I was sitting in church on Sunday and listening to Dominee Jannie Ferreira’s message about a parent that left his three sons 17 camels. According to his will the oldest son must receive one half, the second one third, and the third one ninth. They were reasonably concerned as to how to divide up the estate without slaughtering or selling any of the camels. This was, to me, a typical example of what we come across every day in wills. It is also much more complicated today as compared to the situation in biblical times.
A Will is simply stated an expression of the wishes of a person as to what should happen to their assets on their death. A typical example is that of a married couple with two children that have a house, two cars, furniture, and investments and in all probability a bond on the house, loans on the cars and an overdraft facility at their bank. When one of the couple passes away and they are buried, the next step is to settle their estate.
The executor of the estate must register the estate with the Master of the Supreme Court and once the executor’s appointment letter is received an administrative process is set in motion. The Estate account is opened, all cash and policies are paid in and all the liabilities (bond, loans, overdraft, etc.), whether communal or individual to both spouses, and claims from creditors are settled. In addition, executors’ fees, Masters fees, advertising costs, valuation costs, transfer costs, accounting fees, possible estate duties, outstanding income tax etc is paid. If there are sufficient cash assets in the form of investments, bank deposits and policies there is no problem.
Should this not be the case, the assets will need to be sold (and in many instances this is through an auction) to cover the payments required.
Another evil, and please excuse me for calling it that, is usufruct. It often happens that, for example, a son inherits his father’s farm, but his mother has a usufruct on the dwelling on the farm and she receives an income from the son for as long as she lives. The father here has not taken into account that his son may also marry, and his wife may not be comfortable in the same house as her mother-in-law. He has also not considered that there may be financially difficult years and it may be difficult for his son to continue providing his mother an income during those times. The mother may ultimately decide to move off the farm so as not to place too much financial pressure on her son and grandchildren, thus putting herself in a position where she suffers consequently.
It is important to diversify your investments to cover all asset classes to ensure that you always cater for unforeseen changes in life circumstances and liquidity requirements. Cash is the most easily divisible asset, and a life policy is only necessary where there is insufficient cash, or where you would like your available cash to be used for a different purpose on your death.
It is unfortunately the case that an estate with sufficient cash is the easiest to wind up, and one which results in the fewest problems among beneficiaries. This is where structures play an important role, in other words Trusts, Buy and Sell Agreements, Companies, Closed Corporations, Property Investment Structures, etc.
A Will is thus not just a letter, but rather a well thought through Financial Planning Process that should be reviewed at least annually.