By Derick Grant, 21st July 2014
Empowered woman of South Africa, have you taken control of your financial security? Or do you fall in to the category of many of your counterparts that delegate their financial security to a spouse or significant other, allowing divorce or death to plunge you into unwanted circumstances? In celebration of National Woman’s Month, we urge you to take control.
For most, money is an emotionally charged subject. It may represent power, love or control, especially in relationships. Our beliefs about money and our emotional attachments to it strongly influence the way in which we spend and handle it. If you aren’t where you should be financially, examine what drives you emotionally when it comes to your finances and identify the psychological stumbling blocks that prevent you from becoming financially independent.
The most important starting point is not relying on someone else to drive your financial future, be proactive and educate yourself about investing and managing your money from saving for retirement to saving for a specific need.
Be involved in the day to day management of the family’s finances to prepare yourself to fulfil the full magnitude of the task should your spouse pass away.
When reviewing your assets and liabilities and drafting your will, have your financial planner conduct an estate liquidity analysis to ensure the estate has sufficient liquid assets to cover the liabilities.
Having done this and covered any short fall in the analysis with appropriate life cover, you ensure that your hard earned assets will not be sold off cheaply to cover liabilities. Thus providing your family with peace of mind.
Having a will is not a luxury of the wealthy; in fact, one could argue that middle income earners require the protection of a will more so than their wealthy counterparts. Should you die without a valid will in place; the winding up of your estate will follow the requirements set in the Intestate Succession Act, thus disregarding any wishes that you may have had regarding the disbursement of your wealth.
Should your heirs be minors, their inheritance will be placed in The Guardians fund to be managed by the state until they are 18 years of age. The surviving spouse may end up receiving a much reduced share of the inheritance.
After all assets are sold, there is a possibility that the surviving spouse may not have sufficient funds to provide for the basic necessities of the household.
The regime in which you are married will affect the winding up of the estate.
If you do not sign an ante-nuptial contract before marriage, you are automatically married in community of property. When married in community of property, everything a spouse owns, as well as their debts is combined in a joint estate.
If one spouse is reckless with their financial affairs, it will affect the other, as effectively, they are each responsible for each another’s obligations. If on death the estate is declared insolvent, so is the remaining spouse.
This agreement serves as a level of protection in the event of death, insolvency or divorce. There are two types of ante-nuptial contracts, with accrual and without.
In the “with accrual” contract each spouse is liable for their own obligations before marriage. Generally the creditors cannot attach the other spouse’s assets to settle before marriage debt. All assets accumulated in marriage are shared equally less the commencement value as noted in the ante-nuptial contract.
The “without-accrual” marriage regime allows each spouse to maintain their accumulated assets in marriage as separate, and is noted as such in the ante-nuptial contract.
Whilst the Country celebrates you, the women of our nation this woman’s month, let it be a month of learning, observing and taking charge of your financial future.