Women, make sure your will is done

No­body wants to think about death, but if you don’t put plans in place, some­one else will de­cide what hap­pens to your chil­dren, your as­sets and fam­ily heir­looms. Ge­orgina Crouth re­ports

Pretoria News Weekend - - OPINION -

THE Queen of Soul, Aretha Franklin died on Au­gust 16, leav­ing be­hind four chil­dren, in­clud­ing one with spe­cial needs, and as­sets worth about $80 mil­lion. She also left no will: the singer, who had been suf­fer­ing from ad­vanced pan­cre­atic can­cer for years, ap­par­ently did not see the need for one.

Don Wil­son, her en­ter­tain­ment lawyer, told Rolling Stone mag­a­zine that he tried to con­vince her for years to take care of her es­tate, but she wouldn’t hear of it.

And Franklin wasn’t un­usual in her choices: the Ike Turner es­tate is still con­tested by his rel­a­tives, 11 years af­ter he died with­out a will, while Prince’s es­tate is re­port­edly “a mess”. It has been shared by his sis­ter and five half-si­b­lings – one of whom hadn’t spo­ken to the artist in over 15 years.

While th­ese mega stars’ lack of es­tate plan­ning may be per­plex­ing, most peo­ple – par­tic­u­larly women – don’t have a will.

South Africa’s Mas­ter of the High Court’s fig­ures in­di­cate that about 70% of work­ing peo­ple do not have wills and up to 90% of peo­ple die in­tes­tate.

We’re hardly unique in lack­ing es­tate plan­ning: in the United King­dom, at least 60% peo­ple die with­out a will, while in the US, only 44% have one.

In South Africa, where al­most half our chil­dren grow up with­out fa­thers, los­ing a mother leaves chil­dren at the mercy of rel­a­tives, neigh­bours and the state.

Women live longer than men, and this longer life span means they must take care not to out­live their as­sets; their as­sets must last for a longer pe­riod, for them and their de­scen­dants. It is im­por­tant to get guid­ance from a fi­nan­cial ad­viser, to help women pro­tect them­selves fi­nan­cially.

Viwe Dyasi, a gen­eral man­ager for wealth, in­vest­ment man­age­ment and in­sur­ance at Absa, says women are not pri­ori­tis­ing es­tate plan­ning.

“Women are gen­er­ally tak­ing care of oth­ers, their jobs and ev­ery­thing around them, park­ing es­tate plan­ning,” Dyasi says.

“Sta­tis­ti­cally, women live longer than men, and this longer life span means they must take care not to out­live their as­sets; their as­sets must last for a longer pe­riod, for them and their de­scen­dants.

“It is im­por­tant, there­fore, to get guid­ance from a pro­fes­sional fi­nan­cial ad­viser, to help women pro­tect them­selves fi­nan­cially.”

Women of­ten as­sume that when they die, ev­ery­thing will au­to­mat­i­cally be left to the “ob­vi­ous” in­tended ben­e­fi­cia­ries, says Kobus van Schalk­wyk, the head of cor­po­rate devel­op­ment for Stan­dard Trust Limited at Stan­dard Bank.

“If you pass away with­out leav­ing a will – that is, in­tes­tate – leg­is­la­tion will de­ter­mine how your as­sets should be dis­trib­uted.”

A valid will en­sures that the es­tate-ad­min­is­tra­tion process is ac­cel­er­ated, says Van Schalk­wyk.

“If you don’t nom­i­nate an ex­ecu­tor in your will, the Mas­ter of the High Court has to go through the process to ap­point an ex­ecu­tor. It could take months, po­ten­tially leav­ing vul­ner­a­ble fam­ily mem­bers with­out crit­i­cal in­come.”

Leav­ing it to the state to de­cide who will in­herit what, won’t nec­es­sar­ily be cat­a­strophic for your ben­e­fi­cia­ries, but it puts them in an ex­tremely vul­ner­a­ble po­si­tion, par­tic­u­larly if you were a sin­gle par­ent.

The In­tes­tate Suc­ces­sion Act of 1987, which was amended in 1992, is un­equiv­o­cal about who gets what:

● If you’re sur­vived by a spouse (or spouses), but no chil­dren, he or she (or they) will in­herit the en­tire es­tate;

● If there’s a child but no spouse, the child in­her­its ev­ery­thing;

● If there’s a spouse (or spouses) and chil­dren, the spouse gets a “child’s share” or R250 000 (which­ever is greater), and the chil­dren re­ceive the bal­ance of the es­tate; and

● If you’re mar­ried in com­mu­nity of prop­erty, half of the es­tate be­longs to the sur­viv­ing spouse (or spouses) and will not de­volve ac­cord­ing to the rules of in­tes­tate suc­ces­sion.

This, how­ever, re­moves your free­dom of choice to de­ter­mine who gets what. It also com­pli­cates wind­ing up the es­tate and forces the heirs to be de­pen­dent on a cour­tap­pointed ex­ecu­tor, says Trisca Hat­tingh, the head of fidu­ciary ser­vices at GTC.

“(The Act) is very fair, but it takes your free will away. There’s noth­ing that you can be­queath. Lots of par­ents want to leave their paint­ings to a spe­cific child, or the wed­ding rings to their daugh­ters.”

Harry Joffe, the head of le­gal ser­vices at Dis­cov­ery, says they’re par­tic­u­larly con­cerned about sin­gle par­ents with mi­nor chil­dren.

“Sin­gle par­ents, when they take out a life in­sur­ance pol­icy, of­ten make the mi­nor child a ben­e­fi­ciary, which is not part of the es­tate for dis­tri­bu­tion pur­poses, but it is for es­tate duty, so we can pay the money di­rectly to the mi­nor child’s bank ac­count. It’s dan­ger­ous, though. There was a re­cent case in which R2.5m was de­posited into a five-yearold’s bank ac­count. The guardian had full ac­cess to it and spent it.”

To pre­vent that from hap­pen­ing, Dis­cov­ery tells clients to pro­tect the pro­ceeds by us­ing a trust, ei­ther in­ter vivos or tes­ta­men­tary.

“In­ter vivos trusts are set up while you’re alive. The trust would own the pol­icy and pay the pre­mi­ums. If the sin­gle par­ent dies, we pay the money into the trust.

“A tes­ta­men­tary trust is cre­ated in your will which comes into play af­ter you die. It’s not ideal. The mom or dad sets up this in their will, but when they die, there’s a de­lay un­til the trust is cre­ated, and it could take three months. It is not as good as an in­ter vivos trust but bet­ter than mak­ing the mi­nor the ben­e­fi­ciary.

“If you’re a sin­gle par­ent, you should be think­ing about the in­ter vivos trust op­tion. It costs around R6 000 and is the best way to pro­tect your child’s in­ter­ests,” Joffe says.

ge­orgina.crouth@inl.co.za

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