BACK TO TOP

Wills and estates – the importance of proper planning

11 June 2019

|

by Anchor

It is important to have a will when you die in order to distribute your assets, name an executor, specify guardians for your children (if applicable) and, in terms of business owners, to assist in ensuring a smooth transition of those assets. Having a will means peace of mind and that you decide how your assets are distributed when you die. If a person dies without a will, that person dies intestate, making proceedings far more complicated for those left behind. It also means the law then decides how your estate is to be distributed, which might not necessarily be in line with your wishes. It is therefore important to discuss drawing up a will and estate planning with the experts, which is where Anchor can assist.

In order to bequeath your assets to whoever you see fit you have to have a will. When writing your will, it is important to consider who will inherit from your estate, who the executor/s will be, whether a trust will be established (if so, then trustees have to be nominated), the estate’s total assets, and whether you want to leave anything in particular to a specific heir or several heirs.

A person’s estate includes all of his/ her assets less liabilities – i.e. everything a person possesses in their own name less their debt. Those assets accumulated, which are not in your name, e.g. in a trust, do not form part of the estate.

Upon death, a funeral home is called in to prepare the deceased and, most importantly, to obtain a death certificate from Home Affairs. The process of winding up an estate, can only start once a death certificate is issued.

The executor is named in the will as being responsible for winding up an estate and must be older than 18. A professional institution such as a bank, financial advisor (Anchor) etc. can be named the executor of a will. If a deceased has nominated an individual as the executor then, on death, that person can make use of a third-party to assist with executor duties.

Often the executor will appoint an administrator, who is a professional at winding up estates (because it’s a complicated process, this is preferable to doing it yourself), giving an administrator power of attorney to wrap up the estate. The administrator deals with the Master of the High Court (Master), who is pivotal in approving the winding up of an estate. An estate cannot be wrapped up (except in the case of very small estates), without the Master’s consent.

An estate’s assets are frozen from death until the Master issues a Letter of Executorship. Once this letter is issued, the administrator ‘gathers’ all assets, liabilities etc. and interim distributions may also be permitted by the executor.

The administrator deals with the Master (applying for the issue of Letters of Executorship, which currently takes 4 months), and draws up a liquidation and distribution (L&D) account, which is submitted to the Master. Once there are no objections, and the Master approves the L&D account, the estate is wound up and assets are distributed to the deceased’s heirs. The Master reverts to the administrator, who reports back to the executor.

Several essential documents are required to finalise an estate. These include a valid and original will, a death certificate, the deceased’s records, and a letter of executorship from the Master. The SA Revenue Service (SARS) provides a tax-clearance certificate after tax returns have been submitted and the executor lodges the aforementioned L&D account, which is drawn up by the administrator, with the Master.

An estate must pay various costs including executors’ fees (a statutory fee of 3.5% of the estate’s value is usually charged by the administrator), a final tax amount might have to be paid to SARS and estate duty is also payable. The first R3.5mn is exempt from estate duty – R3.5mn-R30mn is taxed at a rate of 20%, while R30mn-plus is taxed at 25%. If a spouse inherits, no estate duty is payable until he/ she dies and the R3.5mn rolls over to the surviving spouse.

At Anchor we can run this complicated process to its completion on your behalf. This entails being the executor, dealing with the executor/ administrator as your representative and ensuring progress is made in winding up an estate as quickly as possible. We can negotiate an administrator’s fee and we can try to reduce this cost and create a legacy file to hold all relevant information related to the deceased estate.

Anchor can assist in winding up and administering a deceased estate because we understand the people involved and the process but, most importantly, we know how money works when winding up an estate. Every person’s situation is unique, and it’s important to understand how the above applies to your individual circumstances. Contact us on 011 591 0677 or email us at [email protected] for more information.

OUR LATEST NEWS AND RESEARCH

20

Jun '19
US Fed ready to stimulate if needed
READ MORE

19

Jun '19
Anchor rand view: ECB signals a more dovish stance
READ MORE

14

Jun '19
Anchor Fixed Income Monthly: May 2019
READ MORE

INVESTING IN

YOUR NEEDS

Submit your details and we’ll give you a call back to assist and advise you on your investment.

CONTACT US

SUBSCRIBE TO OUR NEWSLETTERS

Subscribe to our newsletters to receive regular market commentary, research and updates from the Anchor team.