The end of the world as we know it
JOHANNESBURG – The world is facing unimagined and profound challenges, and we are affected both individually and as a nation. At such a time, I was deeply concerned that this subject matter might be considered insensitive and boorish. Is this really an appropriate time to write about preparing for death?
However, there is no better time to consider the importance of personal scenario planning, of having a considered strategy in place for when catastrophe strikes, and of having chosen a trusted and able advisor to guide your family through times of immense change, than a time such as this. We should be having this conversation now.
Plan and be prepared
A final, invaluable gift you can give to your family in the turmoil of their bereavement is being organised. In addition to leaving a legacy, you need a single, simple strategy by means of which to pass on those bequests and transfer ownership of all your assets. To do this, you need a clear picture of what you own, the manner of this ownership and how (and to whom) these assets will be transferred. If you do not know this information, no one else can.
Although there may be other elements involved in more complex situations, such as local and offshore structures, having an up-to-date and executable Will is the cornerstone of a good estate plan. A Will is a necessity for even the simplest estate. But a Will is not the end of the story.
You also need to implement it
As important as seeking professional, qualified assistance when designing your plan may be, you also need qualified assistance to implement it effectively. What point is there in having a wonderful strategy if there is no-one to effect it properly?
There are differing views regarding the ideal executor. In short, there are four options from which to choose:
- Nominate only a professional,
- Nominate only your spouse,
- Nominate another family member such as a child, or
- Nominate a professional together with your spouse or another family member to act as co-executors.
There is a notion that you should not nominate a professional executor in your Will to ensure that your surviving spouse or child will have the flexibility to “shop around” for discounted executors’ fees – the Master of the High Court will require the appointment of a professional agent by means of a special power of attorney in instances where only a lay-person has been nominated. You should be wary of this approach, as it may be a case of “penny wise, pound foolish”.
You are delegating an important decision regarding your personal affairs to those who are less informed, and thus less qualified, than you on the subject. Furthermore, people are rarely in a position to negotiate and strategise optimally when bereaved.
Although fees are important, this should not be the only consideration when choosing a professional executor or administrator. What is more important is the competence of the person you choose to wind up your estate. This executor should have the insight and necessary experience to effectively execute your carefully devised plan. They should be objective, decisive and privy to your thinking and planning rather than vulnerable and overwhelmed by your loss, as your spouse and children are likely to be.
The best solution
Appointing a trusted advisor to implement your plan is a decision best taken by you and your partner. When you make your decision it is worthwhile considering the benefits of using a single, in-house service provider who deals with everything holistically – if not a cradle-to-grave service, then as near as possible.
A professional offers a guarantee of continuity, irrespective of age and health, and also promises impartiality and fairness when dealing with your heirs – particularly in situations where there are sore points or rivalries. My late father had a saying: “Where there’s a Will, there’s a fight”. Unfortunately, he is often proved right. My personal experience is that sorrow does not miraculously mend family rifts and disputes, it magnifies them. We are all imperfect human beings.
I used to believe that the best option of whom to nominate as executor was the combination of a family member working together with a professional. In theory, this offers the best of both worlds: a qualified professional to guide your family and a family member’s involvement in decision-making.
Realistically, however, your family member need not be formally nominated as a co-executor in order to be involved in the process. A competent executor will be consulting and communicating with the family along the way, regardless of whether a family member is acting as co-executor. In fact, it could be counter-productive in certain instances since having more than one executor can complicate matters and slow down the administration of the estate.
This is in large part due to various compliance issues and also purely practical issues such as arranging meetings and getting original signed documents.
The complexities of this crucial role
The role of executor is an onerous one, which should not be taken lightly. In certain situations it may cause stress and inconvenience – and even have unforeseen financial implications for a family member or friend, particularly when it comes to sorting out tax compliance issues. If your executor is inattentive in his or her duty to establish your final tax obligations, then he or she will be held personally liable.
Also remember that, depending on your age and life stage at the time of your death, your tax affairs may not be limited to simple income tax issues but could also encompass more complex VAT, capital gains tax or estate duty considerations.
In dealing with the South African Revenue Service (SARS), executors are obliged to go to the SARS offices personally to carry out certain tasks such as changing your tax status to deceased and providing details of the estate bank account which must be opened after your death.
Although a SARS special power of attorney can assist with these processes, all executors are still required to provide their personal FICA compliance documents (in terms of the Financial Intelligence Centre Act of 2001) and so on. Obtaining current FICA compliance documents for everyone involved may in itself cause delays.
An additional complication arises if children live abroad. It is not advisable to nominate an executor living outside South Africa. Not only is it impractical, but it may result in unnecessary costs to your estate such as courier costs and the cost of a bond of security (an insurance policy for the proper winding up of the estate which insurers are often loathe to issue to lay people and which the Master normally requires before authorising the appointment of a non-resident executor).
While these technical complexities are best handled by a professional, what cannot be abrogated to a third party are the important – and often difficult – conversations we need to have with our loved ones around the so-called softer issues.
These are often the hardest issues. They include your wishes regarding organ donation, your quality of life concerns (such as being kept on life support or receiving only palliative care), details of your funeral arrangements and practical steps for your family to move forward after your passing.
If such conversations do not come naturally in your family, there are many resources available as guidance. Death is part of life and we need to become accustomed to talking about it openly to better equip our families, both practically and psychologically, when the inevitable happens. Right now, we are confronted with the fragility of our time on this planet as news of the COVID-19 pandemic dominates our senses and our lives. A certainty we have in the midst of the maelstrom are the honest discussions and plans we’ve put in place around our deaths. Being mindful of who and how many people you nominate as executor in your Will is just one step, but it is crucial to putting your family in the best position possible when the time comes.
Hilary Dudley is managing director at Citadel Fiduciary.