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Speaker 1: The Money Show, Personal Finance, Well Warren ingram Outh. Today

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Speaker 1: Sharon Hammond is joining us instead a senior legal advisor

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Speaker 1: at momentum. But let me first just set the scene.

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Speaker 1: So imagine that you draw up will you get it?

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Speaker 1: Will you get it from a certain place? And off

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Speaker 1: you go, and unfortunately you pass away. And then this

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Speaker 1: is what happens at that moment, when everyone's around waiting

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Speaker 1: for the will to be read.

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Speaker 2: All my assets, both liquid and otherwise, I leave in

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Speaker 2: their entirety to Marta Cabrera. My entire ownership of Blood

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Speaker 2: like Wine Publishing, I leave in its entirety to Marta Cabrera,

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Speaker 2: the copywriter, its catalog. Likewise, I leave in its entirety

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Speaker 2: to Marta Cabrera.

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Speaker 3: No that's not that's no, that can't be.

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Speaker 4: Can I see that?

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Speaker 5: Please don't right, Please just keep legal it's right.

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Speaker 1: Can you imagine? Can you imagine if you're wondering? Is

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Speaker 1: from the movie Knives Out? But can you imagine if

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Speaker 1: that's what happens with your will? Well, Sharon Hammond is

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Speaker 1: one of those people to make sure that it doesn't. Sharon,

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Speaker 1: good evening, and thanks so much for joining us on

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Speaker 1: Personal Finance tonight.

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Speaker 5: Good evening, Steven, It's good to be here.

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Speaker 1: Okay. So we're talking about why you need to actually

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Speaker 1: make sure your will is sorted out. And I know

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Speaker 1: that you can get wills online, you can buy them,

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Speaker 1: you can fill them in and it's kind of done.

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Speaker 1: But there are many issues that happen when you do this,

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Speaker 1: and one of the things is a will which is

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Speaker 1: valid but is not executable. What does that mean? Why

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Speaker 1: would a will not be executable?

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Speaker 5: Yeah, I think a lot of people think they've drafted

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Speaker 5: a will, or even if they do a homemade will

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Speaker 5: and they've signed it and they've got the witnesses to

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Speaker 5: co sign with them, that everything is sorted But the

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Speaker 5: difference between having a valid will, which means that you

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Speaker 5: fulfill the requirements of the will's act, is quite different

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Speaker 5: to having an executable will, which is where the executor

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Speaker 5: can actually give effect to your wishes. So similarly to

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Speaker 5: your example, you are dishing out your assets, you're saying,

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Speaker 5: my house goes to this child, my investment goes to

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Speaker 5: that child. The vehicles go yeah, and everybody is happy

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Speaker 5: because they're getting something for the executor to then come

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Speaker 5: in and say the executor is the person that's got

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Speaker 5: the job to actually deal with this estate, and he says, well,

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Speaker 5: it's all great and lovely, but first of all, have

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Speaker 5: to pay me to do my job. Secondly, receiver of

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Speaker 5: revenue standing in line because there's something like your state

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Speaker 5: duty that might be payable, or these expenses because we

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Speaker 5: have to pay the transfer costs to transfer the property

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Speaker 5: to you, and there's debts that must be settled. So

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Speaker 5: all of a sudden, the thing is, we've got all

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Speaker 5: these assets, we've each got it, claim to it, but

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Speaker 5: we can't have it because we're going to have to

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Speaker 5: sell it to actually pay all these expenses. Where if

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Speaker 5: you made sufficient provision by doing a proper state plan,

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Speaker 5: and you could determine okay, I've got a lot of

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Speaker 5: clients or acid rich, but they don't have a lot

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Speaker 5: of cash, they can say, let's make provision for it,

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Speaker 5: either by way of life insurance or by way of

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Speaker 5: earmarking a specific asset that can be sold to generate

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Speaker 5: this cash to then give effect to all the other

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Speaker 5: wishes that are basically put in my will, so that

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Speaker 5: the executor can then sort the holy state out without

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Speaker 5: having to dispose of those assets.

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Speaker 1: Okay, I mean There's another issue, which is what's called

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Speaker 1: and I always find the spelling the pronunciation of this tricky.

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Speaker 1: It's the Interstate Succession So interstate, if I remember, is

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Speaker 1: what happens if someone dies without a will.

