A simple will is essential.
However, it is equally important to ensure that such a will is practically executable. This was recently illustrated when a farmer sought advice regarding his will. At first glance, the will appeared simple enough, but upon closer inspection, it became clear that it was not practically workable. Consider the background.
His assets consisted of two farms, livestock, a beach house, and cash investments of approximately one million rand. He bequeathed the farms to each of his two sons, the beach house to a trust, and approximately half a million rand to his daughters. The residue of the estate was left to his wife, to whom he had been married for 51 years.
His surprise was considerable when a proper estate analysis revealed that his wife would inherit nothing, as there would be a cash shortfall in the estate. This shortfall was mainly caused by capital gains tax on estate assets, estate duty, and the costs associated with administering and winding up the estate.
In this case, approximately one million rand would have had to be found merely to finalise the estate. The consequences could have been disastrous. The surviving spouse, who was intended to be the primary heir, would have inherited nothing and might have had to rely on others to maintain her standard of living. New legislation would, however, allow her to lodge a maintenance claim against the estate.
To inherit is a privilege, not a right. One must therefore ensure that one’s spouse will be financially secure upon one’s death. This should always be a priority.
The key point to emphasise is that one must be certain of what the net residue of the estate will be. Another factor that can create complications is an accrual claim. These claims apply to marriages concluded out of community of property with the accrual system after 1984, as this became the most common marital regime thereafter.
People often bequeath their assets without taking the accrual claim into account. It is therefore essential to determine the potential accrual claim before finalising a will.
It is also important to remember that an accrual claim works both ways and may arise upon the death of either spouse.
Normally, calculations are done on the assumption that the husband will pass away first, but it is equally important to calculate the potential position should the wife pass away first.
In many cases, it is therefore worthwhile to consider life insurance on the life of the wife as well. These are complex matters, and the vast majority of people require the assistance of a professional adviser who can perform the necessary calculations and ensure that the estate plan is practically workable.