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COVID-19 is a reminder to ensure your personal affairs are in order

23 March 2021 Mark Hawes, Certified Financial Planner and Financial Consultant at Alexander Forbes
Mark Hawes, Certified Financial Planner and Financial Consultant at Alexander Forbes

Mark Hawes, Certified Financial Planner and Financial Consultant at Alexander Forbes

With over 50 000 South Africans dying of Covid-19 related illnesses in the past year, the pandemic has forced us to face our own vulnerability and take stock of our lives.

Ensuring that our financial affairs are in order is now imperative. With even healthy and young people dying, the question of “what will happen to my family if I pass away” has never been more important.

Your death can place a massive administrative burden on your loved ones long after you have passed if you do not have your financial affairs in order.

Having a ‘ready to depart’ file with all the necessary documents and information needed in the event of your passing will assist your family. They will have access to your will, living will, passwords and title deeds for example Having all these documents in a single file or folder allows for ease of reference and access during what is an extremely emotional and stressful time for them.

In the event of an emergency or death, the following documents are crucial to include in your personal ‘ready to depart’ file, which can be kept in a safe or filed with your lawyer for safekeeping while you are alive:

1. Important documents
Record the contact details of your lawyer, insurance broker and financial advisers, all of whom need to be notified when you pass away. Include a copy of your birth and marriage certificate, antenuptial contract or divorce agreement, any previous partner’s death certificates, ID book or card, will and your living will, if you have one. Include the most updated tax assessment for both yourself and your partner, as well as car ownership documents and any title deeds for properties. If you own a business or shares of a company, include important documents such as partnership agreements.

2. Medical details
In the case of medical incapacitation, it is a good idea to write down a medical history for yourself and other dependent family members. Record details of your medical aid and gap cover policies, as well as the number of your broker, if you have one.

3. Personal details
Safely record passwords or pins for phones, computers and bank accounts – encrypt them using an app like LastPass to keep them safe. Include letters for desired funeral arrangements. Write down a list of your bank accounts and a list of debit orders which go off every month, as well as a comprehensive list of insurance, pension funds, trusts and investments. List the number of your financial adviser.

Where to start organising your personal affairs
The best place to start is estate planning. This not only includes your financial affairs but your legacy and beneficiary structuring and planning. Some of the areas that need setting up include:

• Ensuring funeral arrangements are in place and understood
• Appointing guardians for minor children (and informing the guardians of your wishes)
• Setting up trusts and appointing trustees as well as competent executors

Two simple areas to start are:

• Have an effective will in place.
• Make sure you have enough money on death to settle debts and to provide for dependants – where necessary include family who are not earning an income that you are currently supporting such as a spouse or extended family.

If you do not have enough money to provide for these outcomes, use life insurance to make up for the difference in the required wealth.

Take family members with special needs into account for the plan, and set up special trusts. Include ageing family members with existing conditions such as dementia who require ongoing care, especially during the pandemic.

Often the hardest part of any financial planning is simply to get started. This is where professional and trusted financial planners can assist, providing advice, guidance and assistance to get you to where you need and want to be.

Quick Polls

QUESTION

Financial behaviour experts suggest that today’s risk modelling methodologies ignore your client’s emotional ability / behavioural capacity. What are your thoughts on spicing up risk profiling tools to make allowance for your client’s financial behaviours

ANSWER

[a] Bring it on; my client’s make too many irrational financial decisions
[b] Existing risk profiling tools are adequate
[c] Risk profiling tools should be based on the model / rational client
[d] The perfect risk profiling tool is science fiction
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