Planning for when you’re not around? Make sure you consider these four things!
- Last will and testament
Do you have a last will & testament? Well, statistics show that nearly 75% of South Africans pass away without a valid will. The main reason for this is everyone is just too busy and never finds the time to get it done.
Your will is a legal document that deals with important things such as nominating the executor of your estate, who will care for your minor children and how your assets should be distributed after your death.
Getting your will drafted is the first and most crucial step in ensuring that your death, however traumatic for your family, is not compounded by the uncertainty of your final wishes, which inevitably leads to family feuds. It’s quicker and easier than you think.
- Trusts
Your will outlines what you want to happen when you pass away – trusts can help with the structuring and management thereof. A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title deeds to property or assets for the benefit of a third party, the beneficiary.
There are two main types of trusts: a living (inter-vivos) trust and a testamentary trust. When it comes to dealing with wills and estates, we concern ourselves mainly with testamentary trusts.
A testamentary trust only comes into effect when you pass away. You should consider using a trust when leaving assets to minors or beneficiaries with disabilities or special needs, or protecting wealth for future generations.
If there is no trust in place, minors’ inheritances are paid over to their legal guardian or to the Government Guardian’s Fund, which is probably not what you would have intended.
- Legal fees and other costs at death
Many people are entirely unaware of the legal fees and costs associated with dying. Along with the heartache caused by the loss of a loved one comes a variety of additional burdens in the form of expenses your loved ones must take care of.
A few of these unexpected costs include executor fees, conveyancing attorney fees, testamentary trust fees, masters fees, inheritance tax and other immediate expenses such as costs associated with arranging a funeral.
These fees can accumulate to hundreds of thousands of rand and can often send a family into financial ruin.
- Life cover
Most people know what life cover is and how it works – but too many people don’t think about the consequences of being under-insured.
When you pass away, your debts and monthly financial commitments such as bonds, loans, school fees and insurances don’t die with you, and still need to be covered.
Having sufficient life cover in place protects your family and loved ones, allows you to leave an inheritance, pay off debts and other expenses, and gives you peace of mind that they will not be left destitute.
Over the last decade of winding up the deceased estates, we often see estates that don’t have enough cash to cover the deceased’s debts. This leaves family members scrambling to raise finances and often ends up with them resorting to selling off assets such as cars and properties.
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