By Nicolene Schoeman-Louw, Managing Director of Schoeman Law Inc.
As a firm of attorneys, we are known for advocating the importance of having a legally valid will drafted, regardless of your age or financial standing. In my career, I have often come across hugely successful entrepreneurs who didn’t have a will in place, or if they did it was seriously outdated.
The problem is that these entrepreneurs often think that:
- “I don’t have enough yet to justify having a will” or
- “I will do it – just not today – tomorrow” or
- “I have one, it was drafted 10 years ago, and is fine” or
- “I have one with a financial institution – it is fine” or
- “I only have the business and its registered so I don’t need a will”
Actually – I am here to tell you, I have seen way too often … that it is actually not fine AT ALL!
Let me explain why:
- Having a will is just as much about making the administration around someone’s passing as easy as possible, than it is about distributing wealth. So, it is not just about what you have or don’t have, and therefore wealth is not the only determining factor in having one or not.
- Postponing is a really bad idea –because statistically where you delay often enough you end up not doing anything at all.
- Outdated wills and inappropriately drafted wills are just as good as having none at all.
I say this because life is evolving at such a pace – you cannot expect decade old solutions to fit your current needs. Practically speaking, this could mean your business structure has changed, your children are adults or that you are no longer with the partner you provided for.
In regard to wills drafted by anyone who is not an attorney, attorneys are trained to draft wills, and a will is the most important document that you will ever draft – for many reasons but most notably because it is the only document which you will not be able to explain because you are not going to be there to do so. In conclusion of my comments, I haveone question to ask – would you let your accountant fix your car’s broken radiator? Over the years, I have heard this argument before. This, I think comes from the perception that we plan our business affairs well enough not to threaten our personal assets. In other words, we separate our business risks from our personal risks. The problem is that little consideration is given to personal risks that threaten your business. So, what about your spouse inheriting your shares? Are your partners okay with that? Or how about the business being unable to buy your shares out or to manage without you?
The moral of the story is that your legacy is not just about your business, it’s about that which is outside of it too, and both strategies need to align with each other.
So, what does life after your death look like with and without a will – i.e. Intestate versus testate succession
The basic difference between testate and intestate succession lies in having a legally valid will or not. A legally valid will is vital to allow the heirs of your choice to inherit from you, prevent fraud and to ensure that one’s wishes are carried out after death.
These wishes include:
- inheritance, including the future of your business
- funeral arrangements
- settlement of debts
- supporting a philanthropic cause of your choosing
- nominating an executor
- estate planning which ensures that the administration process runs smoothly and only the necessary taxes are paid
Not having a legally valid will has the following implications:
- inheritance is regulated by the country’s legal system (Intestate Succession Act 81 of 1987)
- your business being sold for under its value, run by someone who knows nothing about business and as a result suffering major losses
- the estate may be heavily taxed and the process of resolution could substantially delay the administration of the estate
- the philanthropic causes we were passionate about during our lives are not supported
- often the surviving family members are unable to provide the necessary financial security and therefore, in the absence of a nominated executor, the Master of the High Court will appoint someone they deem fit. This can seriously delay the administration process
Conclusion
Legacy planning is about securing the footprint you not only leave in business, but in the hearts of loved ones too. A mind-shift needs to be made and entrepreneurs need to think about what they are leaving behind as a full and comprehensive concept without any form of segmentation between business and personal.
We assist entrepreneurs to construct a legacy that would encapsulate their life contribution best. Contact us at SchoemanLaw for more information today!
Nicolene Schoeman–Louw is an admitted attorney of the High Court of South Africa, as well as being a Conveyancer, Notary Public and Mediator. She is the Managing Director of SchoemanLaw Inc. Attorneys, Conveyancers and Notaries Public in Cape Town. Visit www.schoemanlaw.co.za for more information or email enquiries@schoemanlaw.co.za.
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