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Preparing for the Worst

How to ensure peace of mind for your loved ones in the event of your death.

Hesta van der Westhuizen

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Preparing for your unexpected death may not be the most uplifting topic to talk about but it is very important in order to save your loved ones from any additional pain and suffering after your death. If you are one of the many people concerned that your partner or spouse will have to worry about money in addition to the stress and grief they will suffer if something happens to you, here are a few points to consider.

  • Ensure that your partner has access to money for the immediate expenses – preferably a bank account in his or her name.

    In practical terms, if you are married in community of property, or even if you are married out of community of property but only have a joint bank account, the bank manager is legally obliged to stop any access to your account the moment he is informed about your death. Most banks will handle the situation with compassion and, after having certified the amount in the account for estate purposes, will allow the surviving spouse to draw money for their immediate needs. But if they do not have an account it might mean that they will have to go through the process of opening an account in their own name.

    Having access to money does not mean that they have your pin and can continue to draw money from your account – this can be construed as theft from a deceased estate or defrauding the estate. The executor will have to take action as it might limit his ability to administer the estate.

  • The funeral costs will have to be paid even before the undertaker is prepared to move the body from the mortuary. Undertakers do not do funerals on ‘credit’. Make sure your surviving spouse has sufficient money available, or access to money (a loan from a child or family member, even sufficient credit in a credit card will do) to pay for the funeral. The funeral costs are usually reimbursed by the estate to who-ever paid for it, so it does not have to be a gift. Even a basic cremation – cheapest coffin, small service in the undertakers’ rooms – starts at about R12 000. And the minister and organist will have to be paid in cash. Other ways to ensure there is money for a funeral is to confirm if your family members can access your risk cover policies. Some employers offer a funeral benefit with their employee benefit schemes, while some of the insurance companies also allow family members to take an advance (sometimes as much as R50,000) on your risk cover policy – however, this might be subject to conditions. As a last option you might consider a funeral policy. If this route will be your way of preparing for the costs of a funeral, just make sure that the paper work has been done correctly and that the person you have nominated to claim the money can do so without any hassle.
  • Most people are worried about where the money will come from for the surviving spouse’s living expenses until the estate has been finalised. This is a real concern as it could take a number of months before the executor of the estate has been officially appointed by the Master of the High Court – and until the executor is appointed, he cannot legally give the surviving spouse the money for living expenses, even if the estate has sufficient capital for the purpose. The good news is that in most instances, if the estate has sufficient assets in it, it is not necessary for the estate to be finalised (which on average takes about 18 months) before the surviving spouse can access some of the capital. Most executors will arrange for the spouse to get some money for living expenses and things like rates & taxes.

    An option to ensure that your spouse has immediate access to capital is to nominate your spouse as the beneficiary on some of your insurance policies. This should pay to her/him directly and in a reasonable time – unless the death claim is delayed because the cause of death is due to violence such as murder, hijacking or an accident caused by a drunk driver. In such a case the underwriters will wait for a police report before they will pay the benefit – and this can take up to two years.

    If you assume that your spouse will get immediate money from your retirement fund, be aware that the trustees of any retirement fund – such as your pension fund at work or your retirement annuities – have 12 months in which to pay the benefit to your dependants. This is to ensure they make 100% sure that they pay to whoever has been financially dependent on you. This might not be a problem if you have an uncomplicated family structure, but with our modern families where you may have your children, your spouse’s children, and children from a previous marriage, this could be a serious problem.

    On the positive side, for retired people whose income comes mainly from their living annuity, most administrators of these funds will change the ownership of the structure as soon as they have the necessary documentation – your spouse therefore might miss one month’s income, but would soon after continue receiving a regular income. However, make sure he or she is nominated as a beneficiary on your living annuity investment.

  • The bond and other liabilities. One would think that your bank will be lenient because your spouse is to deal with your death and the estate is anyway responsible for settling all your debt. In practice, the bank doesn’t care – they want their money back. The best way to provide for this is to have a ‘bond’ policy which is payable to the bank in the event of your death. If the bond is less than the benefit on the policy, the bank will pay the rest to your estate.
  • As financial planner, I have heard some gory stories about the family and the deceased’s will – such as the search for the last will and testament that starts even before the deceased’s body has been removed to the mortuary. The lesson is to keep updated records and ensure that your spouse knows where to find the documentation – and maybe one other trustworthy person in case you die at the same time.

