The importance of a will

One of the most important financial documents you will ever have is your will. Without a will, the following 5 problems will arise if you pass away:

The Intestate Succession Act decides who inherits – not the deceased

In essence, the government and fixed rules dictate how your estate is handled.

Complications with blended families and multiple marriages
Intestate succession has specific (and often confusing) rules for polygamous marriages and blended families with children from different relationships.

Minor children's inheritances get tied up in the Guardian's Fund
If minor children inherit under intestate succession, their portion typically goes to the Master's Guardian's Fund until they turn 18, rather than being managed flexibly through a testamentary trust.

No say over who administers the estate
Without a will, no one is nominated as executor. The Master of the High Court appoints one (often based on who has the strongest claim or applies first), which can lead to family conflict over who takes control, delays, or an executor who doesn't understand the family's circumstances or the deceased's business affairs.

Delays, extra costs, and family disputes
Intestate estates generally take longer to wind up. More paperwork is required to establish heirs (sometimes requiring affidavits, DNA tests for paternity disputes, or tracing missing relatives); there's more scope for disagreement among family members, and administrative costs are higher relative to the estate's value.

So do not delay, if you have no will or if it is outdated, please make contact with me and let's get it done this September.

Interest-linked investments and the true cost of using them

Banks and money markets often feel safe and are relatively low-volatility, but these interest-bearing savings and investments are often the most expensive mistakes people make.

Interest is seen as income (even if you do not withdraw the funds), and this can add to your tax bill or even put you into a higher tax bracket. Getting 6% interest at the bank may be closer to 4% after you account for the tax you will need to pay.

They rarely beat inflation. In the example above, you will see that if you earn 4% after tax, you are not outperforming inflation, so your buying power erodes over time (you are getting poorer in real terms).

Don’t believe me; let’s consider an example:

An R2 000/month investment into a 6% interest-bearing account vs R2 000/month into a top high-equity mixed-asset investment (growing at an average of 12%).

After 15 years, we have the following:

Interest-bearing account – R584 545 (not bad). This is without tax deductions, so this will actually be much lower.
High-equity mixed-asset investment – R1 009 152 (almost double the amount) – CGT will be the main tax deduction here, and it is only triggered if you withdraw funds.

Bank accounts and money markets might feel and sound safe, but the loss from low interest and high taxes actually makes them riskier over the long term.

Contact me if you have any questions or would like to discuss your current situation.

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Contact:

Mauritz Oberholzer

A Financial Advisor employed by Stonehouse Capital (Pty) Ltd, an authorised Financial Services Provider (FSP 50464)

Mobile: +27 82 774 1996

E-mail: mauritz.oberholzer@stonehousecapital.co.za

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