Weekend Argus (Saturday Edition)
Let liquidity, knowledge and simplicity be your legacy
LEGACY’S FS FIDUCIARY SPOKESPERSON
I GET asked almost daily, “What must I do to make sure that my family is left in the best position, should something happen to me?” My answer is always the same; provide for liquidity, information and expertise. To me, the most important factor is to provide for liquidity in your estate, as this is usually the most pressing issue for your family following your death. Their grief and loss can only be compounded when the electricity is cut off.
If your family is not in a position to settle the immediate expenses and shortterm debts, such as funeral expenses, rates, taxes and insurance, the unnecessary unhappiness and hardship caused can be truly heart breaking. It is also important to remember that on your death, your bank accounts are frozen and no one will have access to the funds in those accounts until an executor is appointed.
If you are married in community of property, the accounts of both you and your spouse can be frozen, even if the account is in the survivor’s name only. My advice is to plan for the event, make provision for funds to be readily available to your spouse to settle the debts and expenses and to keep the household running for a few months until an executor is appointed.
Insurance policies are a good way of providing this liquidity. However, they can take a few weeks and sometimes months before they pay out, as many insurance companies now require copies of the letters of executorship before they will process the claim.
The speed at which we can obtain a letter of executorship and begin winding up your estate depends on many factors, most important of which is probably the second key component – information. This is critical to a speedy reporting of your estate. I suggest that you maintain a file with all your important information in it. Update it regularly and let your spouse know where it is kept. If you have such a file, and your spouse simply has to pick it up and hand it to your nominated executor, the time value of money will apply and, the quicker and faster your estate can be wound up, the less costly it will be.
My advice would be to get the expertise involved in any deceased estate sooner rather than later. These issues of liquidity, information and required expertise can be easily solved with a proper estate plan. Plan for the inevitable, take the time to sit down and work out the ramifications of what might happen sooner rather than later and work out the possible scenarios.