Everybody needs to have a will, so it is one of the most important items on your financial check list. Many people avoid writing up a will because it reminds them of their own mortality, but it is vital to protect those you care for when you are no longer there.
Why you need a will
To avoid chaos: should you die without a will your assets are distributed according to the Intestate Succession Act, Nr 82 of 1987. A high probability of administration, taxation and legal complications arise when a person dies intestate.
To have your wishes carried out: what you may have wanted to take place on distribution of your assets and the care of your loved ones is now determined by the Act, not your wishes.
Key points
- Update regularly: revise your will regularly especially when circumstances in your life change.
- Assets and liabilities: in drafting your will you should create a list of current assets and liabilities with a realistic value on each. You may want to nominate heirs or beneficiaries for specific assets, including sentimental objects such as jewellery.
- Guardian: you should consider appointing a guardian if you have minor children. If you are paying maintenance as part of your obligation on a divorce, you should keep this in mind as a future responsibility that needs to be maintained to your former spouse and children.
- Testamentary trust: make provision for minors or a spendthrift relative by stipulating a testamentary trust in your will.
- Identify: heirs should be clearly identified including full names, surnames, relationship and identity numbers.
- Make it practical: always look at creating a practical document — one that is easy to understand and can be executed easily.
- Don’t divide: it is not a good idea to leave an asset such as your house or car to your spouse and children. Placing these assets into the names of both your spouse and children can lead to practical problems and family disputes.
- Executor: nomination of an executor should be stated clearly. Your executor should be chosen with care as this person or institution is responsible for making sure your last wishes are carried out and are in the best interests of your heirs.
- Appointing expertise: a layperson cannot wind up an estate. He or she must appoint an agent to do so on his or her behalf.
For example an attorney, bank or a fiduciary institution to provide the required security, knowledge and continuity to meet the needs of your heirs.
Legal advice: a person can draft his or her own will, but to make sure your last wishes are respected you must ensure that your will is technically correct and signed properly. Instructing an expert to word and draft your will is the best advice.
Read the contents carefully and make sure you understand it fully.
Signatures: you are legally required to sign your will with two legal witnesses present. All the pages should be signed.
Legal witnesses may not derive any benefit from the will, they must be older than 14 and they must be able to give evidence in a court of law. Any alterations to the will must be signed by you and the two legal witnesses.
Keep it safe: make sure your original will is kept in safe storage. The institution or firm that will act as executor to manage your estate should have a copy. Keep a duplicate with a spouse, financial planner or close family friend who does not live on the same premises.
Information provided by Linda Sherlock, head of FPC consulting at Alexander Forbes
Call your bank
Call your bank and ask it to analyse your bank statements to see if you could benefit from a different bank product.
A recent bank inquiry report showed that someone with a pay-as-you-use account would have paid R700 a month for the same amount of transactions that Standard Bank offers in its R80 a month bundled option.
Check your credit card and the annual fees you pay. Remember you pay for the privilege of holding a gold and platinum card. Rather ask for a standard card and save.
When criminals look to skim a credit card they go for the gold and platinum ones first because they know they have higher limits.
Cover your back
Every year you need to update your short-term insurance to make sure you are paying the right premium and getting the correct cover. The following should cover your insurance check list:
Revalue your car insurance every year. Your vehicle’s value depreciates with time and you may be paying for a R100 000 car that is worth only R50 000. If something happens that is all you will be paid out.
Review your household insurance. Property increases in value, but people tend to buy big ticket items such as TVs and sound systems and forget to update their insurance. If you are underinsured by 50%, (for example you insure your household goods for R50 000 but they are in fact worth R100 000) and you are robbed, the insurer will pay out only 50% of the value of the item.
As with household contents, review your re-building value on your house insurance. If it costs you R1 000 000 to rebuild your home and it is insured for R500 000, a fire would destroy a significant portion of your equity. As with household contents, insurers will only pay a portion of the claim if you are underinsured. So if your kid burns down your thatched lapa which costs R50 000 to rebuild but you are underinsured by 50%, the insurer will pay out only R25 000.
Make sure your security system is working. If the insurer sees that your electric fence is in disrepair or locks are not working, it will not pay out.
Make sure your car is roadworthy. If it isn’t your insurance contract could be made void in the case of an accident.
Information provided by www.saia.co.za