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Category Life Insurance

When dying isn’t the only high price to pay

09 September 2022 Metropolitan GetUp

As South Africa enters National Wills Week on 12 – 16 September, know why it’s important to get your death affairs in order.

While Riky Rick’s sudden death stunned the country earlier this year, it was the aftermath of his passing that only added to the tragedy.

The much-loved 34-year-old rapper and producer – who, with his big brand endorsements was regarded as being the embodiment of the South African dream – had passed on without a will, leaving his long-time partner and mother of his child to battle it out in court.

The entertainer’s passing highlighted the high price attached to passing away without making the provisions. While death is never a nice thing to think about, if we don’t put the necessary plans in place, it’s our loved ones who will likely pay the price after we’re gone.

What does this price entail? Liezel Gordon, Client Engagement Team Lead at Metropolitan GetUp, tallies things up.

“While some might have insurance to cover debts, education and other costs when they die, there are also ‘hidden’ costs that must be taken into account. Even when these costs are considered, they’re often severely underestimated and can run into hundreds of thousands of rands.

“These fees might include capital gains tax, transfer fees for properties, rates and taxes, estate duty, executor fees, advertising costs, as well as funeral costs.”

Without a solid will in place and these costs taken into account, Gordon warns that family members might end up having to sell assets or even take out a loan to cover costs. She offers some practical advice to ensure that your loved ones are looked after when you’re gone.

Where there’s a will, there’s a way…of doing it online.
It sounds simple, but so many people do not prioritise drawing up a will, or postpone it to some more convenient date in the future; often finding that this time never arrives. And then it’s too late.

But this doesn’t need to be a lengthy, complicated or expensive process, says Gordon. Metropolitan GetUp, for example, offers a free will-writing service through their partnership with Cliqtech, which can be done online. “This lets you make your wishes clear, giving you peace of mind through knowing that your loved ones will benefit the way you intended them to in the event of your passing.”

Cover your ground.
Life and funeral cover should be non-negotiables, and ensure that the largest costs associated with dying are covered once you’re gone, leaving your loved ones able to grieve you without added financial burden. These can include debts and student loans, as well as funeral costs. A simple funeral can cost anything from R3000, while you could pay up to R50 000 and more for elaborate affairs.

Gordon also provides a helpful tip: Life cover can be used to cover any estate duty payable after you die, without needing to sell any assets intended for your beneficiaries. “To ensure your life insurance policy is earmarked for these purposes, make your estate a beneficiary on one of your policies, which will cover your estate expenses,” advises Gordon.

Understand the death-islation.
Your retirement annuity allows you to save for retirement using pre-tax money (money that hasn’t been taxed). If you pass away, the funds accumulated in your retirement annuity are not considered part of your estate so are not factored in when calculating your estate duty liability or executor’s fees. “These funds will be allocated to your beneficiaries or financial dependants by the fund’s trustees. They have the option of receiving the benefit in cash, which – if more than R500 000 – will have tax implications. They can also purchase a life or living annuity which will be tax-free, but the beneficiary will be taxed on the annuity income.” says Gordon.

Also bear in mind that all assets left to your spouse in your will (or in accordance with the law), are deductible from the gross value of your estate and are also exempt from estate duties and executor’s fees. “Therefore, ensure that you clearly list your spouse as your beneficiary, so that these assets are made available to them without any hassle.”

Finally, for larger estates or complex instructions it is advisable to speak to an Estate Planner to help structure your estate to ensure you don’t pay unnecessary fees, advises Gordon.

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