By Themba Mahlangu, Consumer Education (FSCA)
As a Consumer Education Officer for the Financial Sector Conduct Authority (FSCA), I have come across many instances where surviving family members don’t know where to go, who to contact and what to do when a financially traumatic event such as death occurs from a financial perspective. As parents, perhaps it’s time to have a conversation with your spouse’s/partners and young adult children about money matters to inform them now - about your financial status.
It is still frowned upon by South African parents to discuss money matters with their children in front of them, but it is critical to begin the conversation on financial matter. In this article though, the emphasis will be more on the importance of having a conversation with your family regarding important documents when one of the parents pass on. Parent must make sure that their children know where to go, what to do and who to contact in order to make informed decisions about any insurance policies on heritances for the future rather than starve and live by borrowing meanwhile they have inheritance.
During the stakeholder relations campaign between the FSCA (then Financial Services Board), and one of the Pension Fund Administrators in 2014, a family in Northern KwaZulu-Natal lost a father and had to borrow money from a Mashonisa to cover the costs of a funeral, despite the fact that the deceased's retirement fund had an R20 000 funeral cover benefit that could have been used to cover the funeral costs. This indicates a lack of financial communication between families. Furthermore, I advised my next-door neighbour's children on where to go to obtain a letter of authority and who to appoint within the family to finalise their father's estate.
Below are six important pointers to share with your families about your finances:
Safe keeping of important documentation
Ensure that your young adults are aware of where important documents are kept in order to avoid confusion, delays and anxiety during unforeseen circumstances or unexpected events such as death, hospitalisation or illness.
Share important information
Inform your spouse, partner, parent(s), older children or trusted friend about the various bank accounts that you have and financial products that you own, examples include funeral and life insurance policies, pension or retirement annuities, investments and other assets such as property etc. You could also provide the contact details of the executor of your will, lawyer, financial planner/advisor, or someone your children can trust if you feel that they are too young, or you do not want to disclose too much information.
Your last Will and testament
Update your will as and when your life experiences change for example, when you buy an asset. By having a will, you will help to ease the financial burden on your family. With a will, you get to state your wishes and how you want your assets to be distributed when you have passed. Tell your family who you have appointed to tie up your estate in the event of death.
Handling an estate has a lot of administration, especially if it is a big estate and there are assets and investments. Make sure that there is enough money in your estate in case there is a shortfall, that is, the assets owned are less than the expenses or debts. It can take some time to tie things up and that it would be wise to have emergency savings for this purpose in the interim. You do not have to be wealthy for you to have a will, as long as you own an asset or working. It is important to have a will.
Funeral and Life insurance
Talk about your policies, for example funeral, life, non-life insurance, retirement plan and annuity beneficiaries (without disclosing the nominated beneficiaries). Indicate to the family if the premiums are up to date, and which insurer to contact in the event of a claim.
For more information on life, non-life insurance or retirement click here https://www.fscamymoney.co.za/Pages/Financial%20Safeguard/Retirement.aspx
Credit Insurance
Talk about the credit insurance you have taken in case you still owe on a house, car, furniture, or any other items. Ensure that your children know the retail shops where you have bought the insurance in order to avoid repossession of the valuable goods that you have already paid for.
Divorce
The divorce rate is currently 45% according to Statistics SA. If you and your partner are getting separated or divorced this has an effect on the household finances. Share the details of your settlement agreement or provide a copy thereof to your children, in the event of your passing.
It is important to update your policies when a relationship has concluded, for example removing an ex-spouse as a beneficiary if he/she was a nominated on your retirement plan or insurance policies. Unless you prefer to keep this unchanged.
To learn more about the effects of divorce on your finances click here
https://www.fscamymoney.co.za/elearning/Divorce/index_lms.html
Enquiries:
www.fscamymoney.co.za
CED.Consumer@fsca.co.za | 
