Wills - Crest Trust Services

By: Crest Trust  11-11-2011
Keywords: Estate Planning

Background

A Will is a written document in which a person can determine how his/her assets are to be distributed after his/her death and to communicate last instructions to various people and institutions.

There cannot be effective succession or estate planning if a valid Will is not in place.

A Will should ideally be comprehensive, yet simple. References in a Will to assets and other matters should be clear and unambiguous.

Every person of the age of 16 years or more, may make a Will, provided they are capable of understanding the nature and effect of their act.

A Will should be regularly reviewed to ensure that it always reflects one's current circumstances.

Why a Will is needed:

  • To avoid the application of the laws pertaining intestate succession.
  • To allow the testator/testatrix to choose his/her heirs.
  • To prescribe the conditions upon which an asset is to be inherited.
  • To appoint Executors and Trustees who are responsible for the smooth and sufficient transfer and administration of assets on the death of the testator/testatrix.
  • To apply safeguards to protect an heir's inheritance.
  • To avoid lengthy delays in the administration of an estate and the transfer of assets.

Key Aspects of a Will:

There are many pitfalls that can be avoided if they are clearly identified and addressed in a well-prepared Will. Some of these potential pitfalls include:

  • Marital status - if you are unmarried, or married out of community of property, you are the sole owner of your assets and a single Will can be drawn up whereby your personal assets can be bequeathed. If you are married in community of property, you and your spouse are joint owners of the communal estate and you may effectively only bequeath your share in the joint estate.
  • Burial requests - this is expressed as a wish in your Will and should be discussed beforehand with your next-of-kin.
  • Substitution - should a beneficiary predecease you, or die simultaneously with you, who should benefit in his/her stead?
  • Awards to minor beneficiaries - in the case of movables, provide for a hand-over to their guardians until they attain their majority. In the case of cash awards, provide for a testamentary trust.
  • Age restrictions - a beneficiary may only receive his/her inheritance upon attaining majority (currently 18 years of age). Testators often stagger distribution, for example 50% at age 21 years and the balance at age 25 years.
  • Guardianship - where children of the testator/testatrix are minors, the nomination of guardians must be carefully considered and provision should be made for substitution guardians in the case where a nominee cannot accept the appointment.
  • Foreign estates- care must be taken to avoid conflict should you have onshore and offshore assets. Separate Wills dealing with onshore and offshore assets should be drawn up as probate formalities differ from country to country.
  • Maintenance commitments - these could lead to substantial claims against your estate if not adequately provided for. The creation of a dedicated testamentary trust can be most effective in such instances.
  • Business interests - provision should be made by way of a buy and sell agreement for the disposal of your interests as a going concern. Determine reasonable funding for your partner(s) so they can pay the purchase consideration to your estate and beneficiaries with relative ease.
  • Equalisation - make use of the principle of a bequest price if an asset bequeathed to one beneficiary is worth more than the share of another beneficiary.
  • Inter Vivos (Family) Trust - the existence of such a trust and any loan owing to you must be taken into account. Be aware of the Capital Gains Tax implications.
  • Record of Unwritten Agreements - use your Will to record the terms of any verbal agreements, e.g. a loan to a child which should be accounted for.

Objective:

  • To comply with the relevant legislation.
  • To ensure that the ultimate distribution of your estate will be equitable, practical and timeous.
  • To rule out any potential conflict of interest.
  • To make use of effective estate planning techniques to minimise estate duties where possible.

Keywords: Estate Planning

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