Documenting a life: Why documentation is so important for a sound estate plan


Estate planning is a structured and legally binding process. So, how can you better prepare your clients?

Many members of the general public have an aversion to estate planning. There are misconceptions around its purpose and whom it benefits.

Estate planning is not just for the wealthiest of business tycoons, celebrities and their heirs. It is also not exclusively for older, retired individuals seeking to settle their accumulated life-long financial success. And despite its portrayal in the world of entertainment, estate planning is not meant to be a dramatic affair.

In fact, a good estate plan eliminates drama and potential conflict. Its structure accommodates all income levels as well as any number of assets. Any self-sufficient adult, no matter their age or income, can benefit from having an estate plan in place. 

In an ideal world, a working adult won't play the waiting game where they hold off having an estate-planning conversation until the time they perceive to be right arrives. Independent financial and medical decisions need to be made from the time young adults begin navigating big life events.

Estate planning requires everyone involved to ask serious questions, specifically including those that a person is not always in the position to, or ready to, answer. This is the challenge, and yet, financial advisers know the best plan does not necessarily involve coming up with the answers all at once.

Gareth Friedlander Deputy CEO of Discovery Life says, "Life changes, so life plans must adapt too. This is what makes such a process a journey. When you become the decision maker of your life, that's possibly the ideal moment to begin an estate-planning journey. It's an opportunity to make sure that your wishes can be fulfilled at a time when you are unable to implement them yourself."

He adds that it also helps minimise the possibility for an already difficult time to become drawn out, emotionally draining and costlier than it needs to be.

The importance of documentation in an estate plan

There's no doubt that estate planning is a big deal for everyone involved. This creates "all the more reason to get it right," adds Friedlander. "It can be as simple or complex a plan as needed, but the outcomes shouldn't be painfully difficult. A poorly built plan or lack of planning complicates this and increases the level of difficulty. When done correctly, estate planning is merely a structured process to implement. That is something advisers can plan for, making it less stressful for those whose lives it affects."

Estate planning requires a lot of paperwork, but this shouldn't be off-putting. "It's the backbone of any structured plan: that makes it critical," says Friedlander. "Merely communicating with loved ones verbally won't make your wishes stick. The application of estate planning is bound by legal structures and so, having it all in writing, allows it to be properly executed. It's the only way to ensure that exactly what you want to happen is honoured by the country's legal system," he adds.

What are some must-haves in a good estate plan?

Documentation needs to reflect the client's intended outcome. "There is no lengthy standard list that perfectly suits everyone's needs. Not everyone will need everything from one information repository," Friedlander explains.

Every estate planning document folder needs to be carefully put together and well thought out. After all, loved ones are the individuals who will need to take control of a person's affairs once the implementation of the plan begins.

"Such a file requires numerous types of information," says Friedlander. Every file should have copies of:

  • Personal information: Identification documents (as registered by birth and marriage), passport, a tax number (South African Revenue Service (SARS) tax reference), unabridged birth certificate, unabridged marriage certificate (including from previous marriages), divorce orders, maintenance agreements, personal contact details (such as email addresses and telephone numbers), the location of the most up-to-date will, the nominated executor of an estate and their contact details, personal details of a spouse and all next of kin or children, firearm licences, trusts and title deeds, lease contracts, and even jewellery valuation certificates.
  • Contact details of important individuals: Doctors and other healthcare specialists (such as a counsellor, psychiatrist or psychologist), accountants, tax practitioners, legal experts and attorneys, financial adviser, bookkeeper, HR manager at a place of employment and private bankers.
  • Security details: Household security information (such as system alarm codes and passwords, and security company details), codes to safes and their location, safety deposit box details and their location and so on.
  • Medical information: Medical scheme details, gap cover information, emergency numbers and details, organ donor registration information, known blood type, details around a formalised and signed living will, known chronic conditions or medically diagnosed ailments, medicine and any known allergies.
  • Financial information: Bank accounts (including full details of the accountholder and type of accounts held), credit facilities and all account details, financial institution details (branch information), usernames, passwords and other login credentials, personal loan agreements, investment portfolio information (including old or offshore investment policies, discretionary investments, annuities, pension or preservation funds, provident funds and so on).
  • Insurance portfolios: Long-term insurance policy details (life insurance cover) and short-term insurance cover details (such as car and household cover), including details of the insurance provider.
  • A copy of the original will (including a digitised version): An up to date original copy of a last will and testament, including ID copies of any named beneficiaries who may not reside in this country, applicable foreign asset information and details pertaining to a created 'digital' will (log in details and other access details, the name of a digital executor, as well as the details surrounding how social media accounts should be handled, along with their access details). The original will should be safely stored and accessible
  • Accounts, licences and subscriptions: Details (including account information and access or login details) on any accounts held at retail outlets (such as shopping accounts, online shopping profiles and accounts), internet and cell phone service provider account details, municipal accounts and online subscriptions that require managing or cancellation. In the world of crypto-currencies passwords are vital, heirs must have knowledge of such accounts, and be able to locate the passwords.
  • Funeral and burial or cremation arrangements: Specified details on preferred procedures (such as burial location or where ashes should be spread, ceremony preferences, eulogies and whom they should be delivered by, as well as service arrangements).

