The bank offers free wills, why should I appoint a financial advisor?
When banks draft your will, they will ensure that they are appointed as your executor. If not, they will not be interested in providing you with a “free” will.
They do this to take control of your assets after your death and to earn the executor’s fee of 3,5% of the value of the assets.
Drafting your Will with a professional, will allow you to choose an independent executor, who may not opt to charge the 3.5% (4.025% with VAT!)
After your death, if the estate does not have much value, a bank may opt not take the appointment as executor, as it may not be lucrative enough. In that case the heirs will have to approach the Master of the Court to appoint someone.
Wills are often complicated, and the “standard” form may not suffice. Estates are often complicated, and trusts must be established. In such instances banks are not equipped to render a professional service.
You may be provided with a “standard” Will that costs you nothing, but your heirs will pay the price!
What happens if I pass away without a will?
If you pass away with no Will, or a Will is declared invalid, you will be deemed to have died intestate, and such laws will determine the distribution of your assets. The Master of the High Court may then appoint an executor Dative to wind up your estate.
If you are married in Community of Property, one half of the estate belongs to the spouse, and this will not form part of intestate succession.
In the case of simultaneous death or where the other parent is no longer alive, the state will have to appoint a guardian for your minor children. In the absence of a valid will, the state will need to determine the most appropriate guardian for your children, and it may not be the person you would have wished.
We can assist you in drafting your Will today and will ensure your wishes are honoured.
Are wills and estates the same thing?
Last Wills and Testaments are powerful documents. They give you the ability to distribute your estate, choose your heirs, appoint guardianship, and give your most precious belongings to chosen people. It is important to keep in mind that a last Will is a part of an Estate Plan, not an entire Estate Plan.
Get in touch for assistance.
What costs are involved when you pass away?
A common misconception is that if you do not have debt – you don’t pay anything when you pass away.
Immediate expenses become payable, such as a funeral. Your assets and bank account freezes until your estate is wound up, which causes difficulty.
Further costs in winding up an estate include:
- Executor fees (Up to 4.025% including tax on the gross value of estate assets, including gross Community of Property)
- Administrative fees
- Transfer fees of properties (spouses get an abatement)
- Trust fees if children are involved, or anyone with special needs including parents
- Capital Gains Tax
- Advertising fees
Get in touch for advice on Wills and Estates or to reduce fees
What is Estate duty, and which of my assets form part of my Estate duty?
Estate duty is tax paid on the dutiable estate of the deceased person and is charged at a rate of 20% on the first R30 million, and at 25% on anything over R30 million. The dutiable estate includes all the deceased’s assets and liabilities, less any allowable deductions. Keep in mind that estate duty is applicable to the estates of all deceased individuals who reside in South Africa at the date of their death, regardless of citizenship.
Further, it is also applicable to foreign property owned by the deceased if he was a resident of this country at the time of his death. If you do own foreign assets, it is important to be aware of the tax regime that applies to the foreign country in which you own assets and to find out whether there is a double taxation agreement with South Africa to avoid being taxed twice on death.
In terms of calculating estate duty, the first R3.5 million of the value of the estate is not subject to tax. If the deceased is the first-dying spouse, he can roll-over this abatement to the surviving spouse who will then have a R7 million estate duty abatement on her death. In addition, where the deceased bequeaths assets to his surviving spouse (including proceeds from a domestic life policy) no estate duty will be charged on the applicable assets.
Importantly, funds held in any retirement annuity, pension fund, provident fund or living annuity do not form part of the deceased estate and are therefore not included when calculating estate duty, making these vehicles attractive estate planning tools. Other deductions which are allowable in respect of estate duty calculations include the deceased’s liabilities, funeral, tombstone and death-bed expenses, administration costs, and fees where the property is transferred. Bequests made to qualifying public benefit organisations also do not attract estate duty.
While life insurance policies are often used to provide liquidity in an estate it is important to note that, where the estate is the nominated beneficiary, the proceeds of the policy will be included when calculating estate duty and executor’s fees. As such, the quantum of cover will need to be adjusted to account for this additional tax and expense when preparing one’s estate plan. While the proceeds of domestic life policies are considered deemed property in the deceased’s estate, there are several exceptions that apply.
Income, which accrues to the estate after the death of the deceased but before the distribution of the assets to the beneficiaries, is also taxable, and dealt with under section 25 of the Income Tax Act.
I’d like to bequeath property to my loved ones; will they pay transfer duty?
Section 9(1)(e)(i) of the Transfer Duty Act, 1949 exempts from transfer duty the acquisition of fixed property by virtue of a bequest. For the exemption to apply the property must have been the property of the deceased.
This means that heirs and beneficiaries are exempted from paying transfer duty on property inherited from a deceased estate, regardless of the nature of their relationship with the deceased.
The deceased estate will however be liable for conveyancing cists including the Deeds Office Fee, and the cost for the Rates and Levy Certificates.
I would like property in my name to be sold, and proceeds to go to nominated beneficiaries
Only the executor may sign an offer to purchase to a third party, with the consent of the beneficiaries.
The transfer duty would generally be paid by the Purchaser. The Estate would carry the costs of Rates and Levy Clearance Certificates and cancelling of any bonds registered over the property – if applicable.
If you need any help with Wills or Estate Planning, please contact us
