It is only when someone passes that many people find how unprepared they are for the event. Where is the will, what are the bank account numbers, where are the insurance policies, car registration documents? The list goes on and on.
It is a problem that has existed for many years. Families and spouses don’t feel comfortable talking about personal financial affairs, and the subject death, will and financial planning, is often never discussed at a family level. Unfortunately, the results of this attitude are usually felt only years later, says John Manyike, Head of Financial Education at Old Mutual.
“By August 2021, the Covid-19 pandemic had cost more than 78 000 lives. When we think about these deaths, few of us think about the widows, widowers and even orphans left behind to cope.”
“When it is considered that 94 625 children became Covid-19 orphans in the last 12 months, the value of having an open attitude towards financial planning and a valid will is underlined, “says Manyike.
“When a search for documents begins, the first item on the list is a will. A person who has passed away without a will is regarded as intestate (meaning without a will), and the law steps in. Money and assets are then given to people according to a formula. This sad result can see people who the person passing would actually have liked to benefit getting nothing.”
“Even worse is locating a will only to see that it was written years before and has never been changed or updated. The result again is that the family or family members may be disadvantaged in what could have been dispersed to them after the passing of a loved one.
The lessons to be learned are simple:
- A will is a ‘living document’ that should be checked and changed whenever a major change occurs in your life. For instance, relationships change, estates changes as assets and liabilities grow or decrease and people drift apart. Imagine the shock if it is found that a person who left the family circle years ago and has not talked to anyone for years is found to have inherited everything, just because a will was not updated.
- A will without a signature cannot be enforced. It is vital that a will is properly signed, dated and that it is witnessed.
- It should be kept somewhere secure. One of the easiest ways of doing this is by having a will drawn up by a financial institution and kept in their safekeeping. The original document will be safe if the bank is appointed as the executor (the person responsible for seeing that all wishes are carried out).
- A will should be clear and always bear the interests of the vulnerable at heart.
- This can be achieved by:
- Setting up a trust for young children so that someone responsible and trusted can look after their inheritance until they come of age.
- Ensuring the welfare of people who may be living in a multi-generational home owned by the breadwinner who has passed. A provision in the will could enable them, particularly aged parents, to continue living in the house until they die. The house can then be taken over by a person nominated to eventually receive it.
From an admin point of view, he recommends that:
- A simple filing system be opened. It should contain:
- A letter indicating the institution and contact details of where the original will(s) are held and who the administrators are
- Life insurance and other policies
- Details of bank and credit card accounts, including account numbers
- Account numbers for investments
- Information about any existing home and other loans
- Passwords for computers and information about electronic files so they can be opened.
- Medical aid membership details
- Papers relating to ownership of assets, including cars.
“It is also important to make sure that your financial adviser has up to date records regarding finances, policies, savings, investments and information about beneficiaries. Details about your financial adviser and contact details must also be included, so family members know who to call for assistance.”
“However, the cornerstone of any legacy is a will. Keeping it up to date and according to your wishes is the surest way of letting your family know that they are loved, and care has been taken to ensure that they receive their legacy,” says Manyike.