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Speaker 5: Yes, So if you die without a will or a

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Speaker 5: valid will, then you will fall under the Interstate Succession Act.

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Speaker 5: So it doesn't mean that the government takes all your money,

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Speaker 5: because some people believe that that does not happen. But

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Speaker 5: the Interstate Succession Act is very clear and how assets

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Speaker 5: are distributed. So the big risk is that what you

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Speaker 5: might have intended to happen will not happen because of

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Speaker 5: the Interstate Succession Act. So, if you've got a spouse

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Speaker 5: and children, the Act determines that a spouse will get

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Speaker 5: a child share plus one and the kids will get

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Speaker 5: the rest. Where most often the spouse ship be or

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Speaker 5: is the only ap because they obviously often have to

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Speaker 5: stall after the children. So to leave it to the

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Speaker 5: Interstate Succession Act is really risky because it will not

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Speaker 5: necessarily pan out the way you want it to.

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Speaker 1: What does a child share plus one mean?

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Speaker 5: So if you've got three children, they will divide the

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Speaker 5: estate between that and the spouse gets basically one share

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Speaker 5: plus another one, and there's a minimum which you will get,

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Speaker 5: which is two hundred and fifty thousand or the child

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Speaker 5: shap one, whichever is the greater.

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Speaker 1: Okay, I mean it's an interesting way to work out

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Speaker 1: a formula, So I mean that would be spelled out

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Speaker 1: quite kelly. That's what happens. If you die without a will.

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Speaker 1: Does it also cost? Does it also take longer? I

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Speaker 1: mean one of the problems that people have. If someone

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Speaker 1: passes away, the bank is formally told they immediately freeze

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Speaker 1: all the accounts. I can understand why they do that,

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Speaker 1: and then it can take a long time to actually

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Speaker 1: get the money out. If you die interstate without a will,

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Speaker 1: does it take longer?

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Speaker 5: It tends to because all of a sudden somebody has

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Speaker 5: to take control of the process, and they either have

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Speaker 5: to go to the Master's office to get themselves appointed

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Speaker 5: as an executive, because somebody must still administer the state,

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Speaker 5: whether it's in accordance with the will or whether it's

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Speaker 5: in accordance with the Interstate Succession Act. Someone must still

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Speaker 5: take control of that. So you will have to go

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Speaker 5: to the Master's office and say that this is state

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Speaker 5: is nice to be lodged, and then they will determine

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Speaker 5: who the executor is. If you don't want to nominate yourself,

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Speaker 5: because often family members would want to do that, the

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Speaker 5: master can insist that you appoint an agent to support you,

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Speaker 5: because they tend to favor people that have a legal

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Speaker 5: background or an accounting or some sort of experience in

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Speaker 5: this field to assist the family to sort out the administration.

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Speaker 5: So even just that process to find the right person

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Speaker 5: or to get yourself appointed will take a while. And

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Speaker 5: then obviously that the airs might not be happy, so

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Speaker 5: there might be some disputestick go on. And also obviously

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Speaker 5: keeping in mind even though you've got the interstate succession

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Speaker 5: at the creditors and the receiver revenue generally stands in line. First.

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Speaker 1: Sure we're taking your calls tonight O double one double

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Speaker 1: A three seven two two one four four six O

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Speaker 1: five six seven in voice notes on those seven two seven,

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Speaker 1: O two one seven O two we're speaking to Sharon Hammond,

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Speaker 1: a senior legal advisor at momentum about your will, about

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Speaker 1: why you need to make sure that everything is done properly.

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Speaker 1: I suppose the reason, Sharon, and tell me if I

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Speaker 1: get this right, the law does that. And the problem

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Speaker 1: is is that sometimes people become estranged from a spouse,

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Speaker 1: but they're still legally a spouse. Sometimes even you become

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Speaker 1: a strained from your children and in fact the people

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Speaker 1: you love most of the people you want to get something.

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Speaker 1: It could be someone completely different, could be your next

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Speaker 1: door neighbor or the person who's helped you through something,

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Speaker 1: and yet that's not taken into consideration unless you have

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Speaker 1: a proper will.

