By Harry Joffe
Whether you’re single or remarried, your estate planning will look different.
Life is mostly unpredictable. However, being prepared for one of its inevitabilities – passing away – makes a difficult experience more manageable for those left behind. This preparation comes down to two things: estate planning and having an up-to-date, valid will in place.
We all want to ensure our loved ones are taken care of if we’re no longer around. But with different family set-ups, like single-parent families, cohabiting, unmarried couples, blended families, and divorced-parent households, comes different estate planning considerations. And having a will in place becomes critical.
Yet, according to 2022 statistics from the Master of the High Court, only 15% of South Africans have a valid will. Estate planning – which ensures your affairs are able to be easily wound up when you pass away – also looks different depending on your family make-up. That’s because the definition of a “family” is no longer limited to a mom and dad with two kids.
How single parents can protect their children’s future if they pass away
In South Africa, where 42.3% of households are women-led, estate planning may seem less complicated for just one person and their children. However, without a valid will, your children could find their inheritance not being properly looked after and the person looking after them could act against your wishes.
When a parent dies without a will, it’s left up to the Master of the High Court to determine the executor of the estate, explains Joffe. “The executor is the person who ensures your last wishes are carried out. Once there is no will, they will split your assets between your children and spouse if you were married – based on a pecking order in the Intestate Succession Act and not necessarily on how you would want them to be divided.
A will determines who will take care of surviving kids, and how they inherit money
Without a will, it’s also left up to the court to appoint a legal guardian and custodian of a minor child to manage their affairs if both parents have passed away. In most cases, the other biological parent is first in line for this appointment, regardless of their relationship with the child.
At Discovery Life, we have seen cases involving single parents passing and nominating minors as beneficiaries on their policy – to the detriment of the surviving children. Situations like these can be avoided with a valid will in place, where the single parent stipulates that a trust will be set up, and who will be their legal guardian.
Where parents wish to leave money/assets to children in the will, they set up a trust with the children as beneficiaries of the trust, rather than nominating a minor child to receive cash as part of their inheritance. In terms of the Administration of Estates Act, a minor can't get paid cash out of an estate. Instead, it goes to the Guardian's Fund, which falls under the administration of the Master of the High Court.
There are two types of trusts: inter vivos and testamentary. An inter vivos trust is set up while you’re still alive, while a testamentary trust is created via a will and only comes into existence once you pass away.
There are pros and cons to each, but a trust is looked after by a professional and that allows you to protect your children’s inheritance so that the process is not left up to the guardian/Guardian’s Fund. I’d suggest parents speak to a financial adviser to ensure a relevant estate plan and will are in place.
Why cohabiting, unmarried couples are often in a precarious position
In South Africa, there’s no such thing as “common law marriage” in terms of divorce laws. Cohabiting, unmarried couples who don’t have a will won’t automatically inherit anything from one another, if one dies. Instead, they will have to approach the court to recognise them as a spouse, and, failing that, will be subject to intestate succession laws (based on the formula the Act uses) once one of the partners passes away.
Parliament is still working on a draft bill to govern such relationships, but in the meantime, this leaves unmarried, cohabiting people in a precarious position if they want to be financially and legally protected after their partner passes away. Having a valid will, as well as drawing up a cohabitation agreement, which can cover how expenses are shared, who owns the property, and how assets will be divided if the relationship ends, is the solution to this problem.
How divorced parents and blended families can navigate estate planning
Statistics from 2022 show that in South Africa, most divorces were for marriages that lasted between five and nine years. And, more than half of all divorces involved couples with children under 18.
A multitude of issues come up in estate planning with extended and blended families, especially where couples have divorced and remarried. That’s because after a divorce, when someone remarries, they may have a financial responsibility to two families. If they die without a valid will, it complicates inheritance and maintenance claims.
“The current spouse and their children could have a claim against the estate. At the same time, the estate must honour the former spouse’s divorce claim,” says Joffe. To avoid disputes about who can claim, he advises people to have a will that addresses their responsibilities to both families and financial protection to ensure liquidity in the estate, possibly also a specific maintenance trust as well. Meaning, there is money readily available to pay for any obligations.
If you don’t have an estate plan and a will in place, I’d encourage you to make this a priority. No matter what your family configuration is, planning ahead protects your family and secures your legacy.
* Joffe is the head of legal services at Discovery Life.
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