In a country where almost 40% of households are headed by females, women are still behind when it comes to taking charge of not only their own financial security but that of their children and family who dependent on them. Unfortunately, the unintended knock-on effect of this on future generations intensifies when a female breadwinner passes away without having done adequate planning. South Africa’s fearless females need to own their legacies by ensuring that should they pass away, the winding up of their estates, is as pain-free as possible for loved ones left behind.
According to the latest Momentum/Unisa Household Financial Wellness Survey, the unfortunate truth is that women have little control over their income in many households. Although they are exposed to day-to-day budgeting, they are more inclined to leave long-term financial planning and issues to their partners. The survey compared the personal empowerment skills of both males and females who are both considered a Financially Knowledgeable Person (FKP) within the household.
According to Jeffrey Wiseman, CEO of Momentum Trust, one of South Africa’s leading providers of wills, trust and fiduciary services in South Africa, it is critical for women, especially those heading their households, to take charge of their estate planning. “We are all going to pass away one day. The COVID-19 era has only reinforced the urgency to get our affairs in order and protect those we leave behind as that time may come sooner than we think.”
The Momentum/Unisa Household Financial Wellness Survey revealed that women, much more than men, reported feeling that they are ‘pushed around in life’, with little they can do to change the things that matter in their lives. The result? A sense of helplessness when dealing with life’s challenges. Wiseman says one of the greatest of these challenges is keeping your family protected in the event of your death.
He says there is a great financial cost to winding up an estate which is very often underestimated. In many instances, the absence of a financial plan results in the wishes in terms of the will of the deceased person not being actionable. This is normally due to assets needing to be sold to cover expenses. “Many South Africans don’t have enough money in their estates when they pass away to provide sufficient liquidity to settle expenses incurred in winding up the estate. This liquidity is crucial in not only enabling the executor to settle these expenses, but also in empowering the executor to action their wishes in terms of their wills.”
“Unfortunately, grieving loved ones are often left to shoulder the financial burden. This is not the legacy that most of us want to leave behind, especially if you are the sole breadwinner for your household as many women are. To avoid this scenario, the financial adviser has a crucial role to fulfill,” says Wiseman.
The survey showed that 33.6% of households where the Financially Knowledgeable Person (FKP) was a male were financially well; this was only the case with 20.4% of female FKP households. Furthermore, only 13.2% of female FKP households have an up-to-date singed will, compared to 20.7% of male FKP households. Wiseman says it is critically important, especially considering the stark inequality highlighted by this survey that women face when it comes to financial wellness, to ensure that you have a financial plan in place that includes a will to ensure your wishes are actionable. Put differently, without a financial plan backing it up, you may have a legal will that may be difficult to give effect to.
Women need to appoint a qualified executor to ensure that their loved ones inherit as intended. An executor of an estate is an individual appointed to administer your estate when you die and should generally be an impartial person. Wiseman says that, “we tend to see issues when clients place executorship in the hands of a loved one who doesn’t understand the nuances and challenges that come with this responsibility.”
Without the help of a professional winding up an estate, Wiseman warns that one tends to run into one or more of these challenges:
• Wills cannot be found, are found not signed, or are incorrectly signed and witnessed;
• Wills are poorly drafted, resulting in confusion and unintended consequences as to who inherits what;
• They are too low in value (less than R 250 000) for a professional executor to be appointed, and the family must deal with the Master of the High Court directly (During this COVID period access to the Master’s Office is challenging);
• There is insufficient cash to settle administration fees and debts, whereby either assets need to be sold to create cash liquidity, or should there still not be sufficient cash liquidity in the estate after this forced sale, the estate is declared insolvent.
These challenges result in the testator’s wishes in terms of the will not being actionable and results in the stipulated heirs not inheriting.
To help South Africans gain complete peace of mind when dealing with the loss of a loved one, Momentum has enhanced its professional will drafting and deceased estate administration offerings, by launching its Estate Provider Benefit. This unique packaged solution provides the necessary funds to settle existing debts and professional fees that arise during the administration of a deceased estate. This includes amongst others executor fees, conveyancing fees, fixed property or motor vehicle transfer costs, trust costs, taxes, existing debt, sworn appraiser’s valuation fees, fees relating to the Master of the High Court and costs associated with firearms and how this is dealt with in the deceased estate. As part of this unique packaged solution, you will be assisted with implementing a professionally drafted, legally-binding will.
“We know that women have it hard enough as it is, not just across the world but especially in this country. Many of you are bravely leading your families into a better future, but should you pass away make sure you leave your loved ones with the life they are accustomed to. Give your loved ones the peace of mind knowing that there will be enough money available in your estate to cover debts and administration costs, your will is safe, and that any amount not used will boost your estate instead of being lost to fine print,” says Wiseman.
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