This article was first published in the second-quarter 2012 edition of Personal Finance magazine
There was a time when banks would draft a will for you free of charge. But times – and practices – have changed. Now, if you approach a bank to draw up a will, you can expect to pay roughly R350 to R450, although prices range between R250 and R1 000. “Free wills” are available only in some circumstances.
“Free or not, the most important factor is that you ensure you actually get a will executed, and that it covers your particular circumstances and gives effect to your wishes,” the Fiduciary Institute of South Africa (Fisa) says. Fisa represents some of the fiduciary practitioners in South Africa.
When you go along to a bank branch for a will, it is not the bank but the trust company that is part of the same group as the retail bank that does the drafting and will be the custodian of the will.
For example, if you are a client of Standard Bank and you approached your local branch for a will, the actual drafting would be done by Standard Executors and Trustees (SET).
The major banks confirm that the costs are the same, whether you make the approach through a branch or go to the trust company directly.
However, there is no cost for drafting if you apply online for a will from FNB Trust Services, Angelique Visser, the head of products for the trust company, says.
Sanlam Trust also has a free option.
“We provide a computer program to intermediaries with which they have the option to draft wills for the client at point of sale, free of charge. This program can address the needs and requirements of 70 percent of their clients,” Ann Nel, Sanlam Trust’s national manager: wills, says.
The prices charged by the main trust companies can be found in the table – link at the end of this article.
Trust companies charge extra to draft a will in which they are not nominated as the executor.
The important thing is not to seek the cheapest option – if at all possible – but to be confident that you have named as your executor a person or entity that you trust and that you believe is best able to wind up your estate quickly and efficiently.
Fisa recommends that you distinguish between will drafting and the administration of your estate.
“Each is as important as the other and each should be attended to by a professional,” Fisa says. “In practice, the will drafter may often be appointed executor, but this is not, and need not, always be the case.”
Fisa says it is not unreasonable to have to pay for the will-drafting service and, later, for the administration of your estate through the executor’s fee.
Before drafting the will, the institute suggests, discuss “the appointed executor’s ability to attend to your estate”, the cost of drafting the will and the executor’s fees.
If you do not set the level of the executor’s fees in your will, your executor will be able to claim the maximum 3.5 percent (3.99 percent including VAT) once he or she has wound up your estate.
Nel says the factors that play a role in negotiating the executor’s fees are your age, the value of your assets and the complexity of your estate.
She stresses that not only executor’s fees are negotiable; Sanlam Trust will negotiate all prices in connection with wills on merit.
In most cases, the cost of drafting a will does not depend on how complicated your estate and your wishes are.
However, SET makes a distinction between a pre-printed will (R250) and a complex will (R475) if it is named as the executor.
Roy McMurchie, the managing director of SET, says a pre-printed will from SET is a straightforward will that is flexible enough for a few different situations, including if you want to bequeath your entire estate to your surviving spouse.
Spouses can sign a joint will in terms of which they bequeath the entire estate of the first-dying person to the survivor, McMurchie says.
“A pre-printed will can also cater for a situation where all the assets must go to children, and, if they are minors, that a trust be established to hold the inheritance until they have attained majority.”
A pre-printed will would not be suitable if you wanted to make cash legacies to different people or to put in place particular conditions with regard to the creation of a trust.
“A further example would be where the person is involved in various business ventures like close corporations and companies, and the shares or interest in those entities must be held in trust for the benefit of certain beneficiaries,” McMurchie says.
Absa says it charges R342 for a “standard will” but does not specify the cost of a complex will.
Derek Mabin, the national manager: advice and fulfilment at Absa Trust, says: “A standard will may be defined as being a request by a client to have his or her will drafted in accordance with specific wishes. Guidance is given to the client in alignment with his wishes and current assets and liabilities. Possible estate duty and liquidity implications may also be addressed.”
A complex will is in many cases associated with estate planning, Mabin says.
