Advice for homeowners on how to plan for the future, and the importance of having a living Will and testament.
Planning for the future is important at any age. As a homeowner with a bond, planning for the future is imperative. Craig Hutchison, CEO of Engel & Völkers Southern Africa advises, “When you own a property, a 'Will' becomes even more important as you would not want your loved ones to be left without a roof over their heads. Having life insurance attached to your bond, will ensure that the remaining bond is settled with the bank and that your 'heirs' do not still need to cope with the financial burden on top of the emotional stresses”.
Basic terms that you need to know:
Craig defines the following terminology: When someone passes away they are referred to as the 'deceased'. The 'deceased normally has a 'Will' in place. Those who benefit from this 'Will' are known as the heirs, and the heirs receive an 'inheritance'. The money, property and belongings they left to their heirs is called an 'estate', and the 'estate' is administered by someone called the 'executor'.
If you do not have a Will, here’s what will happen to your estate:
Your estate will be distributed according to Intestate Succession Act, 1987. Allen West, Property Consultant at MacRobert Attorneys gives an idea of how this means your estate will be handled in different situations:
- Only spouse survives: Entire estate goes to spouse
- Only descendants survive: Estate is divided between descendants
- Spouse & descendants survive: The spouse gets R2 500 000 or a child's share and the balance is divided equally between the spouse and descendants
- Both parents survive: Total share is divided equally between both parents
- One parent: Total Estate goes to the parent
- One parent & descendants: Half the Estate goes to the parent; balance is divided equally amongst descendants
- No spouse; No descendants; No parents; but descendants through mother & descendants through father: Estate divided into two parts: half to descendants through mother; half to descendants through father
- No spouse; No descendants; No parents; No descendants through mother or father: Full Proceeds of the Estate has to be paid into the Guardians Fund in the event of no descendants whatsoever.
How to get a Will
An attorney, bank or financial advisor will be able to help you draw up a Will. It will need to be printed and signed by impartial witnesses in front of the testator, in order for it to be valid upon your death. Every page needs to be signed by all parties and dated to ensure that the most recent version of the Will is used.
Nominating an executor
Every Will needs an executor, this person will be in charge of taking control of your assets and liabilities upon your death. They will be responsible for distributing your estate as per your Will.
Importance of updating your Will
Your Will needs to be revised and kept up to date every time your living situation changes. For example, in the event of a divorce, when children have been born, once you’ve entered into a marriage and so on. A good idea is to revise your Will once a year to make sure that every property which has been obtained or sold can be added or taken out of your Will.
What happens once you pass away?
Once a person has passed away a medical certificate needs to be acquired, and the death should be registered with the Department of Home Affairs. The Will should then be located, and the executor contacted, so that they can report the estate to the Master and administer it according to the Will.
Your property can either be sold, or occupied by your heirs, once you pass away. However, this process can take up to 1 year depending on the complexity of the estate. In terms of tax, SARS states that a South African resident acquiring assets by means of inheritance does not have to include these assets in their gross income. Therefore, your loved ones will not be taxed on any property or other assets left to them. Capital Gains Tax (CGT) is also not payable by the receiver of the inheritance. Estate duty and CGT, where applicable, are usually payable by the estate. If it is a foreign estate, it will be subject to the taxes of its country of origin. In South Africa, immovable property in SA falls within SA Tax Laws.
In order to make the process easier on your loved ones, it is advisable to consult the professionals to make sure that your Will is set up correctly.