Consider those you leave behind: Let’s talk about your will
We never want to think about it, but unfortunately the importance of a Will can’t be underestimated. Making sure that those you leave behind can wind up your estate with relative ease is a gift that only you can bestow. We take a look at some practical things you can do.
Getting started on your will
To prepare a will, begin by compiling a list of your assets and debts. Be sure to include the contents of safe deposit boxes, family heirlooms, and other assets that you wish to transfer to a particular person or entity.
If you wish to leave certain personal property to specific heirs, begin a list of those allocations for eventual inclusion in your will. In addition, you can identify the recipients of particular assets in a separate document called a letter of instruction, which is kept with the will.
If both you and your spouse don’t have wills, you might be tempted to prepare a single document that covers you both. Resist the temptation. Estate planners almost universally advise against joint wills. Separate wills make more sense, even if your will and that of your spouse may be mirror images of each other. A joint will should not be confused with a mutual will. A mutual will is usually executed by a married or committed couple. After one party dies, the remaining party is bound by the terms of the mutual will.
Mutual wills can be used to ensure that property passes to the deceased’s children rather than to a new spouse. Because of the technicality of contract law, a mutual will should be established with the help of a legal professional.
Common mistakes made when setting up a will
A Will that is not clearly worded may cause confusion and eventually require a court ruling, which can be very traumatic for those you leave behind. For instance, a will that simply states, “I bequeath all my money to my daughter” can easily be challenged. What exactly is money? Is it notes and coins found in the testator’s wallet on the day he died, or does it include the fixed deposit at the bank and other financial investments?
A few words – an accurate description of exactly what you mean, such as ‘I bequeath the balance of my cheque account at the date of my death to my daughter Jane’ – can have a major effect on the implementation of your will.
Distributing your assets equally among heirs
It is not a good idea to distribute everything equally if you have more than one heir – except if your entire estate consists of cash. For instance, transferring ownership of a house to your spouse and all your children may cause practical problems, as they all have a right to live in the house. Furthermore, by bequeathing a property to a specific exempts them from transfer duty which may provide a substantial saving. Transferring ownership of a car to four people is not practical either. One of the heirs will have to buy the car if he or she wants to keep it, and what if all of them want to buy the car?
Involving beneficiaries in the drafting of your will
If any of your heirs signed as a witness or helped draft your will, they could be disqualified from receiving their inheritance if the other heirs were to challenge the will. Although a disqualified heir is entitled to approach the court to resolve this, it can be a lengthy and expensive process.
Not executing your will properly
It is very important that you initial every page and where changes are made, that any change be initialled. A will found with inconsistencies will be referred for a court ruling as to its validity.
Not using an attorney to assist with your will
The only way to be completely sure that your will is valid and ticks all the boxes, is to consult an attorney who specialises in estates. An attorney will be able to advise you on any pitfalls and ensure that your will is signed correctly.
Not choosing the correct executor
Executors and the choosing of them are a contentious issue. If you do decide to go the route of a family member, choose carefully! This responsibility should fall to someone who is able to step into your shoes and who has good administration skills.
A great article on choosing an executor was written by Eric Jordaan, which you can read here: What to consider when choosing an executor – Moneyweb
On the practical side
Make a file
You do not want your loved ones to start scrambling for information, not knowing what you own and who you owe money to. Keep a copy of your will in a file or folder along with other documents that will make it easier for the people you leave behind.
This could include:
- passwords, e-mail addresses and bank account numbers;
- a list of your accounts and debit orders as all these need to be wrapped up, contracts need to be terminated and debts must be calculated;
- a list of your investments;
- a list of your assets;
- contact details of the executor dealing with your will; and
- a letter of instruction, which explains to your heirs why you bequeathed certain items to certain people or how you wish them to use their inheritance. (Note: this isn’t a binding legal document, but it explains why you put something in your will.)
Make sure that you store all documents in a safe place like a bank or a secure safe at your house.