Month: June 2020


Who should you nominate as the executor of your will?

Who should I nominate as the Executor of my Will, is a question my clients often ask me. In the past, I believed that appointing a surviving spouse or family member to act as your Executor, was in your best interests. The thinking behind this was that by appointing a family member or spouse, you could negotiate and reduce the fee that the Executor charges. Over time though, I have become more and more aware of the emotional strain that this puts on the surviving spouse or family member.

The responsibility of an Executor is an onerous one. It is the Executor’s responsibility to carry out the directives in your Will, and take responsibility for making all the necessary disbursements from your estate and filing the correct documentation with the relevant authorities. The Executor remains responsible for this forever.

In some instances, where the surviving spouse has been nominated as the Executor, we find that the children get involved. They may have a friend who is a lawyer or accountant who offers to perform this function at a nominal fee. The problem here is that the lawyer or accountant may not wind up estates as a profession, so despite the nominal fee, the estate isn’t wound up properly. Decisions that were made in estate planning meetings with both spouses are often disregarded, and it takes years to wind up the estate.

One instance of this is a client of mine, whose husband died 15 years ago, and there are still shares in his name that have not been finalised and paid across to her. The Executor has since died, and the estate has been left in a heap. My client has since remarried, and her second husband is concerned that, should something happen to her, this will now become his responsibility when he was not involved in the first place.

Another instance is where an elderly couple in the Eastern Cape had nominated each other as their Executors, with the intention of the surviving spouse appointing an Agent to wind up the first spouse’s estate. The surviving spouse at that stage was 84, and not in good health herself. Even though she did appoint Chartered Legacy & Trust to assist us with winding up her late husband’s estate, she had to personally go to SARS to fulfil certain of her responsibilities as the Executor of the estate. She was pushed from pillar to post at SARS, which left her distraught, and in a very emotional state.

From experience, both through our clients’ stories and our own, we have come to respect the fee earned by Executors, and urge clients not to burden anyone but a professional Executor with this appointment. If there is a specific instance where a person would like a member of the family or friend to be involved in winding up the estate, they should instead consider appointing them as co-Executor along with a professional Executor.


Retrenchments and Layoffs

Sadly, retrenchment and layoffs are terms many people are having to come to grips with these days. These terms invoke anxiety and uncertainty, especially when it comes to an understanding of how being retrenched or laid off will affect their Pension or Provident funds as well as the company risk benefits.

If you have been retrenched or laid off, you need to understand all the options available to you, so that you can make informed decisions that best suit you and your family.

One way to help navigate through the uncertainty is to understand what your options are with each decision your employer takes regarding Company Pension / Provident Fund and Company Risk (insurance) products.

Pension / Provident Fund

Accessing your company Pension / Provident Fund will be one of your options if you are retrenched. However, before you decide to access your funds, you should ask yourself the following questions:
Do I have any savings that I can use for my daily living?
Do I need a short or longer-` term solution?
Do I have debt?
Do I have people that rely on me financially?

Depending on your age, your access is wide-ranging, but there are tax consequences. There are also options to access part of your Pension / Provident Fund and preserve the remainder.

Decisions regarding accessing your Pension / Provident Fund can have varying long-term financial consequences, so it is crucial to understand the implications before making any decisions. The decision to access your Pension/Provident fund should preferably be made after a consultation with your Financial Planner.

If you are laid off, you remain a part of the company and will not be able to access your Pension / Provident Fund. Your employer may offer to still contribute to your Pension / Provident Fund (potentially on your behalf), but this is not mandatory. It’s important to note that if you are laid off, and during your layoff period you find other employment and resign, you will not get the benefit of a retrenchment package. Again, each case is different and discussing what suits your situation best with a Financial Planner is encouraged.

Company Risk (insurance) products

If you have life cover or income replacement cover with your employer, these will fall away if you are retrenched. If you have debt and other responsibilities such as a family, understanding if you can continue with these significant benefits in your own capacity is extremely important. The ability to continue these benefits in your name can be an advantage from a cost and underwriting point of view. Continuing with these benefits in your own capacity when leaving your employer is a decision that your employer would have made at a group level, and needs to be confirmed by your employer. If you do not have this continuation benefit when leaving your employer, you are still able to approach insurers to apply for this cover in your own capacity.

If you are laid off, the consequences of your Company Risk (insurance) products depend on whether your employer will continue with your contributions to the insurer. Again, you can apply for these benefits in your personal capacity directly at insurers.

We encourage you to speak to a Financial Planner so that you understand all options available, as well as the consequences of any decisions you make. Knowledge gives us the confidence to make the right decisions during these uncertain times.



The Impact of Covid-19 on our Financial Planning

There was much talk, in the early days of the lockdown, of the significance of COVID-19, and the impact this virus will have on our lives, and potentially our finances. It came at us so suddenly that I think we all probably spent the first few weeks digesting what had just happened, and trying to get our minds around the situation in which we all found ourselves. Most of our thoughts were very much centred on the present, as we waited in anticipation for our President’s next address. Now, almost 84 days later, we are witnessing the real impact of this pandemic. Reading the news this past week, it has become apparent that a vast wave of retrenchments are lying ahead, along with many businesses closing their doors.

I have spent some time in a few client meetings recently and have realised the significance of the last few months on all of our lives. One couple shared how they had just retired in March and had six months of travel planned, most of which was booked over a year ago starting with a road trip to Namibia, with further plans to see more of Southern Africa. Another client has just completed building their retirement home in the Cape and was due to move in early April, they are still in Johannesburg and anticipate being here for the balance of the year. This past week Kim and I ran the first of a series of workshops for 80 pilots who are all facing retrenchment. These pilots range in age from the early stages of their working life, to pilots a few years from retirement. Given the specialist training and career of a pilot, and the difficulty in trying to find other work, made worse by the fact that the airline industry is probably the hardest hit globally, made this session particularly tricky. It is not easy to plan under these circumstances.

I am sure that many of you have not only been worried about your health, but also your finances, and added to this the potential burden that your children could be facing retrenchments or pay reductions. These feelings that you are experiencing are indeed not isolated; it is quite apparent that every one of us has been affected in different ways.

If we stop and reflect on our lives before lockdown, there are many lessons we can learn from a crisis such as this one. We have all learnt to slow down and appreciate the simpler things in life. The younger generation has possibly realised that this fast-paced material world that we are trying to keep pace with is not worth it. The importance of having some savings during this time is most likely proving invaluable now, especially as job security and earnings are threatened. Many people have had to revisit their financial plans and make adjustments to get them through this uncertainty.

On a positive note, the markets have made a remarkable recovery, a good lesson for all of us to sit tight during these unpredictable times as it’s impossible to second guess the stock markets. Thank you all for your feedback in the recent survey, it was comforting to know that you appreciate all we have tried to do to keep you informed and cared for during the extreme uncertainty we have lived through in the last few months. I am most grateful to our incredible team at Chartered who have all needed to adapt to working from home. Many of whom have young children and needed to juggle their careers and home life.

Wishing you all the best as you venture out to treat yourselves to those long- awaited golf games, pamper sessions or visits to the hairdresser, but please continue to take care in the months ahead as we anticipate the increased spread of this dreaded virus.

Warm regards,

Johannesburg Office
Tel: +27 11 502 2800
Eastern Cape Office
Tel: +27 41 001 1026
Western Cape Office
Tel: +27 21 001 0048
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