Protecting your legacy

The single parent

With about half of South Africa’s mothers raising children on their own, planning for their children is even more important.

Leighanne Decker, who is single mom Maryke’s adviser, says that, when it comes to the guardianship in a will, it can be a challenge if the other parent is alive. In South Africa, the natural parent is always the preferred guardian, unless there is a known reason they can’t be and they have been declared unsuitable.

When selecting a guardian, it is important to choose someone who is willing to take this responsibility on and who you know will have your child’s best interests at heart. “Have a discussion with the person beforehand, and be open about how you are providing for the maintenance of the minor child, so, if the event should happen, there will be no surprises.”

In Maryke’s case, fortunately the relationship with her previous partner is sound and, where their daughter is concerned, they are able to make joint decisions without issue.

However, for parents in a situation where the other parent does not have a relationship with the child, the absent parent may change their mind if they know that there is money involved, so it is important that the money is protected to ensure it provides for the child’s needs.

“I recommend that, even in Maryke’s case, where she has a sound relationship with the father of her child, a testamentary trust be established for the protection of the minor child in the event of her death. This will ensure that what you have left for your child will be protected for the minor child and cannot be used at the guardian’s discretion,” says Decker, who adds that another consideration is beneficiary nominations on polices such as life cover.

Some parents put the policies in the child’s name to avoid payment into the estate and the accrual of executor fees, however, Decker recommends that one rather nominate the estate as the beneficiary and pay the fees. This way, the funds are paid into the testamentary trust to ensure that the minor child is protected. One can also select an age when the trust terminates – for example, at 25.

Decker says costs should be taken into account, as a trust will have both establishment and running costs, thus ensuring that there is sufficient capital to put into a trust. The Guardian Fund can be used for smaller estates, however, that can be an administrative nightmare as it is managed by government. Some retirement funds require the retirement benefits to be paid into a beneficiary fund if they are concerned about the ability of the legal guardian to manage the finances. The guardian is then paid a monthly income from the fund to provide for the child.

“In Maryke’s case, there is sufficient capital in the event of her death to warrant a testamentary trust. Once her daughter reaches the age of majority, Maryke will need to review the will and beneficiary nominations,” says Decker.