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Personal investing

National Wills Week: Time to review your will

National Wills Week, which takes place between 16 and 20 September, is the perfect opportunity to review your will, or get a will drafted for free.

You need a will to make sure your estate is distributed according to your wishes. Without a will, your assets will be divided amongst your family members using the rules of intestate succession, which limit inheritance to family members.

Many investors fail to update their will once they have one in place, but having an updated will is a key part of having your financial affairs in order. A will should be reviewed periodically to make sure it reflects your current financial situation and chosen beneficiaries.

Follow these three steps to get your will in order:

Step 1: Ensure your will is valid

The first step is to ensure that your will follows basic formalities. It must be signed by you and at least two competent witnesses (who are at least 14 years old). A witness should not be a beneficiary or the executor of your estate.

Ideally, your will should be drafted alongside your financial plan.

Step 2: Re-evaluate your plan

If your life has changed drastically since you last updated your will, either through marriage or divorce, or you have received or lost assets, it is a good idea to reflect how this impacts your revisions.

You may also want to ask yourself if you have adequately catered for your children. It is important for your will to carefully outline guardianship for your minor children and how you want finances to be managed until they are adults. Children under the age of 18 will need a guardian to sign any documents pertaining to their assets. You may wish to consider using a trust to administer the assets.

Meanwhile, careful estate planning is essential. When estate planning is done right it can reduce estate duty and ensure liquidity in your estate. Estate duty is a tax on the value of your estate (which includes property, investments and cash both within SA and abroad) after you die. These costs can be very high, but a good independent financial adviser can help you manage this.

Depending on the complexity of your estate, final administration can be a lengthy process, in some cases taking several years. During this period your loved ones will have a number of immediate expenses that may still need to be taken care of, such as funeral expenses, any rentals or bond repayments, utilities and other expenses.

Ensuring that you alleviate this financial burden from your loved ones is important and should form part of your estate plan. You could consider a product such as an endowment or tax-free investment. It is relatively quick and straightforward to process these benefits, so it is worthwhile appointing those who would need immediate financial support as beneficiaries. Doing this will facilitate direct payment to these beneficiaries and will see them through until the retirement fund death benefits are paid, and your estate has been finalised, which can take some time.

Step 3: Update your nominees

When it comes to your investments, retirement products fall outside your estate, so it is important to keep your nominees up to date on any retirement funds that you have.

Update the nominees listed in your retirement fund documents at the same time as updating your will, so that the claim process is efficient, and your dependants are looked after, in the event of your death.

And what about if you don’t already have a will?

During National Wills Week you can have a basic will drafted for you free of charge by attorneys participating in the project. You can find attorneys by visiting the Law Society of South Africa.

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