Add updating your legal affairs to your new year's resolutions
Alongside other resolutions it would be prudent to also ensure that your legal affairs are up to date
Now that people are returning from holiday full of optimism and plans for the new year, it's time to start thinking about getting your legal affairs in order. You should make sure to check up on the following issues:
Have you signed your will, and is it up to date?
Statistics show that around 50% of adults don't have a signed will. Dying without a valid will means you lose all control of the winding up process, as the Intestate Succession Act will regulate who gets what.
In addition, you don't get to appoint your executor, a guardian for your minor children [if the other parent is not alive], or set up a trust to protect money accruing to minor beneficiaries.
Ensure you start off the year by getting a will drawn up and signing it.
If you are one of the few who has actually arranged for your will to be signed, please ensure it is up to date. I have seen too many wills where children have been left out because they were born after the will was drawn up, although the testator had many years to add them to the will, or assets which no longer exist [like a house] have been bequeathed, and its replacement asset [like a flat] does not appear anywhere in the will. A will must be updated every few years, or whenever there is a life-changing event, to ensure it remains relevant.
Are your business contracts signed and up to date?
Buy and sell structures ensure continuity in your business while a keyperson policy protects key individuals in the business and a contingent liability policy covers business debt. If you have any of these structures in place, ensure your contracts [buy and sell contract, contingent liability contract or keyperson resolution] are up to date and signed. You don't want to find out after one of your co-shareholders has died that the correct contracts are not in place.
Are the beneficiaries of your life policies up to date?
This is a good time to check the beneficiaries of your life policies. Do you have beneficiaries on all your personal policies? Remember, if there is no beneficiary on the policy it will pay to the deceased estate. It will then be subject to executors fees, and heirs will have to wait for the winding up of the estate.
Check that there is a beneficiary on your policies, and that it is the correct person. Firstly, is the beneficiary still alive?
Secondly, do you still want that person to be the beneficiary - is it, for example, and ex-spouse or ex-partner? Or maybe that person has become insolvent, and should no longer be the beneficiary. It would then be prudent to replace that person with a trust. This is a good time to conduct a "beneficiary audit".
You should also check your business policies. Is the person that you have insured, and that has insured you, still a partner or co-shareholder? If not, you should ensure the policies are ceded back to the life assureds, as they are no longer required for business assurance purposes. Remember also that if you have multiple shareholders, and therefore multiple owners of a business assurance policy, and one of them leaves the company, they must be removed as a part-owner of the policy. Finally, you must check that if the company is paying the premiums on behalf of the individual shareholders, that loan accounts are being created for each shareholder, and reconciled regularly, to avoid numerous tax problems.
Do you have life policies still subject to a collateral cession?
Did you cede a policy to the bank to cover a bond? Has that debt been repaid? If so, you should ensure the bank cancels the cession and the documents are returned to you. I am amazed how many people have policies still ceded to a bank when the debt has been paid in full.
Do a stock-take of your policies
Now is a good time to take stock of all your policies. Do your policies have the correct benefits and cover the appropriate risks, like various forms of disability appropriate to your occupation and your income?
Have you reflected your income correctly for your income protection benefit? Do you have too many policies for your needs?
Sit down with your financial adviser and check all your policies, ensuring the amounts and details are correct and relevant.
This time of year is normally a time for resolutions to improve health and eating habits. Protect your own and your family's finances by adding updating your legal affairs to the list of resolutions.
Joffe is the head of legal services at Discovery Life