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Speaker 5: Indeed, if you are married by in terms of the

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Speaker 5: Marriage Act, or even in terms of a religious tenet

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Speaker 5: or a customary marriage, or in a permanent, long term relationship,

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Speaker 5: and the person can prove it, then they will be

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Speaker 5: seen as a spouse. So even for the Interstates Succession Act,

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Speaker 5: they can have a claim. So if you do not

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Speaker 5: want to include somebody in your distribution of your assets

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Speaker 5: upon your death, then a will is definitely the place

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Speaker 5: to start. Just keeping in mind, if you are legally

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Speaker 5: married and you do have a spouse, and even some

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Speaker 5: of your other forms of marriages, even if you disown

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Speaker 5: your spouse, there is something like a Maintenance of Surviving

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Speaker 5: Spouses Act that you must still have to contend with

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Speaker 5: because inherently the rule is, if you wanted to marry

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Speaker 5: somebody and you didn't go through the trouble of getting

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Speaker 5: divorced or having a formal separation, you might still be

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Speaker 5: held liable to maintain them in some form of fashion.

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Speaker 5: But there's also once again a process that you have

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Speaker 5: to go through. It's not just a given.

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Speaker 1: Sure, all right when you pass away, and I mean

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Speaker 1: somehow obviously SARS was going to get a look in

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Speaker 1: on this conversation. There is still taxes the two certainties

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Speaker 1: in life.

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Speaker 5: Yes, indeed there is obviously when you die, you as

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Speaker 5: a natural person taxpayer, your tax yiar really ends the

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Speaker 5: day of death, soirst of all have the tax liability

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Speaker 5: for the year whilst you are still alive until the

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Speaker 5: day that you die, and then on that same day

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Speaker 5: a new tax payer is born, which is referred to

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Speaker 5: as your deceased state, and any income and interests or

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Speaker 5: anything that's earned by that estate whilst it's being round

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Speaker 5: up will still be subject to normal income tax or

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Speaker 5: capital gains tax in addition to just the normal taxes

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Speaker 5: when you die. For capital gains tax purposes, it is

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Speaker 5: seen as if you have disposed of all your assets.

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Speaker 5: So to make sense of it, you can really see

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Speaker 5: that the living person is disposing of their assets in

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Speaker 5: favor of their estate, so there's a deem disposal for

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Speaker 5: capital gains tax purposes, so upon death, capital gains tax

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Speaker 5: is automatically triggered. There are certain exemptions or exclusions that apply.

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Speaker 5: Most common is that if all the assets go to

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Speaker 5: a spouse, you don't pay that capital gains tax or

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Speaker 5: your primary residence exclusion will still continue to apply. So

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Speaker 5: all the normal exclusions that you have during your lifetime

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Speaker 5: will apply. The only other difference is that during your lifetime,

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Speaker 5: if you dispose of an asset, you get up to

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Speaker 5: fifty thousand as an exclusion for the gains that you've

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Speaker 5: made for capital gains tax. We're on death, it is

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Speaker 5: three hundred thousand. I actually think that it's changed in

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Speaker 5: the budget recently, just going to double that it.

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Speaker 1: Was a change in the budget. Yes, I think it

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Speaker 1: was our contry member exactly exactly what happened. Okay, So,

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Speaker 1: I mean, the worst thing would be if you get

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Speaker 1: some sort of tax and then as a result, some

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Speaker 1: of the assets have to come out of the estate

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Speaker 1: and be sold or something like that. I mean, you know,

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Speaker 1: it's an awful story. But it must happen from time

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Speaker 1: to time.

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Speaker 5: Yeah, some assets have to be sold to pay taxes. Obviously,

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Speaker 5: Also if assets are disposed of, or if assets go

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Speaker 5: to anybody else but the spouse, do you have a

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Speaker 5: liability of potential or state duty. So each person has

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Speaker 5: up to three and a half million RAN that can

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Speaker 5: pass to anybody else, as I say, other than the

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Speaker 5: spase that will past is state duty free. But over

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Speaker 5: and above that you will InCor state up to twenty

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Speaker 5: five percent for any state value up to city million,

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Speaker 5: and then twenty five percent for the assets over and

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Speaker 5: above that. So once again, if the receiver of revenue

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Speaker 5: is due to be paid and there's no liquid funds

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Speaker 5: to do that, then assets are going to have to

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Speaker 5: be sold to make that payment. Or alternatively, as can

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Speaker 5: be asked that if they want to pay that, because

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Speaker 5: they might want to preserve the assets. So if there's

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Speaker 5: family property and the farm may be involved, they might

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Speaker 5: not want to sell that asset. So then they will

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Speaker 5: have to come up with the cash themselves to settle

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Speaker 5: their estate debt, because tax is really just another estate debt.

