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No one likes to think about death. Fact. But considering how hard you work for everything you have or plan to own one day, it's nice to think that you can decide exactly who should get your holiday house/countryside cottage/share portfolio. Imagine people going through your personal belongings and handing things out willy-nilly. Even worse, imagine the administrative, tax and legal problems your nearest and dearest would have to cope with – possibly even financial losses – when they're already dealing with so much in your absence.

Instead, celebrate the choice you have. It's literally your will, on paper. If you haven't yet created a will, there's no time like the present. And with tools like Sanlam's free online will maker*, it's quick and easy too to create/draft a single or joint will.

"I don't have a will because..."

I'm not married yet. I don't have kids. I don't own a home, just a car and lots of clothes. It's too expensive. I don't trust financial advisers. Do you tick any of these boxes? Then you're part of 90% of South Africans who don't have wills, according to the Fiduciary Institute. But if you're over 16 and you own a fair amount of stuff, it's time to draw up a will.

The most important thing to remember about a will is that it's not something that will kick in and magically work when you're old.

Tips for creating a will

  1. Keep it simple and straightforward: Use an online tool or consult an expert.
  2. Be practical: That means not, for example, dividing an estate into thirds if you have a spouse and two children (unless it's cash), nor insisting that assets be sold when it's a poor market.
  3. Test the contents of your will against the cash available in your estate: More about this in our acid test (see below).

  4. Nominate a guardian: If there are minors (children under the age of 18).
  5. Protect heirs from themselves with a testamentary trust: Set up a testamentary trust, which increases flexibility and security.

  6. Create a living will: This is a document for doctors outlining how they should treat you if you are suffering from an incurable disease and reach a stage when you are no longer able to communicate your wishes to them.

Acid test: Do you have a shortfall or surplus in your estate?

Picture an estate as a living, breathing thing – always growing or diminishing, needing maintenance and constant attention. If you bear in mind that at least 30% of all estates can only be settled once some of the assets have been sold to generate funds, there is unfortunately a chance that the assets you plan to leave your family will have to be sold to cover any debts. The best way to plan is to work out whether there will be a shortfall or surplus in your estate.

The money you require is equal to your needs (all your debt) plus 5x annual income (to care for your family). If your needs exceed your provision, you will have a shortfall in your estate. If your provision exceeds your needs, you will have a surplus in your estate. To find out what your financial position will be, use this acid test:

Determine your needs

Add up all debts:

+ Last expenses (executor, funeral, etc.)
+ Mortgage

+ Hire purchase

+ Overdraft account

+ Rental contracts

+ Receiver of Revenue (SARS)

+ Loans

= Total A

Determine the income required to take care of your family


5 x current annual income
= R_____________
= Total B

A + B = total of cash requirements

Determine your provision:

Add up:

+ Insurance policies

+ Investments

+ Cash

+ Assets to be sold

+ Group scheme at work
= Total C

Shortfall in your estate (needs exceed provision):
Needs (Total A + Total B) – provision (Total C) = R_____________

Surplus in your estate (provision exceeds needs):
Provision (Total C) – needs (Total A + Total B) = R_____________

If you suspect that your will might be more complicated (for instance because there are children from a previous marriage, complex business arrangements and specific wishes, for instance), contact Sanlam on +27 21 947 5673 or email us.

*An annual fee of R57 will be charged to manage and securely store your will in a vault.

Want to bring out the WealthsmithTM in you? Call us on 0860 22 33 90 or find your closest BlueStar adviser.

 

 

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