Stian de Witt, CFP®, Executive Head of Financial Planning at NMG Benefits
‘Wills are only for married people.’ ‘You only need a will when you earn a certain amount’. ‘My family knows what my wishes are’. ‘I’m too young to have a will’. These are just some of the popular conceptions about wills. Problem, is, they’re all myths – and they’re causing unnecessary distress when people die without a valid will in place.
According to recent research, it’s estimated that more than a third of South Africans who die every year don’t have a will. If you die without a will, your estate will be wound up by a state-appointed executor. This is a long and drawn-out process, and the assets from your estate will not be in line with what you wanted. This can also cause disputes among family members.
“We often think of wills and estate planning as something for old people. But the reality is that unexpected death, disease or injury can occur at any time. To leave a legacy for your family, you must plan and make deliberate decisions to ensure your loved ones are provided for after your death, and that your assets are distributed the way you want them to,” says Stian de Witt, CFP®, executive head of financial planning at employee benefits firm NMG Benefits.
What is a will?
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 children, and even if you want to be cremated or buried.
There are five things every South African should know about a will, says de Witt.
It’s easy to draw up
Drawing up a will doesn’t have to be a complicated or expensive process. You simply have to 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.
You must update it regularly
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 trust to look after them, says de Witt. A trust is a legal entity that holds and manages assets for beneficiaries. It can minimise your estate tax, 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.
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.