A will is often treated as a once-off document – something to be signed, stored and forgotten until life forces the issue. But, in reality, your will should be reviewed regularly to ensure that it continues to reflect your family circumstances, financial position and estate planning intentions. A will that was appropriate five or ten years ago may no longer achieve what you need it to, and an outdated will can create confusion, delay, unnecessary costs and conflict for those left behind.
Personal circumstances change over time – often faster than we appreciate – and any significant life event should prompt a review of your will. Marriage, divorce, remarriage, the birth or adoption of a child, the arrival of grandchildren, the death of a beneficiary, or becoming financially responsible for another person can all affect how your estate should be structured. In our experience, a will that does not keep pace with these changes may result in assets devolving in a way that no longer reflects your wishes.
Divorce is a particularly important event that should trigger a review of one’s will. In terms of Section 2B of the Wills Act, if you die within three months of your divorce or annulment and your will was signed before the divorce, your former spouse will generally be treated as having predeceased you, unless it is clear from the will that you intended otherwise. However, if you die more than three months after the divorce without updating your will, your former spouse may still inherit if they remain named as a beneficiary. Divorce also affects more than inheritance in that your former spouse may still be nominated as executor, trustee, guardian, beneficiary of a life policy or beneficiary of a living annuity, meaning that a full review of your estate plan is essential.
Where you have minor children, your will should nominate a guardian to care for them if you are no longer around, particularly where both parents die simultaneously or where one parent is absent – and this nomination should be revisited regularly. The person you chose when your children were very young may no longer be the most appropriate choice. Relationships change, people emigrate, family dynamics shift and those originally nominated may no longer be physically, emotionally or financially able to take on the role. If you nominated grandparents, it is important to consider their current age, health and practical ability to raise children. Your will should also make provision for alternate guardians should your first choice be unable or unwilling to act.
It is equally important to consider how any inheritance for minor children will be managed. In the absence of appropriate trust provisions, funds inherited by a minor may be paid to the Guardian’s Fund, which may not offer the flexibility or investment control you would want for your children. A testamentary trust, created in terms of your will, allows you to appoint trustees to manage the inheritance, fund education and maintenance, and determine when your children should receive control of the capital. As age 18 is seldom an appropriate age to receive a substantial inheritance outright, this is an area that requires careful thought.
Your choice of trustees should also be reviewed. Trustees are responsible for managing and investing trust assets, making distributions and ensuring that your children’s interests are protected. Family members who were once suitable may no longer be available, sufficiently independent or financially experienced. Ideally, your trustees should bring a combination of personal knowledge, sound judgement, administrative ability and independence. In many instances, it is useful to appoint at least one independent trustee with experience in managing trust assets.
Your executor nomination is another important part of the review process. The executor is responsible for reporting your estate, gathering details of your assets and liabilities, dealing with the Master’s Office, paying creditors, settling taxes, preparing the liquidation and distribution account, and distributing your estate to your heirs. It is a technical and time-consuming role. If you nominated a family member years ago, consider whether they are still the right person for the job. They may have aged, emigrated, passed away or become inappropriate because of changed family dynamics. If you appointed a professional firm, bank or trust company, check that the entity still exists and that you are comfortable with its fee structure and service model.
Beneficiary changes are another reason to review your will. For instance, if a beneficiary has died, your will would need to be updated to indicate who inherits in their place. Many wills contain a per stirpes, or by representation, clause which provides that if a beneficiary dies before you, that beneficiary’s share passes to their descendants. While this may be exactly what you want, it may not be appropriate in every case, particularly in blended families or where relationships have changed. Your will should make it clear what happens if a beneficiary predeceases you, dies at the same time as you, or is unable to inherit.
If you have made special bequests in your will, be sure to review these regularly. A fixed rand amount left to a particular person or organisation may no longer be meaningful in the context of your estate, or it may place pressure on estate liquidity. Similarly, if you have left a specific asset to someone, such as a property, vehicle, artwork or investment, but have since sold or replaced that asset, the bequest may fail unless your will makes appropriate provision. Charitable bequests should also be checked to ensure that the organisation still exists and is correctly identified.
It is also important to remember that not all assets are distributed in terms of your will. Retirement fund death benefits are dealt with in terms of Section 37C of the Pension Funds Act and are allocated by the fund trustees after identifying your dependants and nominees. As such, while your beneficiary nomination is important, it is not binding on the trustees. Living annuities, life policies and certain investment products may also have beneficiary nominations that operate outside the will, and these nominations should be reviewed together with your will to ensure that your overall estate plan is aligned.
Offshore assets can add another layer of complexity. Direct offshore assets, such as immovable property, foreign shares or foreign bank accounts, may require jurisdiction-specific estate planning advice and, in some cases, a separate offshore will. Rand-denominated offshore investments, on the other hand, may not create the same requirement. Importantly, where more than one will is used, each document must be carefully drafted so that one does not unintentionally revoke the other.
Keep in mind that a technically sound will can still fail practically if there is not enough liquidity in the estate. Your executor may need cash to settle debts, executor’s fees, taxes, conveyancing costs, bond cancellation costs, maintenance obligations and estate duty – and if your estate is asset-rich but cash-poor, assets may need to be sold to cover these costs, which may not be what you intended. As such, liquidity planning should form part of every will review.
Finally, check that your original signed will can be found. The Master’s Office requires the original document when your estate is reported, and a copy can create complications. Your will should be properly signed, witnessed by two competent witnesses, and stored somewhere safe but accessible. Further, note that beneficiaries and their spouses should not sign as witnesses, as this can create unnecessary problems.
In our view, your will should be reviewed every few years and immediately after any major life event. A clear, current and well-drafted will gives your loved ones direction when they need it most, reduces the potential for conflict and ensures that your estate is distributed in accordance with your wishes.
Have a fantastic day.
Sue
