Three questions clients ask about making a Will
By Paul Flude
A well-drawn Will can ensure that your client's estate will be distributed quickly to their heirs on death. Here are some answers to help with questions your clients may have.
"My assets are too insignificant – only really wealthy people need a Will, right? Anyway, I already have a Will – why should I make a new one?"
These are common misconceptions. Everyone who is able to should write a Will. You don't have to be wealthy to have a Will. If you draw up a personal balance sheet, you may be surprised at exactly how much you have to dispose of. Often forgotten "hidden" assets are pension rights, insurance policies and all your electronic data, which should form part of your estate planning, but may not necessarily form part of your Estate for Will-writing purposes. If you have multiple assets and multiple heirs or you have specific items that you would like to leave to specific people (bequests) then you should make a Will.
A Will is a personal document in all senses of the word; it moves with you on the path of your life. Your Will must be tailor-made to fit your current individual and financial circumstances and wishes. If you already have a Will, you should review it regularly (at least on an annual basis), as it is surprising how quickly a Will gets out of date. Time doesn't stand still. Your financial position will almost certainly change (for the better or worse) while a change of residence, births, marriages, divorces or deaths in the family all impact on the validity of your Will. Tax Laws and other legal matters change frequently – all have a significant impact on the 'currency' and validity of your Will.
"I don't have a Will, but doesn't everything automatically go to my spouse/civil partner and my children? From your experience what are the greatest risks associated with not having a Will?"
Another misconception. Failing to draft a Will, or having a poorly-drafted Will or having a Will declared invalid on your death, will mean that you die intestate and may have the following results:
- The applicable Law usually provides a fixed and arbitrary formula for the division of your Estate which may not accord with your actual wishes – distant relatives or even the State may benefit and your spouse/civil partner may not receive the full share you want them to inherit, and could be left with a legal battle or have to share assets with your blood relatives;
- An Executor/Administrator not known to you or your family will be appointed;
- No Guardian of your choice for your minor children, which could have a huge detrimental effect on them;
- Assets such as bank accounts could be frozen for a lengthy period;
- It generally creates huge stress and complications for your family, and a financial mess to clear up (most people are too busy to devote the time to sort it out, which only exacerbates the problems); and
- The costs of winding up your Estate will soar and additional legal costs will be incurred.
"I've lived in different places and acquired assets along the way including fixed property. What about my assets in other jurisdictions – do I need more than one Will to cover these?"
You can have one "worldwide" Will to cover all jurisdictions, but it is rarely advisable. If you have significant assets in multiple jurisdictions, you should have separate Wills to cater for each jurisdiction. This is particularly so where fixed (immovable) property is concerned, as in certain jurisdictions a property transfer may only be effected by way of a valid Will. Another important point is that there are significant differences in the inheritance laws and practices in common law and civil law countries. Religious law, such as Shariah Law, may apply in some jurisdictions. Each legal system has variations as to who gets what.
The differences and implications don't end there.
The legal system can dictate how guardians are appointed for children: the appointment of Temporary Guardians, for example, should be considered in the United Arab Emirates.
When it comes to tax, preparing a separate South African Will, for example, will assist non-South African residents in separating your assets subject to Estate Duty in South Africa from those assets in your non-South African Estate (which are exempt from SA Estate Duty). It also makes the appointment of Executors easier and significantly reduces time frames and costs.
It is vital that your different Wills don't revoke or cancel each other or create an ambiguity. They should be "ring-fenced" per jurisdiction, so it is preferable to get professional advice in this regard. If you have a Will that is specifically limited to your South African, US or Australian assets for example, you will die intestate in an offshore jurisdiction such as the Isle of Man if you have assets there (with the added burden of probate costs associated with winding up an offshore Estate). Having a separate Will to cover these offshore assets will create certainty, avoid delays and a potential court application.
It can pay to have "universal" Executors and Trustees who know your background, personal and financial circumstances, so that essentially your entire Estate and all assets can be dealt with "under one roof" speedily, confidentially, seamlessly and at a reduced cost. Make sure that your chosen Executors have the legal and personal capacity to be appointed as such in all jurisdictions.
About the Author. Paul Flude is a member of the QB Partners Expert Panel. He is a practising Attorney of the High Court of South Africa, based in London as Director & Chief Liaison Officer of Flude & Associates Ltd. He has specialised in Wills, Trusts, Estate Planning, and the winding up of Deceased Estates (Probate) for almost 25 years. He acts mainly for South African clients with assets in multiple jurisdictions.
Please contact us if you have any questions or require more information about Wills, Trusts, Deceased Estates (Probate) and Estate Planning.