29 January 2025
Advocate Sankie Morata CFP, Chief Executive of Sanlam Trust, elaborates, “I always tell our clients who think their debt will be gone when they pass away, ‘If you love your next of kin, settle your debts for their sake or be proactive with your estate planning’. This means setting up a plan that clearly outlines who will receive or inherit your assets after you pass away and it ensures that your dependents are provided for when you are no longer around.” If you don’t do this, the Executor or person administering your estate may be forced to sell assets in your estate to settle the debt.
Morata explains that debt on items like vehicle finance, personal loans, home loans, and business loans must be settled after death.
In addition to debt, other financial burdens that may affect heirs include:
“A deceased estate must have enough money or insurance cover to settle debts, so that the surviving family won’t face insolvency. If there is not enough left to cover these costs, the Executor may have to sell any available assets. It’s a sad story that can often be avoided with proper estate planning and good financial advice,” says Morata.
Morata shares three strategies that could reduce the financial burden on your loved ones:
Morata says it is critical to appoint an estate planner who can help you structure the inheritance you want to leave to loved ones; a financial adviser who can help you save, invest and minimise your debt; and a fiduciary specialist who can help you draft your last will and testament and assist your family in wrapping up your estate. “If you design your estate plan to save costs, you increase your loved one’s inheritance instead of relinquishing your assets to the state.
“These strategies are good tools for building a legacy in South Africa. It all starts with a will. Your will must be clear to deliver your intent and empower your beneficiaries to live with confidence. Last year, a survey on South Africans and wills, conducted by Sanlam Legacy, showed that 98% of respondents expressed a desire to leave a legacy, but only 39% had a will, indicating a clear disconnect that we must address. Now’s the time to get your affairs in order, draft a will and have a plan to protect your family, now and after you are gone.”