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Last month was Will's Month, which meant the drafting and updating of recent wills received much attention and awareness in the media.
However, with most of us dealing with so much around us, such as managing monthly expenses, the hustle and bustle of getting by, and juggling home and work life, these headlines may have either passed us by or might have meant nothing to us.
Working daily to ensure that your family is cared for is a good thing, but what will happen to them once you are gone? Do you want your children to start looking out for each other because you did not plan? Your hard-earned money and inheritance for your children might be at risk if you do not have a will in place.
READ: Insuring the cost of dying
Nominating your minor children as beneficiaries in your policy may not guarantee that they will receive the payout because it might be handled by someone who might squander your money instead of taking care of them.
Real-life story 1: A single mother of three children (two of whom are minors, and whom she had named as beneficiaries in her insurance policies) died unexpectedly and without a will. The bank sold the mother's home to recoup the outstanding balance of the bond, forcing the children to live with their grandmother. When the time came to make a claim, the children's father, who had never provided for them, handled their payout because he was their biological father. The father seized the payout and built a house for himself and his new wife.
Real-life story 2: In another story, a wife who had been divorced for eight years ended up inheriting most of her ex-husband's entire estate. This is despite the businessman paying her a huge separation lump sum during their divorce while taking care of his elderly parents and the woman in his life whom he had been staying with for five years.
You may have heard that having a will is costly, but this is not the case. Certain organisations provide free wills. What is expensive is the administration of your estate, which includes unavoidable fees, such as executor fees, trust fees, and conveyance fees, for which you must make provisions because they may be collected from your beneficiaries if you do not. Not to mention the provision for covering those monthly expenses, as debit orders continue until the bank is notified that you have passed away.
This is where your certified financial planner can assist you in developing a comprehensive plan to address all these issues and ensure that everything intended for your beneficiaries is cared for and protected. Remember that even if you have no assets but have children, you should have a will. Please keep in mind that divorce or re-marriage does not cancel a will; you must update it within three months or your ex-spouse will inherit almost all your estate.
Nonhlanhla Nxele, CFP®, is the founder and CEO of Esteemed Financial Solutions
