Legacy planning is often seen as a complicated chore. However, it’s an act of care. In South Africa, where cultural and economic realities can amplify the pain of loss, poor planning can leave families in disarray. The truth is, your will may not be the final word on all your assets, particularly your retirement benefits. Understanding how to properly plan for the future is essential to ensure your family’s financial security and peace of mind.
Understand your benefits beyond your will
A popular misconception is that your will dictates how all your assets are distributed. Retirement benefits, including those from your provident or pension fund, are governed by Section 37C of the Pension Funds Act. This law ensures that your benefits are distributed fairly and equitably to those who were financially dependent on you at the time of your death. This means a fund’s board of trustees has the final say on who receives the money, regardless of what your will or even your nomination form says.
Checklist:
- Understand which of your financial products are governed by a will and which are not.
- Review the beneficiary rules for your retirement fund, life insurance, and other policies.
- Do you know who the trustees of your retirement fund are and how they operate?
Update your nomination form
While not legally binding, your beneficiary nomination form is a crucial guide for the fund’s trustees. It provides them with a clear understanding of your wishes and helps them identify who might have been financially dependent on you. An outdated form can lead to confusion and delays, often resulting in family disputes during an already difficult time.
Checklist:
- When was the last time you updated your beneficiary nomination form?
- Have there been any significant life changes since then (e.g., marriage, divorce, a new child, a new dependent)?
- Have you clearly indicated the full names, ID numbers, and contact details of your dependents and nominees?
The role of trustees
The trustees’ primary duty under Section 37C is to ensure your death benefits are distributed to your dependents and beneficiaries in a just and equitable manner. They are legally required to conduct a thorough investigation to identify all potential claimants. This includes legal spouses, children, and anyone else who was financially reliant on you. This process is designed to protect vulnerable individuals, even if they were not explicitly named on your nomination form.
Planning for life’s unexpected turns
Life can be unpredictable and full of changes. A legacy plan that worked for you in your twenties may not be suitable in your forties. Whether you’re getting married, having a child, or starting a business, each new chapter requires that you revisit your legacy financial planning. Adopting a proactive approach will ensure that your plan remains relevant and reflects your current wishes and responsibilities.
Checklist:
- Do you have an up-to-date will in place?
- Have you had an open conversation with your family about your financial wishes?
- Do you have a financial advisor who can help you integrate your retirement fund planning with your broader estate plan?
Changing your mindset from admin to advocacy
Thinking about death and finances can be uncomfortable, but putting off these conversations only makes things harder for those you leave behind. By taking the time to update your forms and understand the process, you’re not just doing paperwork – you’re advocating for your family and loved ones. You’re giving them the gift of clarity and security, preventing them from having to navigate a confusing and emotionally charged financial process.
“This proactive commitment aligns perfectly with Momentum’s Science of Success philosophy: Success favours the focused. Don’t let a lack of knowledge stand in the way of your family’s well-being. Take action today to protect the legacy you’ve worked so hard to build,” concludes Mathatho.
