Working for a lifetime is about building a future for your family; drawing up a will is about leaving a legacy so that your efforts to build savings, assets and wealth benefit the people you choose after you have gone, says Old Mutual.
Speaking on the sidelines of the October 2020 AMPD Masterclass with South African DJ and music producer, Prince Kaybee, John Manyike, Head of Financial Education at Old Mutual, commented and said that a will is an important part of financial planning. Sadly, however, about 70% of South Africans die without leaving behind valid wills.
People who don’t have wills usually say that:
- Drawing up a will is expensive.
This is not true. There are many options available, and financial institutions and financial planning advisers often offer services for drawing up wills for account holders at minimum or no costs.
- It isn’t necessary because my wife or partner will get everything.
This is not necessarily true. In South Africa, if you die without a valid all your estate will all go to your spouse only if there are no other descendants.
A specific formula is applied if a wife and other descendants survive you.
- They are too young to do so and don’t have anything to leave anyone, anyway.
As soon as you start earning an income, you begin acquiring items and can accumulate debt. It is wise to have a will so that you can have the control to direct where the money you have will go.
- Wills are only necessary if you are rich.
Not true. A will determines how your assets are shared when you are no longer around. “Although a will can be written without legal help, it is advisable to get expert assistance when drawing one up. The more you have accumulated during your life, the more important a professionally written document becomes,” says Manyike. “Having an accredited financial adviser assist with controlling your assets and drawing up a will ensures that special financial plans- such as trusts- are included in your estate. These allow trustees to administer your assets and your loved ones get the benefits for years to come.”
Prince Kaybee added, “A living will can speak for you if you are disabled and can’t communicate. It can direct what you want to be done and avoid confusion and conflict within a family.”
“Thinking about drawing up a final testament is also essential. If you have professional help, you can also make sure that the correct structures are set up for the benefit of the family. In this case, trustees who understand business and have no emotional attachment to your assets can make decisions about investments that preserve and grow them. In this way, the beneficiaries will be sure to benefit from your investments for many years to come.” he concluded.
Other financial matters raised in the AMPD Masterclass were:
- You should never spend future income. Knowing money will be coming in doesn’t mean that you should spend it before it is earned.
- Never allow peer pressure to push you into poor financial decisions.
- Contracts should be carefully read and understood before they are signed.
- Using investments and having another source of income means money can still be earned even when a primary source of income ceases.
- Save money and spend on investments rather than depreciating assets.
- Work on creating financial independence when you begin working.
You should also find out about insurance, how it can help if something happens to stop you making a living, life cover, retirement plans and the other products that can help create long-term strategies advises Prince Kaybee.
“Financial education is important. You should learn what you can and, where possible, use specialists like accountants and financial advisers to help you. Accumulating knowledge is the best way to build a future.”
The full version of the Old Mutual AMPD Studios Masterclass with Prince Kaybee can be viewed on YouTube. For information, go to the AMPD Studios website at www.ampdstudios.co.za. To join the AMPD Studio community for updates, events, and invitations, join the AMPD WhatsApp line by WhatsApp’íng your name to 081 707 66 36.