How would you feel if, in an unfortunate turn of events, all your hard-earned assets and wealth ended up in the wrong hands? Life is unpredictable, anything can happen at any time. That is why it is crucial to prioritise safeguarding your assets not only for yourself but for securing financial stability for your loved ones.
Less than 15% of South Africans have a will set up with 75% of estates transferred through the Master of the High Court without a valid will, leading to lengthy legal battles and disputes among family members. These statistics highlight the urgent need for South Africans to prioritise risk and estate planning to secure their assets and provide financial security and peace of mind for their loved ones.
Let’s explore the importance of risk and estate planning and discuss four strategies and tools one can utilise to create a comprehensive plan that ensures financial security.
The Importance of Risk and Estate Planning:
In an ever-changing and unpredictable world, risk and estate planning serve as vital pillars in securing financial well-being for yourself and your loved ones. Implementing a comprehensive plan not only protects your hard-earned assets but also ensures that your wishes are respected and carried out in the event of incapacity or death. It allows you to have peace of mind, knowing that your loved ones will be taken care of with a properly structured financial plan.
Strategies and Tools for Comprehensive Risk and Estate Planning:
1. Draft a Will: The first step of risk and estate planning is to draft a will. A properly executed will is the cornerstone of any estate plan. It enables you to distribute your assets according to your wishes, ensuring that your loved ones are provided for in the manner you desire. By consulting an experienced estate attorney, you can tailor your will to conform to South African legislation and address any cultural or family-specific considerations.
2. Establish a Trust: Trusts are excellent tools that can be utilised to safeguard your assets and minimise the impact of estate duty or taxes. In South Africa, setting up a trust allows you to allocate assets to specified beneficiaries while providing flexibility and protection against potential challenges to your estate. Trusts can also be used to cater to the specific needs of your beneficiaries such as education or healthcare, ensuring their long-term financial security.
3. Have Adequate Insurance Coverage: Insurance plays a vital role in risk planning and protecting your assets. Whether it’s life insurance, health insurance, or property and casualty insurance, having adequate coverage ensures that unexpected events do not leave a significant financial burden on your loved ones. The Financial Sector Conduct Authority’s (FSCA’s) 2022 Financial Sector Outlook Study revealed that only 10% of South Africans reported having life insurance, which is down 2% from the 12% stats released in 2019. This leaves the majority vulnerable to potential financial hardships in the event of a tragedy.
4. Evaluate and Update Regularly: It is essential to revise and update your risk and estate plan regularly to accommodate the changes in your life circumstances, asset portfolio, and legislative requirements. As life evolves, so should your plan. Regular reviews will ensure your plan remains relevant to your needs and lifestyle and aligned with your current objectives. By doing so, you protect the financial security of your loved ones and avoid potential legal implications.
5.Have you considered The Discovery Estate Preserver?: The Discovery Estate Preserver is a product that guides you through steps 1-4 to ensure your affairs are in order and your loved ones are looked after when you pass away. To make use of The Discovery Estate Preserver, you must have a will where you nominate Discovery Wills and Trust Services’ preferred provider as your executor and/or trustee as the testamentary trust(s) to be set upon death. The Estate Preserver aims to assist with the costs associated with winding up your estate after your death, through the Fee Indemnity Benefit. The costs covered under this benefit include the following:
- Executor fees: Charged by the executor to wind up the estate, based on the gross value of the assets in the estate on death.
- Testamentary trustee fees: Charged by the Trustees to administer a trust created in the will to manage the assets of the deceased on behalf of the beneficiaries.
- Property conveyancing fees: Fees incurred on transferring ownership of property during the estate wind-up process.
Additionally, The Discovery Estate Preserver provides additional benefits to assist your family in the event of your death. These benefits include:
- The Liquidity Benefit: Pays a lump sum within 48 hours of receiving all claims requirements in order to cover various expenses and fees.
- The Contribution Protector: Provides a monthly payment to a client’s beneficiaries for a six-month period following their death in order to assist their loved ones with liquidity.
- The Estate Planning Benefit: Optional benefit available at an additional premium to provide efficiency in the estate planning process and to ensure your planning is up to date.
In South Africa’s ever-changing landscape, risk and estate planning play a crucial role in providing financial security for future generations and safeguarding your hard-earned assets. By implementing these strategies and understanding the products in the market you can create a comprehensive plan that upholds your wishes and protects your loved ones. Remember, successful risk and estate planning isn’t just about accumulating wealth; it’s about preserving it for the benefit of those who matter most to you. So, take the initiative today, consult a financial planner, and start safeguarding your financial future along with your loved ones.