If you listen to the local, area specific radio stations, I’m sure you would have heard the name Capital Legacy being bandied about over the past month as they have been on a marketing drive to increase their footprint in the industry, despite them already being the largest provider of Wills and executorship services in the industry, with an average of over 5,000 new Wills being drafted per year.
At Resolute Wealth Management I am happy to say that we have been ahead of the curve in this aspect and we have been making use of Capital Legacy’s services for over the past 3 years, with myself drafting the Wills personally, and working very closely with Capital Legacy to act as the Executor of the estate where necessary.
Due to the increased excitement and queries we have received in this regard, I thought I would answer some of the most frequently asked questions I receive regarding Wills, Living Wills, as well as Power of Attorney.
How do I know if my will is valid?
Several strict criteria must be met for your will to be valid. Firstly, the person writing the will must be over the age of 16, and the will must be in writing (typed or handwritten). Each page of the will, including the last page, must be signed and dated by the testator/testatrix and their signature must be made in the presence of two witnesses, who must be over the age of 14, must not be in line to inherit from the estate, and it is also not recommended they are a member of the testator/testatrix’s family. Although the witnesses are required to only sign the Will on the last page, I do recommend that the Will is signed on each page by both the testator/testatrix and the witnesses. It is also important to ensure that your will is written in clear and unambiguous language, is dated and that you do not misuse any legal terms.
Must I include a testamentary trust in my Will?
No, it is not essential to make provision for a testamentary trust in your Will, although there are certain circumstances where a testamentary trust can be an effective estate planning tool. For instance, if a testator intends bequeathing assets to his minor children, a testamentary trust is an excellent vehicle to house and protect the assets until the children are old enough to manage their affairs. A testamentary trust can also be used to house assets bequeathed to a spouse or special needs child. If a minor child or a person with special needs does inherit, and there is no provision in the Will for a testamentary trust, it is important to note that the inheritance will by law have to be held by the Government’s Guardian Fund until the minor is 18 years of age, which is not recommended as the person’s acting on behalf of the minor may not have the minor’s best interests in mind.
Please remember that a testamentary trust which is created for a minor or special needs person at a person’s death, will be treated for tax as if it is held in an individual’s capacity, as opposed to as a trust, and is therefore far more tax efficient.
Does freedom of testation mean I can choose who to leave my estate to?
Freedom of testation means that you can leave your assets to whoever you like, subject to a few limitations. Firstly, your estate has a common law obligation to support any minor and/or financially dependent children. In addition, your surviving spouse may have a claim against your estate for maintenance in terms of the Maintenance of Surviving Spouse Act. In terms of our law, partners who are married create a legal bond and a duty of support between them. If your surviving spouse is unable to maintain herself financially, she can claim against your estate for the provision of maintenance. In terms of the Pension Funds Act, you can nominate a beneficiary to your retirement fund although the final decision rests with the trustees of the fund. Your marital regime will also determine how you can leave your assets to your heirs in your will. People married in community of property have a joint estate in which they have undivided joint ownership of all the assets. You can therefore only determine what must happen to your 50% ownership of assets in your will. Your spouse will still retain their 50% ownership in the asset. If you are married with the accrual system, your spouse has a claim against your estate for 50% of the difference between the accruals (where their estate is the smaller of the two).
How do I choose an executor?
Whoever you appoint as executor will essentially step into your shoes and ensure that your estate is wound up correctly. In recent times there has been a move away from appointing the large, retail banks as executors in favour of skilled fiduciary experts who provide the function as a professional service on a more personal basis, and from a more specialized point of view, as is the case with Capital Legacy. Winding up an estate is complex and requires legal, tax, financial and business acumen, as well as the ability to collaborate with beneficiaries, creditors, pension funds, family members, but more importantly, with government departments, such as the Master of the High Court and SARS . Beware of nominating multiple executors as the logistics of three or more people dealing with the afore mentioned institutions, can be an impossible task. Before appointing a family member, give careful consideration to their financial skills and know-how, while also taking into consideration the fact that they may be mourning and emotionally incapable of winding up your estate as they are going through a very difficult time already. Ideally, seek to appoint someone who is an expert in the field and who is capable of impartiality and objectivity.