“The complexity and high value of assets often place unnecessary tax implications (such as estate duty and capital gains) on the client. In such circumstances, we recommend that the client goes through the process of an estate plan to avoid or limit such obligations. In this process, fees are charged in accordance with the amount of work and time involved in drafting the plan and the will,” he says.
If your circumstances call for the more advanced estate planning associated with a complex will, you will be referred to deal directly with Absa Trust rather than the bank, he says.
Of the trust companies surveyed, only BoE Trust/ Nedbank make a distinction based on the value of your assets.
The prices given in the table for BoE/Nedbank are if you have assets of R500 000 or more. If your assets are worth less, you can have a will drafted by BoE and you would still pay the same price as if BoE had been nominated as the executor (for example, R300 for a single will). But you would have to select an executor other than BoE and you would keep the original will (in other words, BoE would not be the custodian).
Hussan Goga, the chairperson of the Deceased Estates, Trusts and Planning Committee of the Law Society of South Africa (LSSA), says the fee charged by an attorney to draw a will is usually calculated on a time-cost basis. The cost of a simple will would be somewhere between R450 and R750.
“The fee for drawing a complex will would be significantly higher. It all depends on the complexity of the will, and the expertise and seniority of the attorney,” Goga says.
All fees are generally negotiable with an attorney, and these include the costs of drawing a will, as well as executor’s fees, Goga says. “Many firms store wills as a free service and a courtesy to their clients.”
Every year, attorneys hold National Wills Week, where participating members draw up basic wills for members of the public free of charge.
This year, National Wills Week takes place in September. You can find out more details on the LSSA’s website at www.lssa.org.za
GET HELP FROM A PROFESSIONAL
The Fiduciary Institute of South Africa (Fisa) recommends that you use a Fisa-registered professional to draw up your will.
Fisa undertakes to ensure that its members adhere to a code of ethics, and Fisa says on its website, at www.fidsa.org.za, that it will “facilitate a complaint resolution process” if you have a complaint against a member. There is a search function on Fisa’s website to help you check whether or not the person with whom you are dealing is a member.
Fisa has set up a dedicated email address for people who may have queries relating to wills or who need a practitioner in their area. The address is [email protected]
Not many attorneys are listed as members of Fisa – probably because the institute has its origins in the Association of Trust Companies – but that does not mean a properly qualified lawyer should not draft your will.
“An attorney has the necessary knowledge and expertise to ensure that the will is drawn in accordance with the client’s instructions, and that such will has been properly executed and is valid and binding in terms of the Wills Act,” says Hussan Goga, the chairperson of the Law Society of South Africa’s Deceased Estates, Trusts and Planning Committee.
“The attorney can advise on any potential problem which may arise with regard to the will and also deal with any legal issues the executor might encounter,” he says.
Not only must a draftsman have a thorough knowledge of testamentary and fiduciary law, Goga says, but he or she must also have skill in the use of words.
By way of example, Goga asks: “When the testator says ‘I bequeath my shares to my children’, does the testator mean his listed shares, or shares in his unlisted Pty company, and, if the latter, does he also mean to include the loan account in the Pty company?”
Provincial law societies will investigate complaints about unprofessional and irresponsible conduct on the part of their members. You can find out how to complain at the Law Society of South Africa website at www.lssa.org.za
Your financial planner should take an interest in ensuring your will is shipshape, but the actual drafting will in most cases be left to a specialist in the field.
“I would always consult with a professional in their field, as the downside of a DIY will or poor advice from somebody not qualified or experienced to give input is too ghastly to comprehend,” says Alec Riddle, a Port Elizabeth-based financial planner at Consolidated Financial Planning and the Financial Planner of the Year in 2009.
“I always ask new clients to provide us with a copy of their will and more often than not insist that they have an updated will. Remember that the most brilliant of financial plans or estates can be destroyed by an ineffective will, or one that is not up to date,” Riddle says.