3 Things every guardian should know in uncertain times

3 Things every guardian should know in uncertain times

Last updated on 22nd June, 2021 at 09:56 am

The ‘D’ word is one we all avoid: death. But one thing the COVID-19 pandemic has reminded us of is our own mortality. As a guardian of children or dependants, your death would have a huge impact on those around you. Here’s what you need to know to protect those in your care.

1. What even is a will, anyway?

“A will is a legally binding, written document that you make freely and voluntarily detailing how you would want your assets to be distributed once you’ve passed away,” explains David Thomson, senior legal advisor at Sanlam Personal Finance.

Did you know that according to the Master of the High Court, at least 70% of working South Africans do not have a will? You might think a will is not necessary because you don’t own a lot, but even the smallest assets are worth something. Remember: even non-tangible assets can be passed to loved ones if you pass away, for example, savings you may have.

While some may think that only the very wealthy or those with complicated assets need wills, there are many good reasons to have a will. Critically, if you don’t have a will, then you lose control over what happens to your assets, and how protected your guardians or dependants are, when you pass away.

Why is it so important?

“If you die intestate (without a valid will), the state (government) will decide whom your possessions go to – your spouse, parents or children – and this may not be what you imagined,” explains Thomson. “When it comes to drafting a will, professional advice can go a long way.”

So, whether you want to look after loved ones after your death, ensure certain people receive certain assets, or simply protect anything you’re leaving behind from being managed and distributed by the state without your written direction, a will is vital to have.

How young is too young for a will?
If you’re young, you may also think that there is no need to write a will. However, you can write a will from the age of 16. “As a very young person with no assets (other than a bank account), needing to write your will may seem strange,” says Thomson. “However we all know how quickly time passes; we buy stuff and next thing we know we have debt as well!”

Find out more about the dos and don’ts of writing a will, plus the youngest age you can write your will, here.

What is an executor?

“Your executor is the person you appoint to collect your assets, close bank accounts, wind down your affairs and complete the general administrative tasks of your will in your absence,” says Thomson. Often people appoint a lawyer, accountant or trust company whom they trust and have built a relationship with, but you can also appoint a family member or friend. Think carefully though: family or friends will be grieving your passing at the time your estate needs to be wound up, which is a time-consuming task. It may be easier and kinder to appoint someone objective, though they must also be someone who you know is capable and can be trusted.

Where do I start?

“Your financial planner can help you review all of your assets and their value, including your savings and any specific high-value or sentimental items, like jewellery,” says Thomson. To prepare a will, begin by compiling a list of your assets and debts. Be sure to include the contents of safe deposit boxes, family heirlooms, and other assets that you wish to transfer to a particular person or entity.

2. Why you need to appoint a guardian in case you pass away

What exactly is a guardian?

If you have children or dependants who are minors (younger than 18) our law does not allow them to take control of their inheritance without the assistance of a surviving parent or adult. The guardian is responsible to look after the financial affairs and personal care of the child until adulthood. A legal guardian is a person who has been court appointed to care for another person and make decisions on their behalf.

Why is it so important?

Without a guardian, the responsibility of your children falls to the surviving natural parent. Should you both pass, the responsibility falls to the state and your assets will be liquidated and placed into the Masters Guardian Trust. A family member or interested person will have to make application to the Master of the High Court for the appointment of a guardian (also called a ‘tutor’) for the minor. In the interim, the children will be vulnerable, as no person may make valid arrangements for their custody, schooling etc.

“By making provisions in your will for your children who are minors, Sanlam will set up a testamentary trust that looks after the money for them until they are at least 18,” says Thomson. “We also have the ‘Sanlam Guardians Trust’ which can be nominated as beneficiary to your life insurance to take care of your children and dependants.”

How do I choose a guardian?

It’s essential to nominate a financially capable and trustworthy guardian for your children, especially if they are under 18. Most people will choose a relative who knows the children. Remember, your nominated guardian is not obligated to accept. It’s recommended to nominate an alternative guardian as a safety precaution.

Where do I start?

Choosing a guardian will fall into your will. Discuss your ideas with the person you have in mind. The guardian clause in your will puts someone in a legal position to take immediate charge of your children, where they will live and will make decisions for them after you die. It’s also important to know that an appointed guardian or caregiver cannot ordinarily oust any surviving parent as guardian.

3. Why risk cover should form part of your planning

“Financial planning goes hand-in-hand with will planning,” says Thomson. The obvious reason for risk cover is to provide for your loved ones and other dependants if you pass away and pay off debt. However, with things like risk cover, the need for it is only felt when one needs to claim, which is usually during a difficult and stressful time. Either you are covered, and you or your family receives the financial support, or you are not and the financial burden adds to an already impossible situation.”

What’s important to consider as a guardian specifically?
It’s a good idea to have a policy of life insurance with sufficient death cover, which helps pay for all the executor fees, your income tax, capital gains tax, your car, any loans you have and any business debt you may owe. This will also take the pressure off your family having to settle these debts.

“Also consider using an estate liquidity calculator, to see if you have any shortfalls,” says Thomson. “So you can work alongside your financial planner to ensure you make adequate provision for your surviving loved ones.” Sanlam Trust has an excellent liquidity calculator here.

Where do I start?

“Ask your financial planner to help draw up an estate plan for you,” says Thomson. “One or more life insurance policies can significantly contribute to ensure sufficient cash flow in an estate. If you have maintenance commitments to your child(ren) and/or former spouse, you should ensure your life insurance portfolio provides for that in the future. Be sure to mention in your will that the specific policy is to be used for the maintenance claim.”

As Thomson says, while no one likes to think about death, parents and guardians can secure great peace of mind by understanding the various options for the provision of support to their children. Proper estate planning is a significant act of love.

As a Reality Plus or Health member, you can get up to 30% discount on your life insurance and other risk cover premiums, depending on your tier status.

Unsure how to plan your estate so the right people get what they’re due when you pass on? A financial planner is qualified to help you settle the admin of estate planning and advise on the right risk cover for you, so your loved ones aren’t saddled with expenses in the event of your death. Book a phone meeting with one now.

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