Why have a Will and a Family Trust?

This month, I thought I would devote my newsletter to Wills and trusts. The beginning of the year is a good time to consider protecting your loved ones.

A client called to say that his mom had just had a stroke, and could I assist him with a power of attorney in his favour so that he could manage her affairs.

I had to give him the sad news that even if she had signed the power of attorney before she became ill, in South Africa we don’t have the concept of an enduring power of attorney. The moment that his mom became incapable of managing her own affairs, he had to apply to court – at huge expense – for the appointment of a curator to act on his mom’s behalf.

having a will and a family trust

She could have avoided that expense (and the risk that the curator would not act in her best interests or even strip her estate of assets) by the formation of a living trust. I explain the advantages of the living trust in this article.

Wills and Trusts are both estate planning documents used to pass assets on to beneficiaries at death.  However, there are distinct advantages to using a Trust over a Will.  Fully funded Living Trusts can cost significantly less than Will-planning/ Estate winding-up procedures.

This should be your mantra:

I want to protect and care for myself and my family while I am alive, and to leave what I have- and what is needed- to whom I want, the way I want, and, in addition, if I can, save legal fees, administrative and court costs, and taxes to the maximum extent legally possible.

The Master’s office (where you report a deceased’s estate) has always been in a chaotic state. Covid has made this much worse.

Remember, a Will represents the cog of the ‘estate winding up’ wheel. If you die intestate (without a will), your intended beneficiaries are unlikely to forgive you! Ever.

If you die with a valid will, your appointed executor is legally bound to fulfil every one of the Master’s requirements before it can be signed off. Each requirement is like a spoke in the wheel, it will not turn until every spoke is in place.

First, the Master must approve the nominated executor in each Will that crosses his desk and issue Letters of Executorship. The executor then must assemble multiple documents, take inventories, pay bills (SARS is at the top of the list) etcetera so that he or she can prepare the Liquidation and Distribution account for submission to the Master. Which will still have to be approved and signed off in a swamped working environment.

If you were hoping for an expedited outcome, we suggest you read Leo Tolstoy’s ‘War and Peace’ while you wait. You may even have time to commit it to memory.

Why are we telling you this?

Because, if you have a will and your assets are in a Discretionary Living Trust, it simplifies the process significantly and dispenses with the indeterminate period spent waiting anxiously for estate funds to be released. When the trust owns your assets there is nothing in your estate to wind up, so it’s business as usual.

Bonus: No estate duty or executor’s fees payable.

A trust includes asset protection (from third parties, like creditors), succession planning and disability protection. If mental or physical incapacitation becomes a reality for the Founder, how much more reassuring to have your trustees caring for you and your private affairs rather than a court-appointed curator.

Put your worries behind you and use a Trust to overcome the arduous administrative hurdles associated with winding up an estate. Put your trust in the hands of a specialist and apply the more pragmatic solution so that your family is not financially compromised by your passing.

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