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Speaker 1: Sure, Okay, so you have children, minor children, or your

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Speaker 1: guardians of them, you need to make sure they're looked after.

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Speaker 1: How do you do that properly?

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Speaker 5: Well, first of all, having a will is the first step,

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Speaker 5: because in your will you will be able to nominate

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Speaker 5: a guardian for your children. Keeping in mind that if

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Speaker 5: you are divorced, the natural guardians, so the father or

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Speaker 5: the mother that appears on the birth certificate will be

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Speaker 5: the natural guardian, So you can't really replace them until

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Speaker 5: unless you've gone through a legal process to do that.

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Speaker 5: But let's say you are providing you the only parents,

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Speaker 5: or you and your spouse are the seas together, you

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Speaker 5: can appoint a legal guardian. Once again, it's not a given.

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Speaker 5: The person that you have appointed as a guardian in

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Speaker 5: your will still has to accept that nomination. So it's

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Speaker 5: very important to have your will in place, but also

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Speaker 5: to have those discussions with the relevant people before you

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Speaker 5: actually finalize those decisions, to make sure that they are

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Speaker 5: prepared for what's going to happen, so that you don't

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Speaker 5: nominate a guardian and eventually they do not want to

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Speaker 5: accept because they might not have the financial means themselves

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Speaker 5: to look after your three children for the rest of

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Speaker 5: their lives. And then secondly, to once again do the

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Speaker 5: proper state planning, so consulting with the financial advisor to

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Speaker 5: do the necessary calculations to see what the cost will

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Speaker 5: be to bring up those children and educate them, and

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Speaker 5: then making the necessary provisions. And very often families use

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Speaker 5: testamentary trusts that are once again set up in your

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Speaker 5: world to look after, administer and control the money for

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Speaker 5: the benefit of those children until they reach other majority,

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Speaker 5: which is eighteen or you can even say that it's

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Speaker 5: until they are twenty one or twenty five, depending on

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Speaker 5: each person's preference.

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Speaker 1: We speaking to Sharon Hammond, the senior legal advisor at

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Speaker 1: Momentum about a will, about estate planning. Your questions for

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Speaker 1: her double wonderable at three, seven and two two one, four, four, six, five,

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Speaker 1: six seven and voice notes on seven to seven two

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Speaker 1: one seven two The Money Show Personal finance Sharon is

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Speaker 1: a popular subject. I must tell you Patients is on

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Speaker 1: the line from swe Patients High. You're on the line

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Speaker 1: to Sharon and you have a question.

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Speaker 3: Yes, please, thank you. So my issue is my father

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Speaker 3: passed six years ago and had a will. But what

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Speaker 3: happened is the attorney was handling the metal, was truck

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Speaker 3: of the role without our knowledge and as soon as

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Speaker 3: we found out, we actually reported to the matter to

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Speaker 3: the LPC, and up to now, maybe two three years ago,

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Speaker 3: up to now, the matter has in the resolved and

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Speaker 3: the estate has not been fully part of the estates

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Speaker 3: have been transferred to my mother like a house. But

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Speaker 3: now the issue is we are stuck because the elpis

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Speaker 3: is taking long and part of the money is in

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Speaker 3: my father's state. Were actually child by the lawyer who

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Speaker 3: was dealing with the matter at that time. So what

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Speaker 3: would be the next pasture to take?

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Speaker 1: Sharon. I mean, it's a complex case and there'll be

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Speaker 1: many facts to it, but it's very hard to know

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Speaker 1: what to do in a situation like that when basically

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Speaker 1: a lawyer a presumer has been struggled for a reason.

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Speaker 3: Yes, never told us.

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Speaker 1: No, Sure, yeah, Sharon, Sharon, I mean, as I say,

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Speaker 1: it's a difficult one, but I would imagine that this

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Speaker 1: is a complex case.