The most important gift that you can give your spouse is not to leave him or her in the dark about your affairs. Keep them up to date on the details of your estate plan, so that he or she can know what the situation is in the event of your death.

Of course, the first step is to have a financial planner draft a detailed estate plan to see if there is enough money and assets in your estate to cater for all your debts and sufficiently provide for your loved ones. A good estate plan will also advise on the most appropriate options to deal with all of the above issues.

Hesta van der Westhuizen CFP is a Certified Financial Planner at Consolidated Financial Planning and has a BCom-degree and Advanced Post Graduate diploma in Financial Planning Law. She is also Chairperson of the Financial Planning Institute’s Risk committee. For more information please visit: www.consolidated.co.za

Personal Finance

(Infographic) The Financial Advice Millennials And Gen Zers Want To Know

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful. And that starts with getting the right advice.

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Whether it’s saving for retirement or paying off credit card debt, money management can be a challenge. Of course, different people have different concerns – and that often comes with age. While a 60-something baby boomer might be organising their savings for retirement, your 20-something millennial might be focused on paying off student loans.

In a recent study, financial intelligence company Comet surveyed more than 1 000 people to uncover the top financial concerns of various age groups, as well as the financial advice millennials and Gen Zers want to know and what they hear instead.

Overall, saving for retirement was the top concern across all age groups, with saving for an emergency and affording monthly bills following in second and third. However, it’s no wonder these are some of the most pressing worries – according to the research, 23 percent of people admit they don’t have a savings account, and 43 percent reported not being on track towards their retirement goals. Perhaps that’s because they didn’t hear the right advice growing up. At least that might be the case for Gen Zers and millennials.

According to the research, these young people want to learn things such as how the stock market works, how to manage an investment portfolio, how to invest in real estate and how to build credit. Instead, they’re simply told how to create a budget, save for retirement and pay credit card bills in full every month.

Related: 7 Critical Things Your Financial Advisor Must Meet

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful and comfortable. To learn more, check out Comet’s infographic below.

1532099434_2-cents-worth-infographic

Related: Financial Wellness Coach Nelisiwe Masango Shares Retirement Wealth Advice

This article was originally posted here on Entrepreneur.com.

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Personal Finance

14 Ways To Make Quick Cash On The Side

If you need money quickly, here are some solid ideas.

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Need to make some fast money on the side, whether it’s to pay off a credit card or to make your rent?

Keep in mind, making quick side cash isn’t about making a lot of money or getting rich. It’s about getting a shot of capital to help tide you over and put something extra in your pocket. However, some of these side-income ideas can build up your wealth over time. There’s many ways to accomplish this: By participating in the gig economy, the sharing economy, online sales networks, passive income techniques and more.

If you’re looking to make extra money in a relatively short period of time, check out these 14 slides.

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Personal Finance

Take Advantage Of Financial Democracy Made Possible By The New Stock Exchanges

Why should financial democracy matter to entrepreneurs?

Etienne Nel

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Because it creates a society able to afford products and services. Without it, even the innovative products and services that are entrepreneurs’ bread and butter will fail.

What is financial democracy, exactly?

It’s both the right and the ability of the (wo)man in the street and business people to make the decisions that affect their financial circumstances.

Financial democracy does not automatically follow political democracy. For almost 25 years after South Africa’s political transformation, the exclusiveness of our financial markets continued to deprive the vast majority of South Africans of the means to invest, save, and build wealth. South Africa has, therefore, never developed a retail stock exchange environment. So, it has deprived the majority of small and medium sized business of access to capital.

For entrepreneurs to truly flourish, they need a mechanism that easily and seamlessly connects the investor pool with every size of business. And, they need affordable ways to enter both the retail and institutional market.

In short, they need stock exchanges. Ones on which listing takes weeks rather than years, doesn’t break the bank for listing fees, and provides the shortest route to the largest possible potential investor base.

That’s not been possible in the stock exchange monopoly that existed for six decades. Now, it is.

What’s changed?

We now have four new stock exchanges. The resulting competitive environment will significantly reduce the cost of listing – and the cost for investors of buying and selling shares.

