Live your life, but plan for your death
Thinking about your own death probably makes your blood run cold especially if you have children. The idea of them going on without your love and support is chilling. Unfortunately, every adult and especially every parent should give their death some thought, because your responsibility to your loved ones doesn't end when you pass away.
There's a checklist of the things you need to sort out before you die, called, unromantically, a death plan. It's never fun to think about, but if you have this checklist up to date, you can live your life without worrying that your loved ones will have an uncertain future if something happens to you.
Buy life cover
If you have dependents, it is vitally important that you have sufficient live cover in place to ensure that they do not suffer financially after you are gone. If you are young and healthy, life insurance isn't particularly costly.
When working out how much cover you need, you should look at your children's expenses like schooling, medical bills, food and entertainment to work out how much they need each month, and then buy life cover to meet those needs. A financial planner or broker can help you to work out the specifics of what you'll need. And remember that if you pass away, a life insurance pay-out that names a specific beneficiary cannot be used by your estate to settle debt. It goes to your beneficiaries.
If you have debt such as a bond or a credit card, most financial institutions offer or even insist that you have credit life insurance to cover what you owe. With this kind of cover in place, you will know that your estate will not be saddled with your debt, which means that your dependants will have a greater inheritance. It's important to know that while a lender can insist that you have credit life cover in place, they can't insist that you buy it from them, so shop around for competitive quotes.
Make a will
Your will is simply a document stating how your assets must be divided and dealt with after your death. You don't need to see a lawyer or pay a fortune to draft a will. Simply use a template that you can find on the internet or purchase at a stationery shop, and sign it and have it witnessed. You can lodge the will with a lawyer or at a bank, or you can keep it in a safe in your house and it's a good idea to give a copy to a trusted family member as well. Remember to tell the relevant people where to find it.
Your will should cover:
- Who will inherit your assets.
- Who should act as your executor. If your estate is worth less than R250 000, you can appoint an administrator, who doesn't have to follow the full procedures of the Administration of Estates Act, which are the legal processes for winding up an estate. For estates greater than R250 000, an executor must be appointed, who is either familiar with accountancy practices, or has the support of someone who understands financial law. This person must have indicated that they are willing to act as the executor.
- Whether and how a trust must be formed. This is important if you have dependent children who will inherit your assets. A trust should be formed, usually made up of three people (for example a family member from the mother's and father's side of the family and a third, neutral financial professional), who will decide, guided by your wishes, how those assets are handled while your children are underage.
- Who will act as your children's guardian. Make sure that you have given this careful thought and consulted with the individuals who you are going to appoint. Also remember to revisit this should the guardian's situation change. Don't worry about hurt feelings or family politics. Do what is best for your children. You may find this part very difficult to deal with, but it can be the most important conversation that you will ever have.
- Whether any charities should benefit from your estate.
- A list of all your bank accounts, investment products, existing policies and internet passwords so that your family can easily wind up your affairs.
- You should also have a document called a living will to state what your wishes about being kept alive by artificial means (life support) in the event that you are unable to communicate and have no hope of recovering.
Plan your funeral
It helps your family immensely to be able to act on your wishes about how to bid you farewell. You can state requirements like whether you should be buried or cremated, where you would like the memorial service to be held, whom you would like to speak, any readings you would like read or any other information that would be useful to loved ones who would like to carry out your last wishes. It can also be surprisingly expensive to bury someone, so it helps to have a funeral policy in place to deal with these specific financial requirements.
Get it done!
While considering your death may not be the most uplifting way to spend your time, knowing that your loved ones will be cared for and your last wishes will be carried out will give you the peace of mind to live your life fully. Don't delay the process; make the time and then do it and remember to revisit your will once a year or when your circumstances change, just to be sure that your requests and bequests are still up to date.