Warwick has selected Appleton to provide specialist fiduciary services to its clients. This month, Appleton Managing Director, Lauren Hean, outlines some of the top tips provided by the Fiduciary Institute of South Africa when drafting a will.
Are you entitled to bequeath certain assets?
FISA members often encounter estate matters flowing from a Will where ownership of assets and liabilities has been overlooked.
Significant assets often form part of a business or trust and while the person using the asset such as a car or house refers to these assets as their own, in fact they belong to the business or trust. A FISA member was recently involved
with two such matters, which it administered on behalf of the appointed executor. In the first instance,
the house had been registered in a trust, but the family lived in it as if it was as their own. In the second example a motor vehicle was used by the deceased which was registered in the name of a business.
Without getting into the technical detail around how the wills need to be worded, the wills in the
above examples simply bequeathed “my house and my car to X and Y”. In these particular sets of
circumstances, the fiduciary practitioner could not give effect to the bequests in the wills.
So, when you have your will drafted or reviewed, remember to discuss the wider issues with the will drafter to ensure straightforward issues like the above don’t arise.
Do you have enough liquidity in your estate?
Is there enough liquidity (cash/cash assets) in your estate to settle any claims or liabilities you may have on your death? The funds can be part of your investments or if necessary, can be raised through insurance polices payable on your life.
Not planning for sufficient liquidity can lead to delays in heirs sourcing financing or even the need to sell an asset to meet the debt.
If you are the sole owner or involved with others, for example shareholders or partners in a private company or partnership, the implications can cause complexity in will drafting/estate planning and need careful attention.
For example, your executor may need to sell a share in a business to a business partner under an existing shareholder agreement on the death of a partner. In this instance there may be a need for buy/sell insurance or key man cover to be taken out. These often essential contracts provide liquidity to allow the deceased’s share in the business to be bought out.
These are complex documents and should ideally be put in place by specialist assurance practitioners to prevent issues like additional estate duty being levied, simply because the policies are not structured correctly.