By Marzanne Jordaan, Financial Adviser, and Nico Reinach, Wealth Manager at Consult by Momentum
Most people make a will for a simple reason: they want the people they care about to know what should happen when they die. The problem is that life tends to get in the way of our carefully made plans, with relationships changing and families becoming more complicated as we age. What was once a straightforward document may look very different years down the line, leaving loved ones to figure out what we really wanted.
The recent legal dispute involving former Public Protector Thuli Madonsela and the estate of her late partner shows just how difficult things can become when what one person believed had been promised does not match what’s on paper. For unmarried couples or blended families in particular, assumptions about who will inherit may not always match the legal position.
With National Wills Week taking place from 14 to 18 September, now is a good time to check whether your will and the rest of your estate plan still reflect what you want, rather than leaving your family to untangle things later.
Your family circumstances matter
South African law changed recently to give greater recognition to permanent life partners. An unmarried partner may have inheritance or maintenance rights if the couple had reciprocal duties of support, but unlike a married spouse, they may still need to prove the nature of the relationship after their partner dies.
If you have built a life with someone without marrying, think about what that could mean if one of you dies. Would your partner be able to stay in your shared home, for example, or could their right to it be disputed? If you’re both relying on conversations or promises rather than anything written down, there’s a risk your wishes won’t be carried out.
One way to avoid that is to ask a lawyer to draw up a cohabitation, domestic partnership or life partnership agreement. This can provide greater clarity around who owns what, your financial responsibilities towards one another and what you have agreed should happen if one of you dies.
Your will is only part of the picture
Your will and any agreement with your partner are only part of what can determine where your money goes when you die. Other arrangements can play an important role too – such as beneficiary nominations on life insurance policies, retirement fund nominations, trusts, or arrangements relating to a business – so it’s important to understand what those are and whether they reflect what you want.
Life insurance, for example, usually pays directly to the nominated beneficiary, while a retirement fund is handled differently because its trustees must consider your dependents and decide how the benefit should be distributed under the law. This is why an old beneficiary nomination can still matter even if you have since updated your will. Trusts and business agreements can also affect what happens to certain assets, so they need to be considered as part of the same overall plan.
There is another part of the picture that is easy to overlook: whether your estate has sufficient liquidity to meet the costs that arise when you die. Executor's fees, taxes and other estate administration costs can all affect what is ultimately available to beneficiaries. Estate duty may also need to be considered, although certain deductions can apply – including, where the requirements are met, for property left to a surviving spouse.
This is why estate planning should look beyond simply drafting a will. A financial adviser can conduct a comprehensive estate analysis that considers your assets, liabilities, beneficiary nominations, potential estate costs and liquidity requirements, while an appropriately qualified legal professional can ensure that your will and other legal arrangements accurately reflect your intentions. Looking at these elements together can help identify gaps before they become problems for the people left behind.
Don’t wait for a crisis to make changes
Once you know what needs updating, deal with it while you have plenty of time to decide what you want.
Making major changes to a will when you are elderly or seriously ill can create complications, particularly if those changes benefit one person at the expense of another. Family members who disagree with the outcome may later question whether you understood what you were signing or were placed under pressure. If changes do need to be made at this stage, using an independent lawyer and suitable witnesses, and keeping a clear record of why important decisions were made, can help show that you understood the changes and made them freely.
National Wills Week is a useful reminder to deal with these questions before they become urgent. If it has been a while since you looked at your will, read it again and think about what has changed in your life since you signed it. If you are unsure whether your arrangements still do what you intend, speak to a lawyer or financial adviser about what needs to change.
You cannot prevent every disagreement after you die, but you can make your wishes clear while you are still here to explain them, rather than leaving the people you care about to piece them together later.