Instead of restricting share trading to people or organisations who already have tens of thousands of rands to invest or millions to spend on listing, by licensing four new stock exchanges, the Financial Services Conduct Authority (FSCA, formerly the FSB) has recognised that most financial decisions do not call for high levels of education.

Related: The Role Of Foreign Exchange In The Economy

Most people know how to spend their own grocery money. Most know that it’s better to keep their R1 000 monthly income in a coffee jar than spend R50 of it on bank account fees. People who can barely read and write are immensely skillful at manipulating air time deals to their advantage.

There is significant financial savvy in all social strata.

In the same way, although the mechanics of bookkeeping and accounting may be unfamiliar territory to many entrepreneurs, most have a clear understanding of the difference between profit and loss.

The FSCA has therefore enabled democratisation of the financial markets by enabling the broadest possible spectrum of entrepreneurs and investors to use stock exchanges to participate in and contribute to the economy – on their own rather than prescriptive terms.

How do you take strategic advantage of this democratisation?

  1. Base your business strategy on people’s instinct for making decisions in their own best interests. Trust financial decentralisation, such as one sees in crowd funding and in digital environments such as block chain, where people would far rather trust one another than institutions and governments. This is democracy innately at work in the financial environment and it’s accelerating organically as digital technologies give people more means and the confidence to help themselves – to information and opportunities. Ride the wave.
  2. Tap into people’s desire to innovate. Consumer organisations have proved that letting people interactively help them develop products is a powerful growth engine. Apply the principle by letting people grow your business by buying shares in it, giving you capital and themselves a platform on which to build wealth.
  3. Remember, the ultimate loyalty reward is equity.

Your financial democracy business plan

Look to list on an entrepreneurial stock exchange; one that was founded by entrepreneurs on entrepreneurial principles.

That means: A stock exchange that is already built on financial democracy and decentralisation. One that has, at its core, a single operational concept that keeps things simple for you, automatically gives you an immediate competitive advantage, and, ensures that no matter what your business needs in terms of attracting capital, the exchange can provide all the options in the same, consistent way.

What does such an exchange look like?

It has fintech capabilities. So:

It slashes your listing costs. It achieves this, among other things, by enabling you to populate an electronic prospectus, demonstrating your financial viability, and self publish.

It gives you control by having the granularity and agility to impose relevant governance right down to the individual investor. You get to decide the types and quantities of investors you want to attract. This also enables you to achieve black economic empowerment in perpetuity.

It leads the world by clearing and settling trades in T+0. No-one in the value chain has to hold large sums of money for days following a transaction. Small transactions become profitable. Investors don’t have to risk their life savings on a single large trade. A retail market is opened. An investment and savings culture is entrenched. The economy expands. Your business grows steadily.

It enables anywhere, any time trading via a mobile app that allows investors to see share value in real time. See economy expansion point above.

It integrates processes and procedures, simplifying them and ensuring rapid onboarding of issuers and, therefore, speed to market with new concepts and alignment with the digital economy.

It operates a principles-based regime. So:

It treats you, as an executive, with respect. It’s not prescriptive. It does not insist on excessive oversight, allowing the Companies Act to guide you to sustainability.

It does not attempt to squeeze your company into a pre-defined business or listings format. It recognises and works with your uniqueness.

It obviates the need for expensive specialist listings advisors.

It focuses on financial inclusion and access. So:

Shares can be bought and sold for no more than R1 000. See economy building point above.

Related: 27 Of The Richest People In South Africa

The new world of stock exchanges is integrated, synergistic, holistic, organic, self-fulfilling

Decentralisation of financial control, democratisation of opportunity leads to a whole new economy. One in which, for instance, a taxi operator can finance a minibus through a company in which his purchase gives him shares. A single purchase gives him two benefits: a vehicle on which to found his business and a longer-term investment in shares that he can trade. The funding company gains liquidity through access to a wider base of investors while being able to control who buys and sells and the conditions on which trading takes place. Increasing black equity in business becomes an organic, natural, self-perpetuating process.

Everyone wins in a decentralised, democratised financial market. And it’s the stock exchanges that drive the process.

As an entrepreneur, can you afford to ignore the acceleration that listing could give your business growth?

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