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Speaker 5: Yes, it's unfortunate, Patience, I'm sorry to hear about this. Unfortunately,

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Speaker 5: quite often the choice of executor does make a difference,

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Speaker 5: and you can only make that decision in your will. Initially,

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Speaker 5: are the appointing somebody that you trust and they can

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Speaker 5: perhaps outsource to an executor eventually, or if you've appointed

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Speaker 5: somebody like in this case, you're unfortunately the process is

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Speaker 5: going to have to take it's called. So I always

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Speaker 5: try to say, we have to make decisions while we

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Speaker 5: still can to appoint reputable I prefer obviously, I work

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Speaker 5: for a company that's got a executive department and we

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Speaker 5: administer the States. But I'm not saying necessarily momentum per se,

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Speaker 5: but bigger companies tend to have longevity because one person's

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Speaker 5: dishonesty or one person's resignation or even death will not

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Speaker 5: impact anybody's the States, because the reality is there's somebody

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Speaker 5: that will step in the next day. Where if you

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Speaker 5: are with an attorney and they are strugg of the

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Speaker 5: role like in your case, or in some instances perhaps

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Speaker 5: even dies themselves, then everything is frozen in time and

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Speaker 5: a new executive must be appointed. The fact that it

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Speaker 5: hasn't been resolved in this time frame, to me, also

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Speaker 5: says that there's possibly some fact has involved it. We'll

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Speaker 5: need a little bit more scrutiny. So I would say

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Speaker 5: trying to get into contact with one of the large

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Speaker 5: executor companies to see if they can perhaps assist you

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Speaker 5: with sorting this out. You can even you can contact

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Speaker 5: me if you want to and we can see if

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Speaker 5: we can assist you patients.

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Speaker 1: I'm sorry to hear that, and good luck to you

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Speaker 1: and your family in this Alan and Joe Berg High.

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Speaker 4: Yeah, it's really so go for it.

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Speaker 1: Yes for sharing now.

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Speaker 4: Yes, I have so a bit of a complicated one

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Speaker 4: as well. My wife's parents are both deceased and her father,

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Speaker 4: her father, died in an insolvent estate. Two separate people

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Speaker 4: doing the estates eventually well, one of the banks was

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Speaker 4: supposed to be the executor, and they eventually pulled the

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Speaker 4: plug and said they not, I don't want to be

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Speaker 4: involved anymore because obviously it's insolvent estate. My wife has

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Speaker 4: got involved and she's now become the executor. The problem

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Speaker 4: now is that both parents have died. The house that

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Speaker 4: her father owned, her brother stayed in. But the house

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Speaker 4: can't be transferred because the mother is not around anymore,

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Speaker 4: and there's nobody that can pay the debts because the

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Speaker 4: brother wracked up all kinds of debts and as a result,

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Speaker 4: the house has now been taken over by vagrants. How

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Speaker 4: do we actually solve this problem, because you know, it's

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Speaker 4: only the house before they can wind up her father's estate,

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Speaker 4: and they can't wind up the mother's estate until the

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Speaker 4: fathers is round up because this house is supposed to

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Speaker 4: go to the mother.

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Speaker 1: Sure allan thank you, I mean, Sharon. This kind of

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Speaker 1: thing does happen from time to.

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Speaker 5: Time, and unfortunately it happens quite often things, Yeah, might

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Speaker 5: this happen. I've had examples where families do not report this,

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Speaker 5: and they do not report it states and people live

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Speaker 5: in houses and eventually one or two generations later they

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Speaker 5: want to sell the house and then realize it's still

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Speaker 5: really in the name of somebody that's been deceased for

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Speaker 5: quite a number of years or even decades. So it

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Speaker 5: is problematic in this case. Once again, administration of an

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Speaker 5: estate is a legislative process. There's a whole process that

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Speaker 5: has to go through. So, yes, the one estate will

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Speaker 5: have to be finalized before the next one can go

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Speaker 5: through the process. And they should really have solved the

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Speaker 5: property as part of the liquidation process. If the estate

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Speaker 5: was insolvent, I would have imagined that the estate they

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Speaker 5: should have sold, the property, settled the debts, and whatever

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Speaker 5: was left should have gone to the matter's estate. So unfortunately,

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Speaker 5: I wish I had a crystal ball to give you

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Speaker 5: all the answers of how to solved for this right now,

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Speaker 5: but I think once again there's probably different factors involved,

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Speaker 5: sure that we will have to consider.

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Speaker 1: Sharon, thank you so much, really appreciate shared the senior

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Speaker 1: legal advisor at Momentum with you on personal finance this

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Speaker 1: evening