How often should estate planning documents be updated?

"Life is never static. Laws also tend to change. Putting together a sound estate plan today doesn't necessarily mean it can be perfectly executed years from now without further reviews," says Friedlander.

A plan that isn't frequently reviewed runs the risk of being executed with information that isn't up to date. New family members such as children, grandchildren or other extended family as well as more recently acquired assets could be missing from the plan. Updates to any plan must be formally processed to avoid instances where an older version is used during administration.

"A typical rule of thumb for review is to have one every three to five years, no matter how simple or complex a plan may be," he adds. "It goes without saying that updates or reviews should also be prompted by an arising need. If a change happens, update your file and review all your portfolio documents, even if you merely move to a new home. Having children, going through a divorce, a change in asset value, guardians, personal representatives or trustees, acquiring more assets or even the disposition of an asset - all of these things can shift your plan," he adds. Some people may even prefer annual reviews of their documentation - this is not a bad idea either.

"Planners understand the tax implications, the potential pitfalls, the legal boundaries and the current processes that enable the process to run its course, as it should, when the time comes. So, it's essentially up to teams to manage a plan in such a way that the task is not all that overwhelming for a client," advises Friedlander.

Discovery Wills and Trust Services

"I'm excited to share that Discovery has set up a company, Discovery Wills and Trust Services, to make sure that the entire process of estate planning can be well managed from the start, and not be overwhelming for clients at all. The services on offer include the drafting of a will - free of charge, executor and trustee appointments, testamentary trust administration, estate property transfers and deceased estate administration."

In order to supplement the services offered by Discovery Wills and Trust Services, Discovery Life is introducing the Discovery Estate Preserver. Features included in the product are designed to help clients cover key expenses on death, ensuring that their families are comprehensively protected:

  1. The Fee Indemnity Benefit: This provides clients with full indemnification for fiduciary fees if the Discovery Estate Preserver criteria are met. These include executor fees (charged by the executor in order to wind up an estate), conveyancing attorney fees (for the transference of property ownership) and testamentary trust fees (charged by the Trustees in order to administer a trust that has been set up to manage assets, as stipulated by the will).
  2. The Liquidity Benefit: Within 48 hours of a client's passing, a lump sum will be paid to the beneficiaries to provide them with the liquidity they may need for immediate expenses. These funds can be used for funeral costs, necessary travel costs, advertising in the Government Gazette, or even for the Master of the High Court and related correspondence fees.
  3. The Contribution Protector: A monthly payment to the beneficiaries for six months following a client's passing can cover ongoing premium contributions. This enables health, life or other insurance cover to remain in force during this very sensitive time for a family.
  4. The Estate Planning Benefit: Added at an additional premium, this benefit pays out on the second death of a principal and spouse, and can be used to cover the applicable estate duty (of up to 25% that will only arise on death of the second dying if the spouses leave everything to each other.)

Over and above the aforementioned features of the Discovery Estate Preserver, clients have the opportunity to increase its value through Vitality Integration. Clients have the opportunity to receive upfront premium discounts and then control future premium adjustments by engaging the Vitality programme (i.e. managing and improving their overall state of health and wellness). By doing so, clients can receive up to 20% of their premiums back every 5 years through the integrated PayBack benefit.

Clients also have the opportunity to store their will with Discovery Wills and Trust Services. This will be arranged for an annual storage fee, which can be fully refunded to the client along with their five-yearly PayBack.

"Essentially, this new product serves to ensure that clients and their families can be comprehensively protected against both legal and administrative costs associated with death - things that can be complex or overwhelming. Together, Discovery Wills and Trust Services as well as the Discovery Estate Preserver offer a means for all necessary documentation to be well put together. Industry experts will see to it that all documentation is legally compliant and kept up to date. A client can rest assured knowing that their legacy will be fulfilled with a comprehensively put together plan that is well managed."

The benefits of a well-constructed estate plan can far outweigh the potentially overwhelming nature of the initial task. "It makes a huge difference to a client and their beneficiaries how sensitively the initial effort is handled, as well as the updating process and, often more importantly, how all this culminates in enabling the most dignified and respectful 'wrapping up' of a life process," he concludes.

Speak to your clients about holistic estate planning from Discovery Life today.

This article does not constitute financial advice. Discovery Life Limited. Registration number 1966/003901/06, is a licensed insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555. Product rules, terms and conditions apply.

Discovery Wills and Trust Services, a division of Discovery Central Services (Pty) Limited, a company registered in South Africa with registration number 2016/054628/07 and part of the Discovery group of companies. Discovery Life Limited. Registration number 1966/003901/06, is a licensed insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555

Discovery Vitality (Pty) Ltd. Registration number: 1999/007736/07. Terms, conditions and limits apply.

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