Introduction
In South Africa, many companies offer “free wills” as part of their services, often marketed as a generous perk to attract clients. While the idea of getting a will for free sounds appealing, it’s essential to understand the motivations behind these offers, why these companies often appoint themselves as executors of the estates, and the hidden cost implications. In contrast, paying for a professionally drafted will through a trusted provider like Legal Trace gives you greater control, including the freedom to choose your executor. Let’s dive into the details.
Why Do Companies Offer Free Wills?
- Marketing and Client Acquisition
Companies, particularly in the financial services, insurance, or estate planning sectors, offer free wills to draw in new clients. A free will acts as a low-barrier entry point, encouraging individuals to engage with the company’s broader services, such as investments, insurance policies, or trust management. Once you’re in their ecosystem, they may upsell additional products or services. - Building Long-Term Relationships
By drafting your will, companies establish a relationship with you that can extend beyond your lifetime. They position themselves as trusted advisors, hoping to manage your estate or provide services to your heirs after your passing. This long-term engagement is often more profitable than the initial “free” service. - Executor Appointment as a Revenue Stream
A key reason companies offer free wills is to position themselves as the executor of your estate. When you sign a free will, the fine print often nominates the company (or an affiliated entity) as the executor. This allows them to earn significant fees during the estate administration process, which can far outweigh the cost of drafting the will.
Why Do These Companies Become Executors?
- Control Over Estate Administration
By acting as the executor, the company controls the administration of your estate, ensuring they oversee the distribution of assets, payment of debts, and compliance with legal requirements. This control allows them to charge executor fees, which are regulated but can still be substantial. In South Africa, executors can charge up to 3.5% of the gross estate value plus VAT, and 6% plus VAT on income earned by the estate after death. For an estate worth R3 million, this could mean executor fees of approximately R120,750. - Additional Service Fees
Beyond executor fees, companies may charge for related services, such as conveyancing (transferring property), trust administration, or professional consultations (e.g., accountants or tax consultants). These fees can add up, reducing the inheritance left for your beneficiaries. - Ensuring Compliance and Efficiency
Companies that offer free wills often have established systems for estate administration, which they argue ensures efficiency and compliance with the Administration of Estates Act. However, this efficiency comes at a cost, and you may have little say in how the process is managed or who handles it.
Cost Implications of Free Wills
While a free will may seem like a cost-saving option upfront, the long-term financial implications can be significant:
- Executor Fees
As mentioned, executor fees are calculated on the gross value of the estate, not the net value after liabilities. For example, if your estate includes a property worth R1 million but has a R600,000 bond, the executor’s fee is still calculated on the full R1 million, potentially costing R40,250 (3.5% plus VAT). These fees can erode the inheritance intended for your loved ones. - Additional Administrative Costs
Administering an estate involves various costs, including Master’s fees (R600 for estates under R400,000, up to R7,000 for larger estates), advertising costs (around R1,000 for creditor notices), bank charges for an estate account (R600+), and professional fees for accountants or conveyancers. If the company acting as executor outsources these tasks, the estate bears the cost. - Potential for Illiquidity
If your estate lacks sufficient cash to cover these fees, the executor may need to sell assets, such as property or investments, to create liquidity. This can lead to unfavorable sales conditions or tax implications, further reducing the estate’s value. - Hidden Costs in “Free” Services
Some companies bundle free wills with products like funeral policies or legacy plans, which may include ongoing fees or subscriptions. For example, a legacy protection plan might cover executor fees but require annual payments during your lifetime, negating the “free” benefit.
The Legal Trace Advantage: Why Pay for a Detailed Will?
Opting for a professionally drafted will through Legal Trace offers several benefits that outweigh the upfront cost, particularly when it comes to choosing your executor and ensuring your wishes are met:
- Freedom to Choose Your Executor
With a Legal Trace will, you have the freedom to nominate an executor you trust, whether it’s a family member, a close friend, or a professional like an attorney or accountant. This choice ensures that someone with your best interests—and those of your beneficiaries—manages your estate. You can also negotiate executor fees upfront or exempt your chosen executor from providing security to the Master of the High Court, potentially reducing costs. - Tailored and Comprehensive Drafting
Legal Trace’s experienced professionals draft wills that are detailed and customized to your unique circumstances, minimizing ambiguities that could lead to disputes or costly litigation. Unlike generic free wills, a Legal Trace will can address complex situations, such as foreign assets, blended families, or business interests, ensuring your wishes are clear and legally enforceable. - Transparency and Cost Control
By paying for a will upfront, you avoid hidden costs embedded in “free” wills. Legal Trace provides clear pricing and guidance on estate planning, helping you structure your estate to minimize fees and taxes, such as estate duty (20% on estates over R3.5 million) or capital gains tax. You can also plan for liquidity to cover administration costs, protecting your assets from forced sales. - Ongoing Support and Updates
Legal Trace offers support to update your will as your circumstances change, such as marriage, divorce, or the birth of a child. This ensures your will remains valid and relevant, unlike free wills that may not be revisited or amended, potentially leading to outdated or invalid provisions. - Peace of Mind
A Legal Trace will gives you confidence that your estate will be administered according to your wishes, by an executor you trust, without unexpected costs or conflicts of interest. This peace of mind is invaluable, especially during the emotional and challenging time following your passing.
Conclusion
While free wills may seem like an attractive option, they often come with strings attached, particularly the appointment of the offering company as executor and the associated costs that can diminish your estate. By choosing a paid, professionally drafted will through Legal Trace, you gain control over who administers your estate, ensure your wishes are clearly articulated, and minimize unnecessary expenses. Investing in a detailed will today is an investment in your legacy, protecting your loved ones and ensuring your estate is handled with care and transparency.
Call to Action
Ready to take control of your estate planning? Contact Legal Trace today to have a customised will drafted by our expert team. Visit our contact page or message us to schedule a consultation and secure your legacy.