Estate planning and the drawing up of a will should be an essential part of any financial plan.
While many people may be focused on living in the moment, taking care of and starting their own financial plan, which includes drawing up a will, should be something that they take care of as soon as possible.
45% of people who have not started drawing up a will believe they don’t own enough assets to warrant estate planning, according to Moremadi Mabule, Head of Wills Operations at Sanlam Trust.
However, every person has some assets, and having a will in place will allow you to ensure that those assets can take care of your family and go to the intended beneficiary.
Assets are not only the big ticket items such as a car or a house; they can also include other items such as jewellery, investments, and sentimental items—even digital assets such as photos in the cloud and cryptocurrency.
If you are a parent, having a will lets you provide proper guardianship for your child or children and create a plan for the care of your pets.
The thought of not having enough assets is not the only thing stopping people from drawing up a will. Other factors that prevent people from drafting a will include anxiety over who gets what and avoiding the topic of planning for when they are not around.
What happens if you don’t have a will?
If you die without a will, the South African law of intestate succession will determine the distribution and beneficiaries of your estate.
After this process, the end result could be very different from what you intended while you were alive.
Alex Simeonides, CEO and co-founder of Capital Legacy, said: "This means people whom you may not have wanted to benefit from your estate may inherit your assets and family heirlooms."
Simeonides shares five other consequences of not having a will, including:
1. If a couple is not married, when one partner passes away, the other partner will be left with nothing. If a person is divorced, it is essential that they update their will from their previous marriage.
2. A child’s inheritance could pass to the Government Guardian’s Fund or an appointed guardian rather than to a trust. This is where the parents can ensure that their wishes for their child are carried out.
3. If a person’s wishes are not clearly documented in a will or there is no will, family feuds can occur because family members will argue over the distribution of the estate.
4. This can result in an estate taking years to wind up, and without a professional executor, the government is essentially in control of the process.
5. People lose the ability to nominate a guardian of their choice for their minor children.
While estate planning can be daunting, engaging with your trusted financial adviser will make the process a lot easier.
IOL Business