We often talk about the importance of having a financial plan, and while anticipating how you will meet your goals during your life is important, you should consider how your assets – including your investments – will be distributed when you pass away. What happens to your investments when you die? Will they pass to your loved ones, as you would want? An uncomfortable topic to think about, but one that we all need to consider – especially if there are dependents involved.
Now is a good time to take the first step in preparing a plan that provides for the financial needs of your loved ones.
Why is a will important?
By making a will you ensure that your assets are disposed of in accordance with your wishes after your death. This privilege is called “freedom of testation”.
What happens when you die without a will?
Dying without a will puts the people you leave behind in a difficult position. Firstly, the court will step in and manage the dissolution of your estate. During this process, your assets, including your investments, form part of your estate. While your estate is being wound up, your loved ones will have no access to your money for a long time. Think about this – if you are the breadwinner for your dependents, what will they do in the months while your estate is being wound up? Could your family survive without any money from your estate for that long?
Secondly, you have no control over who will receive the benefit of your estate. The courts will decide this on your behalf. Dealing with the courts and grieving at the same time is a heavy burden to place on anyone.
Things to consider
Ensure you use the services of a qualified professional. A valid will needs to comply with strict legal requirements; otherwise, its validity may be affected. Your attorney, financial adviser and a reputable trust company can assist you with this process.
Review your will to ensure that it reflects your current wishes. A change in your personal circumstances, such as marriage, the birth of a child or divorce can have an impact on how you wish your assets to be distributed after you die.
Ensure you nominate a legal guardian for your minor children. Having to think about who would take care of your minor children or a special needs child is uncomfortable, but it is an important step in ensuring that your children will be taken care of by someone you trust.
Tell someone you trust where your important documentation can be found, especially your will.
Estate duty is a form of tax payable on the value of your estate (such as property, investments and cash) after you die.
When you have your will drafted, you will need the following documents:
- Your identity document
- A list of your assets
You should also give some thought to:
- Who will get what
- Who you would like to be the executor of your estate; and
- If you have minor children or a special needs child, who should become their legal guardian.
For more information or to speak to a financial advisor, contact us on 0860 102 383 | SMS “Life” to 32297 and we will call you back (SMS costs R1).
More blog articles on financial eduaction:
- The Will checklist. An easy to watch guide
- The importance of having a Life File
- What is in a Life File? An easy to watch guide
- I am your life insurance policy, what does this mean?
Source: Fin24 http://www.fin24.com/Finweek/Personal-finance/wills-an-important-part-of-a-holistic-financial-plan-20160913, http://www.lssa.org.za/our-initiatives/advocacy/national-wills-week