When thinking about their financial planning, most people tend to focus on ensuring they have enough financial reserves to retire and not run out of money before running out of life. This makes absolute sense, so we find that much time and effort is spent around this. There is, however, an area that, as planners, we often find people neglect, which can often be just as important or even more important. This is the area of wills and trusts.
South African Statistics
Experience has shown us that most people’s wills were last updated when they last got married or divorced. Indeed, statistics obtained in 2022 from the Master of the High Court of South Africa show that less than 15% of South Africans have a Will when they die. Everyone wants their family members and loved ones to be cared for when they are no longer alive. Sadly, their best intentions are often lost in translation.
Many South Africans have trusts, and most of them have been neglected and left unable to fulfil the original purpose they were set up for. Laws have changed over the years. Where it might have been “cool” to be a trustee in the past, it has now become extremely onerous and risky.
One example is the latest change to the Trust Property Control Act, which became effective 1 April 2023. In this, trustees are obliged to record AND report information regarding “beneficial owners” as defined in the 2022 amendment. The penalties for noncompliance are not trivial, being a maximum fine of R10 million, imprisonment for up to 5 years, or both. There is more detail to this, but I think you get the message.
Structures In Top Shape
Working, saving, and investing hard our whole lives doesn’t make sense if the structures that hold our wealth are not kept in top shape. To this end, we have always outsourced the drafting of wills and trusts to specialists. We have recently started working with firms that only specialise in this legal field.
If I needed eye surgery, would I go to a GP or a podiatrist? No, I would go to an Ophthalmologist. He wouldn’t do my knee replacement, though! In the same way, we believe in using legal experts who specialise in fiduciary matters to deal with wills and trusts. Your varsity mate who does conveyancing, or your accountant, with respect to both those Professionals, is not necessarily properly qualified to look after your affairs, especially if you are not there to explain what you actually envisioned on your passing.
It’s not that expensive. In fact, it’s much cheaper in the long run to work with someone whose sole focus is your and your family’s legal affairs. Not sure where to turn? Give us a shout.
Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287