When dying isn’t the only price to pay
Life and funeral cover should be non-negotiables and ensure that the largest costs associated with dying are covered once you’re gone.
The 34-year-old rapper had died without a will, leaving his long-time partner and mother of his child to battle it out in court.
While Riky Rick’s sudden death stunned the country in February, it was the aftermath that added to the tragedy.
The 34-year-old rapper had died without a will, leaving his long-time partner and mother of his child to battle it out in court.
The entertainer’s death highlighted the high price attached to dying without making provisions. While some might have insurance to cover debts, there are also “hidden” costs that must be taken into account – and these are often underestimated.
ALSO READ: Fans discuss wills after report that Riky Rick and Bianca Naidoo were never married
This could include capital gains tax, transfer fees for properties, estate duty and funeral costs. Here’s some advice to ensure that your loved ones are looked after when you’re gone.
It sounds simple, but many people do not prioritise drawing up a will, or postpone it until it’s too late. But this doesn’t need to be a lengthy, complicated or expensive process.
Metropolitan GetUp, for example, offers a free will-writing service, which can be done online.
-Life and funeral cover should be non-negotiables and ensure that the largest costs associated with dying are covered once you’re gone.
-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.
-Your retirement annuity allows you to save for retirement using pre-tax money. If you die, 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.
-Assets left to your spouse are deductible from the gross value of your estate and are also exempt from estate duties and executor’s fees.
Therefore, ensure that you list your spouse as your beneficiary, so that these assets are made available to them without any hassle. For larger estates or complex instructions, it is advisable to speak to an estate planner to ensure you don’t pay unnecessary fees.
Gordon is a financial advisor
