Discovery Financial Adviser Onalenna Dipisi

The story is as predictable as it is tragic. Whether in a small, rural village just to the north of Vryburg or in the posh suburbs of Killarney, the plot stays the same. A loved one passes away and, once the initial shock and pain of the loss subsides, what’s left is the unfortunate sight of family members fighting over the deceased’s estate or struggling to deal with bills. Although these disputes are usually handled by the family until an agreement is found, they can also spill over into long-lasting feuds, court cases and even into the pages of the tabloids. These situations always leave observers and even exasperated family members asking of the departed: “Why didn’t you just leave behind a will?”

As highlighted by the recent case of a slain national soccer player, estate planning - which includes drawing up a will - is one of the most neglected parts of financial planning in South Africa. The reasons for this are numerous, but the implication of not considering what happens to your estate when you die is always the same: it is the ones left behind who suffer.

The importance of estate planning, which is “the act of preparing for the transfer of a person’s wealth and assets after his or her death”, cannot be underestimated. Falling within this complex and necessary aspect of a healthy, financial plan is the dreaded last will and testament.   

What is a will?

Discovery Financial Adviser Onalenna Dipisi CFP® provides a comprehensive answer, stating, “A will is a very important legal document which specifies a client’s ‘wishes’ upon their demise. It’s prepared by the client during his/her life. In other words, there cannot be effective financial planning, without the existence of a valid will. A will concludes the financial planning process. The testator (the person the will belongs to) will give instructions as to what should happen to his assets upon his passing and as a result it needs to be updated every time the client’s financial position changes.”

Whether in a small, rural village just to the north of Vryburg or in the posh suburbs of Killarney, the plot stays the same. A loved one passes away and, once the initial shock and pain of the loss subsides, what’s left is the unfortunate sight of family members fighting over the deceased’s estate or struggling to deal with bills.

According to the Wills Act of 1953, a person aged 16 years or older, who is of sound mind and capable of “appreciating the nature and effect” of their actions can draw up a will. Surely a will should be a relatively simple process that everyone can do if a teenager can draw a legally valid one up if all legal conditions are met. Then why is it so glaringly absent in our communities? It is obviously an important requirement, so is it a lack of knowledge that prevents people from doing so? Or perhaps a fear of “tempting” fate?

Why didn’t you just leave behind a Will?

“I don’t think that people aren’t aware of wills, my clients certainly are. However, it’s still considered taboo to talk about and draw up a will.”

Many of Onalenna’s clients seem to understand the importance of planning for after death, as the prevalence of life policies shows. Yet few people draw up a will. This double standard is caused by a few issues: 

  •  There are misperceptions that their assets are not valuable enough
  • The immediate perceived value of a life plan over a will
  • The fear of causing rifts in the family
  • Many people delay drawing up a will as they feel that there’s enough time and that they are still too young to die.

 There plenty more reasons as it is such a complex issue. This complexity means that it is advisable to approach a professional to assist in drawing up a will that it is valid and legally sound. The best option is to approach a personal financial advisor, an attorney or a bank (banks usually have an executors and trustees division which handles this).

What to consider? 

The two most important factors are cost and what to consider before seeing a professional. The typical price of drawing up a will is around R500 to R1 500 but Onalenna adds, “Most attorneys and banks have realised the importance of offering a free will to their clients – provided they are nominated executors of the estate – with the exception of charging a custody fee once a year for as long as the will is kept with them.”

Onalenna also has a handy checklist that you should ask your financial adviser or attorney when drawing up your will:

  1. Will the will cover both my domestic and foreign assets? Will there be no conflict in terms of the laws of all countries involved?
  2. Who will the executors of my will be? Remember a client can nominate their own executors to  their estate, however if those executors have no experience in administering an estate, then the high court will advise them to seek an attorney to assist. Selecting the right executor is ideal as it enables the client to negotiate fees if at all possible.
  3. How much are the executor fees? How can we make provisions through financial planning?
  4. Can I nominate anyone as a guardian to my children? Make sure that the nominated guardian is left with enough funds to take care of the children, for example by taking out life cover. Some people will refuse take on that responsibility of fending for the client’s children if enough financial provision has not been made.
  5. Can my spouse and I have a joint will?
  6. What happens if I die before my spouse or they die before me as well as upon simultaneous death?
  7. Since my assets will be frozen immediately upon death, how will I ensure my financial dependants are able to maintain their lifestyle until a time that the estate has been wound up (administered)?
  8. How do I ensure all debts are paid so that my dependents are not left destitute?
  9. How do I ensure my children are taken care off without worrying that the guardians will squander all assets?

Once comfortable with the answers provided for these questions, it is easier to draw up a will.

What happens when you don’t have a will?

Even if it doesn’t end in acrimony and the Sunday tabloids, passing away without a will can be a headache for your dependents. Your estate will be distributed under the Intestate Succession Act of 1987. A hierarchical model of distribution is applied, which could see your preferred beneficiaries excluded from your estate, while some family members you would have wished not to benefit become beneficiaries. The Master of the High Court will be in charge of this will and appoint an executor of the estate. This is also why it is important to regularly update your will when any significant changes happen in your life, whether a marriage or divorce, birth or death of a child, adoption or retirement.  

As Onalenna reflects, “Having a will does not only state what your wishes are regarding the distribution of your assets when you have passed away, but also, in a case where there are children or persons that cannot manage their own finances due to ill health – a will ensures that their financial affairs are managed correctly by a testamentary trust or a nominated guardian. Having a will also enables you to choose the executors and trustees (for the testamentary trust) and possibly negotiate executor fees while you still have the chance to do so.”

It is time to flip the script on wills and change the tale from a Homeric tragedy to one of security, peace of mind and astute financial planning. Wills may seem scary, but the alternative may be worse for your loved ones.