Personal finances and death: Top tips to do before you die

As anyone has had to wrap up an estate will know, the experience often compounds the grief and the loss. It can drag on endlessly particularly if you aren’t clear about the contents of the estate or if no will was left. What should you and your loved ones have in order before death? Judy Snyman, fiduciary specialist at AlphaWealth shares some of her top tips.

Know assets and liabilities: to prepare an estate plan, you and your advisor should annually prepare a list of your assets and liabilities.

Review life insurance and other policies: if you have dependents that rely on your income, it is important to have sufficient life cover to provide for them. Insurance policies are also a way to ensure that there are available funds in the estate to pay expenses.

Determine your beneficiaries and what their maintenance requirements are: this is especially important where there have been significant changes in your life, such as marriage or divorce.

List of passwords, accounts and investments: Make sure that your family can access all your accounts (including online banking, email etc.) and that they are able to locate all of your banking and investment accounts. It can create difficulties if your family and your executor are not able to locate all of your investment assets. You can keep the list of assets yourself or with a trusted advisor.

Provide for death expenses e.g. funeral costs, taxes, administration costs, etc.

Make sure your estate can cover these expenses.

· Executor’s fees – up to 3.99% of the value of your estate;

· Taxes, including estate duty (for estates over R3.5 million) and capital gains tax;

· Funeral costs;

· An accrual claim in favour of the surviving spouse (if applicable);

· Settlement of outstanding debts (e.g. credit cards/loans).

Draw up a will: Ensure you have a valid will. It allows you to plan how your assets are distributed to your heirs on your death in a tax efficient way. It is hugely valuable to get professional advice as the standard documents which are available in stationery stores are not suitable for all estates and often cause significant problems for heirs. There are also minor things that can go wrong which will invalidate your will eg if your will is not signed in the presence of two witnesses (on the same day!).

If you die without a will, your heirs will inherit intestate according to the Intestate Succession Act. This means that the assets will be divided amongst your spouse and descendants in specific shares. It may mean that your assets are distributed in a way that is not tax efficient or to family members who you did not intend to benefit.

Dying intestate could also be problematic where the assets are inherited by minor children. Children under the age of 18 cannot inherit assets directly. Any assets which they may inherit will, in the event that both parents are deceased, be retained in the Guardian’s Fund which is administered by the Master of the High Court. This means that the administration of your assets will be in the hands of a government institution.

If you have minor children, consider who will be appointed as their guardian in the event that both parents die. However, nominating someone as a guardian to a minor child in a will does not have the effect of legally appointing them – only a court can appoint someone as the legal guardian of a minor child.

When drawing up your will, consider other issues, such as what should happen to your remains, what should happen to your pets and how your jewellery, art and other personal effects should be divided. These matters can be dealt with in your will or in a letter of wishes, provided that the assets are not of substantial value, in which case they should be included in your will and must be taken into account for estate duty purposes.

It is also important to provide guidance to your family in the event that you become incapacitated to make decisions regarding your own health and wellbeing such as if you are in a coma. These wishes can be set out in a document which is known as a living will.

Consider your executor: Your executor can be any competent adult. People often appoint their surviving spouse or someone close to them whom they trust. Appointing a spouse as the executor does not mean he or she has to wind up the estate: the spouse can appoint an agent to do so. AlphaWealth advises that you appoint a professional person as executor who has the necessary skills and expertise to administer your estate. This lightens the burden on your family at an already difficult time. The maximum fee which an executor may charge is 3.99% of the value of your estate. This fee is often negotiable.