Buy onlineBy Kobus Wentzel, Executive Head of Sales and Distribution at 1Life Insurance
Imagine spending a lifetime accumulating wealth for yourself and your loved ones, only for it to devolve to the State once you are gone. A hard pill to swallow? Unfortunately, this is exactly what happens when we fail to plan our estate and ensure we have a Will in place. In fact, this is a reality for many South Africans.
To be exact, less than 15% of South Africans die with a valid will in place, which means over 80% of South African families face the risk of going without provision should a loved one pass on. Added to the financial risk, is the risk of family disputes that often arise as family members argue over how to split the assets of a loved one once they are gone.
This is why commemorative days such as Wills Week, 16-20 September 2024, are so important. Wills Week, commemorated annually, is aimed at educating the public on what a will is and encouraging them to have a basic will drafted by an attorney.
With all the efforts made by professionals in the legal and insurance sectors to educate the public, you would expect to see a steady rise in the number of South Africans who sort out their affairs, but as you can see from the stats, this is not the case. People have many reasons, some linked to a lack of knowledge, while some are just based on misconceptions about drafting a will or who needs to have one.
Let’s take a look at some of these misconceptions.
1. Getting a will is expensive
South Africans are under the false impression that getting a will and partnering with a professional to plan your estate is expensive, but this is not true. If anything, the cost of leaving this world without ensuring that you have planned for your estate is far higher and detrimental to the future of your loved ones.
2. Getting a will is necessary only for wealthy people
Regardless of your financial worth, you need a will. Even if you do not have a lot of money when you die, your loved ones may still be entitled to certain benefits, and these should be stated in the will to ensure that they get them.
Beyond your finances, your will can include details such as naming a funeral executor, your requests for your final resting place, as well as how your loved ones should split your possessions – regardless of their monetary value. Your will can also cover all your belongings, from personal possessions and sentimental items to your vehicle and pets.
3. All that is mine will automatically go to my partner
In the absence of a will, your inheritance will devolve according to the Intestate Succession Act, 1987 (Act 81 of 1987). This means that there is a chance that people you do not want to inherit from your will, do just that, by taking over some of your assets that were not intended for them. In this case, those you believe to be the rightful heirs, such as your spouse, might end up with nothing. Furthermore, not having a will at all may cause delays in the wrapping up of your estate and incur additional costs, not forgetting the conflict it might cause in the family.
In a nutshell, your spouse will not automatically inherit everything, and couples who are either married or in a civil partnership will not automatically inherit from each other. If you are separated but not divorced and are in a new relationship, your ex-spouse or ex-civil partner – if still one of your beneficiaries, will inherit if so dictated. Additionally, it's important to consider who else should inherit if your partner passes away before you do.
The benefits of planning your estate and having a will in place
We cannot deny that death is an uncomfortable subject to think about, but for the benefit and protection of our loved ones, it is important to plan it.
While there are numerous financial benefits to having a solid estate plan, the paramount reason is ensuring that your estate is adequately covered into costs so that you do not leave your family with unplanned shortfalls.
Additional benefits include:
- Having a valid will in place, safe and secure with a trusted provider for easy access for your family
- Asset protection
- Adequate cover due to estate duty costs and tax implications
- Assistance in winding up of an estate
- Protection for your loved ones
- Helps you ensure that your will is drafted according to your asset distribution wishes vs intestate
- Income continuation on certain estate plans
No matter your financial standing, death is inevitable, and it should be planned for. Contact your financial advisor, and get the process started!