National Wills Week (September 11 to September 15), reminds all South Africans of the importance of estate planning. While this annual event serves as a notable reminder, a holistic approach is required to consider the scenarios of the very serious financial and administrative matters that the death of a person leaves behind.
PJ Veldhuizen, managing director of Cape-based attorney firm Gillan & Veldhuizen highlights the need for a more comprehensive estate planning strategy, stressing that a well-rounded approach involves consulting with attorneys and estate planners/life insurance professionals to develop a comprehensive plan that safeguards the financial future of your loved ones. “Estate planning isn’t just about drafting a will; it’s about addressing the practicalities of your passing. Who will manage ongoing financial commitments, and do they have the means to do so?”
Here’s what practically happens when you pass away:
In the event of a person’s passing, the issuance of a death certificate by the Department of Home Affairs is the initial step. After obtaining a death certificate from either the funeral home or Home Affairs, the winding up process will commence whereby a set of documents should be prepared and submitted to the Master’s office. Within a matter of hours, the administration of the estate begins according to the provisions outlined in the individual’s will. This process can be swift and seamless or daunting, lengthy and complicated.
Frozen bank accounts: Upon a person’s death and the issuing of a death certificate, all bank accounts, including joint accounts with spouses are promptly frozen. This freeze encompasses transactions such as monthly debit orders and automated payments, potentially causing significant financial distress for surviving family members. The bank will also scrutinise any activity on the account and the old trick of “Upon death just draw everything out of the bank account” will not stand. Your spouse/partner will be answerable for any funds withdrawn after your death.
Your policies will now kick in and this is where your planning becomes essential.
The vital role of life insurance: Beyond a will, estate planning must include a life insurance policy with an immediate pay-out clause to a defined beneficiary and NOT your estate. Such a policy ensures that beneficiaries, often spouses or family members, have the financial resources to maintain stability during the sometimes lengthy estate settlement process.
Safeguarding digital assets: In today’s digital age, it’s crucial to consider digital assets like cryptocurrencies and online accounts. Leaving an updated list of passwords and logins in a secure place is paramount for managing digital assets and accounts, in accordance with your wishes.
In the process of getting your affairs in order, there is much to consider. However, if anything stands paramount, concludes Veldhuizen, “It’s ensuring the meticulous preparation of your will and the inclusion of a life insurance policy to be paid out to maintain the financial status quo until the estate is finalised. These two pillars provide a strong foundation for safeguarding your family’s financial future during challenging times. As an attorney, I’ve seen too many families undergo debilitating red tape and cannot stress enough the importance of these fundamental steps in estate planning.”