can arise after your death.
Choose an executor: An executor is a person who manages your estate and ensures your assets are distributed according to your wishes. An executor should be someone you trust, and who has the skills and knowledge to carry out the duties of an executor. They will be responsible for paying any outstanding debts, compiling and filling out your final tax returns, and ensuring the fair distribution of your assets to your beneficiaries in accordance with your will.
Consider setting up a trust: If you have minor children, you should consider setting up a testamentary trust to look after them, says de Witt. A trust is a legal entity that holds and manages assets for beneficiaries. It can reduce future estate taxes, while ensuring your loved ones are provided for.
Inform your family about your wishes: To help avoid any confusion after your death, talk to your family. This will help them make decisions and prepare for their own financial futures. It also gives your family peace of mind that your estate will be settled swiftly.
Lastly, talk to a financial advisor: Consulting a financial advisor will help you ensure your will is comprehensive and is part of your holistic estate plan. Your advisor will also be able to advise you on important considerations to think about, depending on your circumstances.
