Xtraordinary Women Magazine August/September 2015 | Page 58

A Will...why? A Will.... do I really need one? My things will go to my spouse, my mom and dad, my siblings, they know that....don’t they? I don’t have anything to give to any one, so I kind of don’t need it...right? I have heard it all, but when it comes to making sure everything you have is in order and that all your wishes are taken care of a Will is the most important part of your financial plan. Simply put, it is a document that allows those you leave behind to know what your last wishes are. It can be as simple as one pager, stating your wishes, signed and witnessed, or it can be complex, with trusts, usufructs and codicils. This document allows your legacy to continue and your estate to be wound up. Without a will things can get very messy. A basic Will is the first step; it states who you are, who your executor needs to be and who gets all your possessions. You might be wondering what an Executor is and whether they get paid? An Executor is a person who looks after your Estate and makes sure it gets passed on to the beneficiaries of your choosing. They do all the paper work; notify the government, SARS, the beneficiaries, the banks. An Executor can charge up to 3.99% (VAT inclusive) of the asset value of your estate. However, agreements can be made at inception of the will to reduce this fee. Usually a family member and or a lawyer are the executors of an Estate. Many people use their banks or general fiduciary services. A word of caution; understand what their process is, the fees involved and how they distribute the estate. Once you have decided on your executor, you need to stipulate who the guardians of your children should be and who the trustees of the trust are. The more information you place in the Will the easier it is to follow your wishes. Be clear about who gets what in your estate. For example, your wedding ring needs to go to your eldest daughter. Giving wide or ambiguous descriptions can cause issues and delay the process. One of the pit falls in looking at your estate can be the lack of cash within your estate to pay the Executors Fees, the Trust Fees and the Conveyancing Fees. When this occurs, assets have to be sold to fund these shortfalls, which can cause undue stress on those left behind. There are companies providing a service which covers these specific shortfalls and do your actual estate calculation. Many offer reduced fees to aid the process. Another option is to have life cover which has your estate as the beneficiary, however ensuring you know how much cash to leave the Estate can be tricky and the life cover is taxable as an asset in the estate. More complex wills can include trusts and usufructs. These are structures which allow for assets to be looked after for minor children, spouses and or parents before being transfer to the new owner. A trust created on death is a Testamentary Trust and the rules of these trusts are created when the Will is drawn up. A Usufruct, allows a person to leave ownership of an asset to one person, but providing the use of this asset to another person. Only once the person who has use of the asset dies, does the original beneficiary receive the asset. Each of these structures can be very complex and have different fees and taxes associated with them. Getting specialist advice when setting these structures up is crucial. A testamentary trust is a wonderful vehicle to ensure your minor children’s needs are looked after on your passing. So what happens if you die without a Will... it means you die in Testate! This means that the government, that is the Master of the court, will assign someone to be the Executor of your Estate. This process can be very lengthy and you have no idea who the executor may be. Until an executor is assigned nothing happens. No assets get transferred, bank accounts get frozen and the process sits in limbo. The Executor then decides how the assets get divided according to the rule of law. If there are children benefiting from the estate their portion is left to the governments Guardian Fund to look after until the age of 18. It is a slow and messy process. Each step taken on the path of financial planning builds your future, but without the protection of a Will, your family and your finances are left vulnerable. Sit with your Financial Adviser to ensure your Estate is covered and has enough cash. Discuss all the structures with a specialist. Keep at least 2 copies should one get damaged. Remember your Will ensures your legacy continues the way you dreamed it would and your family are protected, giving you peace of mind. Joe Webster Email: [email protected] Cell: 084 463 2406