With us having worked closely with Capital Legacy on a number of estates, we are extremely confident in their ability. with the average time to wind up an estate being just 7 months, this is far superior to the market average of well over a year. Capital Legacy do also offer our clients a 25% discount on the executor fees they do charge, as well as a sliding scale fee structure, with their fee reducing to as low as 1.00% on executable assets, dependent on the assets within the estate, and the complexity of the estate, which is at the discretion of the Capital Legacy board of directors.
Do all of my assets attract an executor fee?
The good news is no, not all of your assets will attract an Executor fee. As long as beneficiaries are nominated on pre and post retirement products, they will not be included in the estate, and therefore there will be no estate duty or Executor fee charged. With regards to endowments and life assurance, as long as a beneficiary is again nominated, there will be no Executor fee charged, but estate duty may be charged, dependent on who the beneficiary is.
Where should I document my funeral and/or burial wishes?
It is advisable not to include your funeral and burial wishes in your Will. In many instances, the Will is only read after the funeral or burial service which could result in your wishes being unintentionally overlooked. Further, there is always the risk that your heirs have problems locating your Will and therefore will not have insight into your wishes. Instead, consider documenting your funeral and burial wishes in a separate document, such as a Letter of wishes, which I am able to draw up for you along with the Will, and notify your spouse, partner or loved one, and ask them to keep the document safe.
Is a Living Will legally binding?
A Living will is effectively a declaration of your non-consent to artificial life support if you are unable to communicate your wishes when dying, bearing in mind that Living wills are not yet recognised in South African statutory law, and are therefore treated as more of a “do not resuscitate order”. However, in terms of Section 12 of our Constitution, ‘everyone has the right to bodily and psychological integrity’, which includes the right to have control over one’s own body, and the law as such recognises a patient’s right to accept or decline treatment.
Please make sure that as is the case with your funeral and/or burial wishes, please do not keep your Living Will with your Will, as it may be too late when it is found. Rather ensure again that your spouse, partner or loved one is aware of its existence and what your wishes are, in order for them to action it if the time comes.
Can a doctor ignore a Living Will?
The purpose of a Living Will is to guide your family and doctors if you are in a medical state from which you cannot recover and are unable to make decisions. However, if your family or medical practitioners believe there is even the remotest chance of recovery, they can choose to ignore your Living Will, and rightfully so. However, if there is no chance of recovery and a medical practitioner chooses to ignore your living Will, it is best practice for him to refer you into the care of another doctor.
Can I obtain power of attorney over my aged parent’s or my spouse?
The short answer is yes if your parent or spouse is physically disabled and unable to manage their affairs. If they are mentally incapacitated, your parent or spouse will not be able to sign a Power of Attorney. This is because a general power of attorney is only valid as long as the principal is competent to act for themself and has contractual capacity. If your parent or spouse becomes incapable of acting on their own behalf, such as in the case of dementia or Alzheimer’s disease, any Power of attorney that was in place will automatically lapse and you will lose all authority, and a court order will now have to be obtained for them to act on behalf of the person who now has a diminished mental capacity.
How do I manage the affairs of my mentally incapacitated parent?
Previously the only option available in cases of mental incapacity was the appointment by the high court of a curator bonis to manage the estate, although this is a particularly expensive and cumbersome process. A more affordable and slightly less cumbersome option is to apply to the Master of the High Court for an administrator to be appointed to the estate in terms of the Mental Health Care Act in instances where a person is suffering from a mental illness or profound intellectual disability.
There are some exciting new products which are being launched by Capital Legacy over the next couple of months, which we will provide more information on as and when the information becomes available.
Should you need assistance in drafting a new Will, Living Will, and/or Letter of wishes, please feel free to contact me and I will be happy to assist you in this regard.