By Sydney Sekese, CFP® professional and member of the Financial Planning Institute
I am adopting the phrase: “Where there’s a Will there’s a Way” to challenge readers to intentionally think about creating a will. Followers of my articles will recall that last month we touched on the topic of sanitising your finances during Spring. Now that your finances are somewhat cleansed, it may be prudent to formalise how your accumulated assets and legacy are sustained. This will provide peace of mind for various stakeholders and heirs.
For a will to be valid, you must make sure that: The will is in writing. Two people older than 14 years of age witness the making of the will (these witnesses can’t be beneficiaries of the will). You’ve initialled every page of the will and signed the last page, in the presence of the witnesses
The primary purpose of an estate plan is to help you examine your financial needs and assets in order to make sure that your heirs are provided for in the best possible way, including lifetime planning as well as disposition of property at death.
An estate plan begins with a will or living trust. A will provides your instructions and is a legal document that states to whom you want your assets to go after your death. A will is one of the key documents in attaining financial freedom. It is amazing how many people die without having made a will. This legal document provides comfort and has the following attributes and benefits:
- It allows you to appoint heirs of your choice
- It allows for the nomination of a guardian for minor children
- It enables you to make provision for a trust to be set up for the protection of the inheritance of minors
- It includes the nomination of an executor and trustee of your choice
- It is the cornerstone of your estate plan
There are a few considerations that you need to be aware of. These include the following:
- Your marriage contract could have an impact on how you draft your will
- A will is only valid if executed correctly (signed and witnessed)
- A will should be reviewed on an ongoing basis (for example the birth of a child, buying property, divorce, etc.)
- Consider drafting a separate will for your offshore assets
- Ensure that you have adequately dealt with your business interests
Anyone who is 16 years and older may make a will. You can personally make your own will or instruct someone else such as a bank or an attorney or accountant to draft it for you.
Most people understand the importance of a will, but many people overlook a very important element; the appointment of an executor. An executor is someone who you nominate to carry out the instructions of your will and help to handle your estate. Family friends are usually appointed as executors, but we fail to realise that a friend might not understand the complexities and legalities needed to manage your estate effectively.
But what if you don’t have a will?
A person who dies without leaving a will is said to die intestate and his or her estate will be distributed in accordance with the rules of intestate succession. Although the relevant legislation is intended to ensure a fair distribution of assets, it is usually a poor substitute for a will.
In his recent article, David Shapiro (a well-known stockbroker) mentions that you cannot deal with your monetary matters on part time basis. Readers are encouraged to have a will and keep it up to date. This is a responsible step to protect yourself and those you love. It is not enough to say you will “get to it” or think vaguely that you already got to it. It is essential to get to it now and know you have planned and prepared in the best possible way.