Losing a spouse is always traumatic. What can add to the distress even more is the tying up of financial loose ends – especially if the deceased was the one who always handed those affairs.

This scenario is (sadly) alll too familiar.  Recently I spoke to Lisa. It had been three years since her husband died after a brief illness. There was no time to prepare and no realisation before his death that they even had to get ready for the worst. She had no idea what was waiting for her. All she knew was the password to her husband’s computer in his study at home. If it hadn’t been for a kind friend who said that he knew that her husband kept all his important documents in a file on his computer, she wouldn’t’ve known. She says that she had no time to grieve. While others were mourning, she had to find the executors and organise his funeral - and then try to piece it all together.

In another scenario with a different client, we were still finding assets six years after her husband’s death. Despite the fact that he had been ill for a long time, he just could not face making even the most basic practical provisions for his passing.

In reality there are still many homes where the man handles most the money matters although increasingly we also find the opposite to be true. That’s not the point though: if one spouse is predominantly responsible for the financial affairs, a death can be even more traumatic. It doesn’t have to be so difficult. A few practical steps can really prepare a family for a sudden death of a spouse.

We have asked a few executors to help us with these points.

  1. Leave a copy of your will and marriage contract with your executor or financial planner and a friend. The will has to be valid (http://www.gov.za/faq/wills-trusts-and-distribution-estates-deceased-persons/what-are-requirements-valid-will). Inform your loved ones where this original will is being kept as it is almost impossible to convince the Master, without the intervention of the High Court, to accept a copy of your will.  Preferably, your spouse should be familiar with your will. It is not good enough to say: “You will be ok, honey. Off course I’ll make sure you are fine.” Why should it be kept a secret? Talk about it.
  2. Provision for your funeral is helpful. If payment for the funeral might be difficult - consider a funeral policy. Even wealthy families sometimes find it difficult to fund a funeral because the bank accounts of the deceased may be frozen already. If possible, make your wishes about your funeral known.
  3. Spouses should have their own bank accounts. This is very important to ensure that the remaining spouse and family have funds until the estate is finalised. These days it is not unusual for estates to take two years to wind up.
  4. Keep the details of all bank accounts, investments, title deeds and policies in one place. Let your spouse, executor or financial planner know where you’re keeping these. It is especially helpful if you update this list regularly. If you keep these electronically, your family will need a password.
  5. Keep an updated budget with sufficient details on monthly accounts to be paid as well as a list of liabilities for example mortgage bonds, vehicle finance etc.  It is helpful to keep one copy of an account for each of the expenses and liabilities.
  6. There should be provision for the family to live until the executor can finalise the estate. Money in a bank account or life insurance policies paying out to the spouse, can tide the family over.
  7. The executor should preferably be known to the family. Negotiating the executor’s fees at the time of the drafting of the will is a good idea, especially with a large estate. Alternatively, if a family friend is made executor, he/she can negotiate the fees and terms with a competent executor. These days, executors need specialised knowledge and experience. It is not advisable for the family member or friend to actually deal with the master and SARS. We advsie that this function should be taken by a professional executor unless the estate is very simple and not urgent.
  8. Ensure that there will be enough liquidity in the estate to cover outstanding creditors, executors fees and estate duty. Once again, even wealthy families with asset rich estates, sometimes get caught here. You do not want to have to sell the family’s home or even sentimental holiday home to fund fees and taxes. Ask an expert to calculate the potential duties and taxes. If required, take out insurance to pay for these.
  9. Pay attention to the marriage contract. If you are married in community of property or even with the accrual, some of the remaining spouse’s assets may become part of the deceased estate. Again, you could end up paying fees and taxes on your own assets.
  10. Make provision for minor children in your will especially if there is doubt over the remaining spouse’s ability or willingness to take care of the children (or if both parents pass away). There should be a testamentary trust stipulating the duties and powers of the trustees.

At Foundation Family Wealth, we believe that estate planning is an essential part of financial planning. We see the plan as not only the writing of the will, but a plan for the overall wellbeing of the family after the death of a loved one. Our planning includes the calculation of taxes and duties, planning for the funds to pay for these and facilitating the drafting of the will.

Engage with us if you need to update your estate plan.