How to protect your family from the unforeseen costs of dying

Budgets are tight. There is no doubt that many South Africans are experiencing tough times, with rising inflation resulting in that bag of groceries costing substantially more than we are used to. This doesn’t even include loadshedding’s effect on our time management, which adds additional pressure on the running of our households. 

There are some expense items however that most South Africans would agree are non-negotiables, such as medical aid and car insurance. We don’t procrastinate when it comes to getting those in place, and keep them going at all costs, because we want to protect our families from financial drama should anything unforeseen happen. 

We also know that it’s important that we consider what we need in place as safeguards for our families when we pass away, but there is a common misconception that a funeral policy and life cover are enough. 

In 2012, Capital Legacy was founded by Alex Simeonides as a result of Alex identifying a crucial flaw in traditional estate planning. 

Many people don’t plan for, and aren’t even aware of, all the unexpected legal fees and costs at death. A few examples would be Executor fees, Conveyancing attorney fees, Masters fees, Correspondence Fees, Testamentary trust fees, Inheritance tax and other immediate expenses such as travel costs and household expenses. Depending on your Estate, these bills can rack up to hundreds of thousands of rands.

Even with a funeral cover and life cover, some estates don’t have enough liquidity to cover all the costs, and so the Executor of your Estate may have to sell some of your assets to pay for the winding up of your Estate. This has a devastating ripple effect on family members who may end up not inheriting what was intended, and children and spouses having to change their standard of living completely. Before starting Capital Legacy, Alex saw cases where Executors had to auction off cars and homes, leaving families destitute and having to start from scratch.

This led to Capital Legacy pioneering the insurance to cover these legal fees and costs at death with the creation of the Legacy Protection Plan™.

“The Estates I encountered often didn’t have enough liquidity to pay off the debts and cover the fees and costs involved in winding up the Estate. I found that family members were in the dark as to the process and costs they would need to cover and often properties and other assets would need to be auctioned off to cover these costs which naturally meant that the legacy the clients had intended to leave behind didn’t materialise”, says Capital Legacy CEO and founder, Alex Simeonides.

If we take a closer look at just 3 of the examples of the legal fees at death, you’ll realise how quickly these fees can add up:

Executor Fees

The industry standard fee charged by the executor or assisting professional to wind up your estate will be a maximum of 3.5% + VAT of the value of your estate. An estate worth R3 Million will pay, for example, approximately R120 750 in fees. In terms of South African Law, Executors may also charge 6% (plus VAT) of any income into the Estate after death.

Conveyancing attorney fees

This is the fee charged by the conveyancing attorney when property needs to be transferred. Fees are calculated on a sliding scale depending on the value of your house as determined by an assessor. A home worth R1 850 000 being transferred to a beneficiary could cost the estate R30 544 in fees.

Testamentary trust fees

This is the fee charged by the trustees to administer the trust you create in terms of your will, usually to look after the money you leave to your minor children. On average, 1.15% of the net asset value is charged to establish the Trust, and 1.6% is charged annually for the ongoing administration of the Trust. The total cost of a Trust with R1.5 million in assets over 15 years would be R377 250. 

This is where Capital Legacy’s Legacy Protection Plan™ comes in very handy, seeing that all these fees and more are covered by the plan.

Capital Legacy’s approach is to offer a complimentary Will-drafting consultation in which they will draft your Will and calculate your estimated legal fees and costs at death to determine which Legacy Protection Plan™ would be best for you. For less than R200 a month, you can ensure that these costs will be covered and rest easy knowing that you have planned for the unexpected. 

To get a sense of what your costs would be, try our quick online “cost of dying” calculator here: https://bit.ly/LPP_Calculator_Blog

The costs of dying are one of the most important factors often overlooked when drafting your will and considering your estate. Make sure you prioritise this type of insurance for your family’s sake. These fees eat away at the legacy you plan to leave behind. Contact Capital Legacy to assist you in getting your Will and cover in place today.