The Covid-19 pandemic is a threat to everyone, and now more than ever, it is time to get your affairs in order so that the handling of your estate is a smooth process for your next of kin.

A financial adviser at Didimata (an accredited Old Mutual Franchise Agency), Ms Lenie de Jager, answers some essential questions on who needs a will and why it is necessary.

Ms De Jager, first of all, confirmed that anyone in possession of assets, liabilities, debt and financial dependents is in need of a will. A will eliminates any uncertainty as to what your intent with your assets will be after you pass away.

“When drawing up a will, however, it is important to remember that a will cannot contradict the prescriptions within a marital contract, and pension fund benefits are paid in accordance with the discretion of the Trustees of the Fund. Anyone other than the nominated beneficiaries can claim against pension fund benefits if they can prove financial dependence,” Ms De Jager said.

If you are in possession of assets and have not drawn up a will, your estate will automatically be distributed by the state. This is commonly known as dying intestate.

“The state will investigate to determine whether you have any dependents and will then distribute your assets according to a predetermined process.”

Should you not have any beneficiaries, your estate will go to the Master’s Guardian Fund.

This not only means that your estate will be divided in a manner that you not necessarily intended, but the dissolving of your estate will also take much longer.

So what are assets and liabilities, and what happens to your debt when you die?

An asset is an item of property, meaning anything you own.

“Anyone in possession of property, business interests, investments or shares in a company, livestock or a vehicle even, needs to have a will drawn up. Liabilities are anything you are legally responsible for, such as money owed. These liabilities remain your responsibility after you die.

“Debt does not die with you! That is why liquidity that pays into your estate is essential. If you have liabilities such as debt in the form of a mortgage on a house or a loan on a car, life cover is a good form of liquidity.

“Life cover that is paid out to beneficiaries means that they receive the proceeds. If there is no other liquidity in the estate, and the beneficiaries of the life cover would like to retain the assets (such as the house your family lives in), they would have to take ownership of that debt.

“Before an estate is distributed, any taxes and debt will first have to be settled. If your estate has no liquidity, the assets will be sold to provide for the liquidity in the estate, meaning that the inheritance meant for your loved ones will be sold to pay for taxes and the debt in the estate,” Ms De Jager explained.

Having a will drawn up is not expensive either, and many institutions even do it for free if the institution is nominated as executor of the estate. Executor’s fees are then payable when the Testator or Testatrix pass away.