I hope you are all well.
I find this topic always hard for parents, but I would like to know, which investments policy do you have for your kids. Who do you have it/them with. May it be for Education, Unit Trust and Life Policy. I have an Educational Policy for my kids with Old Mutual, apart from Life Cover I have with Sanlam. I would like to add a Unit Trust also for them, minimum of 5 /10 yrs?.
I just want to ensure they are well taken off financially even when Im no longer around. And how does one decide who to nominate as gaudian for your kids. I have nominated my older sister.
We have an extra house and we see that as an extra investment for our children. We rent it out currently. Then I also have a savings plan for each of them (although I do sometimes use it...) and my husband and I both have life policies with Absa and Discovery.
The nomination of a guardian is so difficult. My nomination would be ME. I am the only person I want raising my kids. But we also chose close family for our will, family that have the same sort of values and outlook on life and who we know will love our children like their own.
We also have properties that generate a rental income stream. Each of my girls have their own savings account, where we and the grandparents deposit money into.
We have life insurance at Sanlam and also Unit Trusts for them.
We nominated my brother and his wife as their guardian, as they have similar values to us.
I am an attorney (for my sins!) and the one thing I always stress to parents of young kids is GET A WILL AND CREATE A TRUST. Please, please ensure that you draw up a will and that you create a Trust in which your kids inheritance will be kept and managed until they come of age (or at whatever other age you choose the Trust to terminate) and the kids are old enough to take control of their assets.
If you do not create a Trust for your minor kids in your will, their inheritance will be paid into the Guardian's Fund. This is a government managed fund, and there has been cases of corruption in the past. Also, as you would imagine, there are quite a lot of red tape for your kids to access the funds. You can nominate the Trustees of the Trust. The Trustees would typically be your selected guardian/s another family member (not selected as guardian) and 1 or 2 independent trustees such as your bank/financial adviser or an accountant.
WOW! this is incredible. thank you so much for the replies. Karmie, how does one create this TRUST, and who do we have it with?
I must be honest, I am one of those people who have not drawn out a WiILL as yet. Do I need to have a lawyer for this?
thnaks bandile for raising this. I am in your shoes as well, no will -why? i dont know. I just keep putting it off for later. SO i am following the comments closely as i would love to get thigns in order before baby comes
You basically have two options if you are going the Trust route:
- Option 1 : you can create a Trust for the benefit of your children whilst you are still alive. It costs anything between R3000 - R5000. You can (but dont have to) already have some of your assets moved into this Trust. Some people do this as it saves on taxes to be paid upon your death, but I will not bore you with those details;
- Option 2 : In your Will you state that a Trust must be created upon your death for the benefit if your children and that all your assets must be transferred to this Trust. You can nominate Trustees in your will that will manage the Trust for your children's benefit.
The typical structure of such a Trust is that it is managed by the Trustees for the benefit of your children. The Trustees will then make sure the money is invested properly and will make payments as required for your children's maintenance needs until they become adults. At that point, the Trust terminates and will be divided amongst your children as you stipulated in your Will.
You can go to a lawyer to draft the Will, which will include creating the testamentary Trust in the Will. Most banks will be able to assist you with drafting such a Will as well. I know for a fact that Nedbank and Standard Bank offers this service.