A will cannot govern how death benefits get paid out - Momentum
Although the coronavirus pandemic has heightened people's awareness on death, South Africa this week commemorates National Wills Week.
The Master of the High Court still estimates that 70% of South Africans don't have a legally executable will.
In addition to this, many people are confused as to how assets are distributed through their will with the distribution of death benefits from their company-sponsored retirement funds.
Often assuming that death benefits fall within the scope of a will, however, the two are treated differently.
Momentum Corporate advice and administration senior consultant Shameer Chothia highlights why it is important for employers to help highlight these issues.
When it comes to retirement funds and death benefits, it is often an employee's retirement savings plus any multiple salary which gets taken into account for distribution.Shameer Chothia, Senior consultant - Momentum Corporate Advice and Administration
That multiple salary can take two forms in that it can be an approved benefit which means it is provided through an retirement fund or it can be an unapproved benefit, which means it is provided through an employer owned insurance policy, he adds.
Retirement fund death benefits don't fall under an employee's deceased estate. Therefore contents of a will cannot govern how that benefit gets paid out.Shameer Chothia, Senior consultant - Momentum Corporate Advice and Administration
Listen below to the full conversation on what employees need to know about the distribution of death/group life benefits when an employee passes away:
Use the Smart Life file to keep your financial affairs in order. Download it here.
Contact your financial adviser or Momentum Trusts for advice around financial planning and preparing a will. https://www.momentum.co.za/momentum/personal/products/momentum-trust