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Wills and Trusts: I have been avoiding them, do I need them?


At the outset, if you are under 16 years old, you can’t have a will. So if you are under 16 and you are reading this, you are excused. For everyone else, we’ve all heard countless times how important it is to have your affairs in order but no one really tells us why. In our opinion, the most important reason for having an up to date will and/or trust, next to tax purposes, is for household cash flow and liquidity. A deceased estate can take years to wind up i.e. pay out. It is even more important if you are the bread winner in your household and stuffing your mattress with cash is probably not the best idea, mattresses don't often give good interest rates, even its its a Sealy. The legal implication of death is that your estate is frozen, which will include bank accounts, credit cards and the like. However and most importantly, bills are not frozen. Bills still become due, which includes bonds, medical aid premiums, car payments, school fees and so on. The practical problem if your affairs are not in order is that the money is inaccessible to surviving family members, which will severely hamper day to day living. The first examples that come to mind are lapsing insurance policies, repossession, school fees and foreclosure. A trust can help in the sense that money can be transferred to a trust for the benefit of, for example, your children, who will only have access to the these funds as and when necessary at the discretion of the trustees. Money can be ear marked for education and medical needs. Therefore your death will not effect the operation of the trust whatsoever and your children can still access funds as and when needed for predetermined purposes. It is also important to remember that if you leave money to your children in your will and your children are minors, the money automatically becomes vested in the Guardians Fund, which is a government administered fund and which holds on to the money until such child reaches the age of majority. A will can make provision that money be put into a trust until such child reaches majority or another nominated age, at which point the money will be paid out. Simply from the above examples, it becomes clear why, at the very least, an up to date will is essential. It is also important to remember that while banks and other financial institutions offer you wills for free, the trade off here is that they insist that they are appointed as your executor, which means that they take a huge fee later on, anywhere between 3,5 - 6% of your estate! As an executor is the person who takes control of your assets and deals with the remaining family members, we would strongly recommend that this person is someone that you trust, i.e. a close friend or family member. RMB Wands Attorneys is able to assist with your estate planning needs. We also work closely with tax practitioners should you have need to make your estate and financial affairs as tax efficient as possible.


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