What happens to your minor children when you die?
As parents we need to make sure our children’s needs are accounted for in the tragic event of our untimely death.
Many parents in Botswana don’t realise the consequences of failing to plan. Follow the steps below to make sure your bases are covered:
1. Draft a valid Will
The two main reasons to write a valid will are:
To nominate a legal guardian for your children
To control how the assets in your estate are to be distributed
There are some templates available online to assist you with putting a will together, but there are many pitfalls in this. In particular, few are designed with Botswana law in mind. Generally you should seek advice from a professional - a Certified Financial Planning Professional - to ensure your Will is valid. SCI regularly help our clients put their Wills in place, for a low fixed-cost fee.
2. Update Your Will
Update your will every time there is a life-changing event, such as a marriage, the birth of a child or a death in the family.
Dying without a valid will in place has terrible repercussions for your children. In addition, your assets will be distributed by the state under the Laws of Intestate Succession. This may result in your assets being inherited by people other than those you would like to leave those assets to. The winding up of your Estate will also take longer and cost more.
3. Appoint a legal guardian for your minor children
As stressed above, a key component of your will is to nominate a legal guardian to take care of your minor children in the event that both parents pass away.
The guardian will be expected to take on full parental responsibilities and (unless a Trust has been set up) administer any inherited assets until your children turn 18. A guardian is typically a trusted family member or friend who has agreed to take on this responsibility.
If you do not appoint a legal guardian in your will, one will be appointed by the Court . However, a court application is often a lengthy process, which could leave your children without a guardian for a significant period.
What happens to your assets if your children are left without a guardian?
If you leave assets directly to minor children who do not have a legal guardian, you run the risk of these assets being transferred to the government’s Guardian’s Fund, where they will be administered until your children turn 18.
The Guardian’s Fund falls under the administration of the Master of the High Court, and maintenance for your minor children would have to be claimed from this Fund. Claiming from the Guardian’s Fund as an individual who is looking after your children is an administration-heavy process and not ideal when funds are required immediately for your children’s needs.
4. Keep the beneficiaries of your various policies up to date
One of the benefits of holding investments through life policies is that you can nominate beneficiaries.
However, it is important that your beneficiary nominations agree with your Will. You should also familiarise yourself with the restrictions on a minor’s inheritance.
When planning your estate, it is important to understand the death claims process for each of your investment products and make sure that you have taken the necessary steps to make the process as easy as possible for those you will leave behind.
5. Consider setting up a Testamentary Trust
Another way to ensure that your minor children’s interests are protected is to provide for a trust in terms of your Will, known as a testamentary trust. In the event of your death, the trustees of this testamentary trust will administer your children’s benefits on their behalf until the age selected by you.
You may also indicate exactly how your children’s inheritance must be used, or empower the appointed trustees to administer the inheritance as they see fit. It is important to carefully choose the right trustees, who will act in your children’s best interests.
6. Keep your affairs in order
Make sure that your loved ones, or those appointed to take care of them, know what will need to be done in the event of your death.
Many investors overlook the importance of good estate planning when thinking about their broader financial plan. Neglecting to think about what will happen to our assets when we are gone can have disastrous consequences for our loved ones – particularly minor children if we don’t appoint a legal guardian.
Half the task is creating a plan, but it is just as important to share your plan: Make sure that your loved ones, or those appointed to take care of them, know what will need to be done in the event of your death to make the process as seamless as possible.