Last week, Aretha Franklin’s sons found themselves in court, grappling with the task of determining how their late mother’s multimillion-dollar estate should be divided.
The Queen of Soul died in 2018 without a formal will, leaving a Michigan court to decide which of the two handwritten letters found in her home constitutes her last will.
This high-profile case serves as a stark reminder that drafting and signing a will is crucial to ensure that one’s final wishes are respected and to save loved ones from a potentially lengthy and costly legal process.
According to research conducted by Sanlam, a financial services company, 45% of people without a will mistakenly believe that they do not own enough assets to warrant estate planning. However, this is a misconception.
“While most of us will not leave behind a multimillion-dollar estate, everyone has some form of an asset, and having a will in place goes a long way toward helping those who depend on you to live confidently,” explains David Thomson, senior legal adviser at Sanlam Trust.
He further emphasises that estate planning encompasses not only significant assets like cars and houses, but also bank accounts, jewellery, investments, sentimental items, and even digital assets such as photos in the cloud and cryptocurrency.
For parents, a will should also address guardianship of children and plans for pet care. Estate planning provides peace of mind, knowing that intended beneficiaries will inherit and unnecessary turmoil can be avoided during an already difficult time for loved ones.
“Regardless of the size of one’s assets, estate planning provides peace of mind and allows for a smooth transition of assets to intended beneficiaries. It is a vital step that should not be overlooked or delayed,” said Thomson.
What to consider when drafting your will:
There are several factors to consider when drawing up a will, including one’s marriage regime. Being married in Community of Property (COP) has major implications on how your estate is distributed.
When couples get married in COP, they create what is called a joint estate. This means that the instructions they set out within will deal with half of the joint estate.
It also means that half of the joint estate will belong to the surviving spouse. These are important things to consider when weighing up how to divide your estate.
Other things to keep in mind:
Make sure your instructions can be executed. For example, it is impractical to leave your car to more than one person.
Drafting a single (or joint) will helps you retain control of your legacy and ensure your instructions are carried out as you intended.
People living together in a permanent relationship should also get their wills done. Failure to do so can result in the other partner being left with absolutely nothing.
As an entrepreneur, having a will in place is a vital part of business succession planning and can help avert potential disasters, such as leaving the running of a business to minors and/or unqualified persons.
For parents of children with serious disabilities, estate planning is critical as they may never be able to work and provide for themselves.
Sanlam Trust found that more than 46% of deceased estates it administers have insufficient cash to cover all debts, taxes and estate duties.
This includes the cost to transfer a property to an heir. Insufficient liquidity can erode the inheritance of those left behind as a cash shortfall often means that assets of the estate must be sold to increase liquidity.
Sanlam Trust offers an Estate Expenses benefit which will contribute to covering the estate expenses and taxes. Alternatively, a dedicated life insurance policy can significantly contribute to ensuring sufficient cash flow.
Make sure your final wishes are respected
Setting up your will is a simple and inexpensive process, but it can be overwhelming to know where to start.
“If your needs are quite straightforward, you can create a will using Sanlam’s free online tool. This will is perfect for single persons or married couples who are leaving their respective estates to each other and people who would like to leave everything to their young children,” said Thomson.
If you have a more complex estate and intricate circumstances, it is best to consult a financial adviser who can assist with an estate plan and a will.
There are many benefits of having an up-to-date will in place:
The Wills Act dictates that everyone from the age of 16 can sign a will and there is no minimum asset base, so estate planning can begin early and evolve over your lifetime.
You can decide how your assets will be distributed, which means that you can provide for loved ones in the best way you see fit. It also means you can disinherit people who may otherwise stand to inherit.
If you have minor children (under 18 years), you can decide who will take care of them.
Having a will can ensure that your loved ones avoid lengthy and expensive legal processes, especially when dealing with a less complex estate. There will be no uncertainty about your last wishes.