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Parenting Hub

How a bespoke Last Will & Testament will save your business

Take a moment. ….Now take a deep breathe.  Imagine that was your last.  Nightmare! You can’t imagine anything worse, right? Wrong!  Now imagine this night terror… You’re unprepared for death.  Everything you’ve spent your life working so hard for, your business, your immortal legacy, your white Pickett fenced home, your precious children and your loyal Labrador are all wasted away in the hands of the South African default system and the taxman. If you do not have a Last Will & Testament (“Will”) in place, this is the detrimental reality your empire and your loved ones face.   If you have a template “google” version of a Will, be cautioned that that is potentially more hazardous than not having a Will in place at all. Entrepreneurs and business owners are often concerned with limiting business risk.  In order to do so it is vital to engage in an estate planning exercise which ensures that your business interests and your empire are given mechanisms to survive your death, whether it be that your business interest is inherited by a family member or your business co-owners are given a mechanism to pay your business interest over to your loved ones.  Failing to do so is likely to result in major losses and the crashing of an empire. It is imperative to have a bespoke Will drafted by a professional who, through their vast knowledge of the law, is able to tailor the most suitable estate planning mechanisms which give effect to your intention … and a little less for the taxman. What to put in your will… Your voice and instruction, enforceable by law, as to the division of your assets (your business in it’s entirety, the house, the car, investments, the special ring you want your daughter to have). i.e “who gets what”. As a business owner a valid will allows you to leave an immortal legacy. Often sole trader and partnership run businesses are left in a detrimental situation on the passing of a key player. The business is abandoned, only to later be sold for well under market value, by an executor with no relevant business experience or who isn’t given sufficient powers in order to protect your business interests during the winding up process. Powers granted to your executor in terms of your Will. As well as mechanisms to ensure your loved ones are protected against your enterprise’s debt liabilities. A business owner will always have debt liabilities from which your loved ones need to be protected; In practice, we often see many a business having to be liquidated or sold just to cover taxes payable. There is a dire need to minimize tax and estate duty payable whether through the creation of separate business and personal asset trusts, or otherwise.  There are options available to every circumstance and every lifestyle to sidestep many of the financially detrimental consequences of your passing away. It is your benefit to make use of these. As a parent of minor children, the appointment of the desired and most compatible guardians for your children. Leaving the appointment of the caretakers and the future of your children, where you are not here to safeguard them, should not be left in the hands of a Court or a distant relative you haven’t seen (or liked) in years. An Executor who will be responsible for winding up your estate and manage your affairs as if he or she had set foot in your shoes. Bear in mind that the executor is entitled to remuneration of 3,5% of your gross assets and 6% of any cash value of  your estate.  Value which rightfully belongs to your family, not a financial institution. For this reason we advise our clients to nominate a family member as executor who is then able to appoint professional agents to assist in the winding up process for a mutually agreeable fee. A Testamentary Trust– it’s structure and inner workings to assist you in “asset protection, estate duty savings, dilution of income tax and the protection of beneficiaries such as minor children and/or incapacitated” heirs. Means for the maintenance of your dependent heirs are similarly put into place in this way. What makes a will valid… Validity hinges on a number of formalities which include:- signing within a certain measurement of the text at the end of the Will as possible, signing in the presence of at least 2 witnesses over the age of 16 and of sound mind, requirements to be met where a testator (or testatrix) is only able to sign by making a mark or otherwise, effecting valid amendments and formatting formalities. Please note that is by no means an exhaustive list Lack of compliance with these formalities has resulted in the Master’s Office rejecting Wills, leaving families deprived and having to resort to financially and emotionally costly High Court litigation. When not to use a free DIY online template… “Using a DIY will is like pulling out your own tooth with a pair of pliers instead of going to the dentist” A bespoke Will is an affordable investment for your estate as well as your heirs. Special Offer…  As a ParentingHub affiliate, MBI is offering you a 30% discount on all Estate Planning services which include drafting a Last Will & Testament, liquidity determination and strategy. Valid until end of February 2015. For a Free, no obligation, consultation to ensure your families future is taken care of, give our dedicated team at MBI Attorneys a call on:- Chantelle Martins                        Beverley Brown Chantelle@mbiattorneys.co.za        bev@mbiattorneys.co.za 082 837 1358                                       082 573 9680 “Planning is bringing the future into the present so that you can do something about it now”.  

April 29, 2014
Mia Von Scha

Reduce Stress by Sorting Out Your Finances

The majority of parental problems that I see in my practice are exacerbated by stress, and what can be more stressful than sinking into debt. So, as the financial year comes to a close, here are some tips to sort out your finances and start the new financial year in a less stressful and more kid-friendly way! The first step in sorting out your finances is to know what they are. Print out your bank statements and credit card statements and make a list of all the income and expenses that you have every month. Most people avoid this simple activity and would rather stay in the dark, but facing the truth is way less stressful than waking up one day to find out you’re bankrupt! So take a deep breath and just do it!! You need to know your income and expenses if you are to create a successful budget and stick to it, and this is step number two. Work out your essentials each month and what they come to and always make sure that you are putting some money away every month into a savings account, or some extra money into your bond. If you find that you are overspending and don’t have any “disposable income” at the end of the month, relax. Acknowledge this and also that you are not alone – the majority of parents find themselves in this position. Here are some tips to sorting this out by bringing your expenses down: Cut up your account cards. If you can’t afford something, you shouldn’t be buying it. The time will come when you’ve saved enough and can treat yourself, but as much as possible, never use credit – and definitely don’t use credit to buy your groceries. Along the same lines, put your credit card in a glass of water in the freezer. If you really need it, it’s still there, but you won’t make impulse purchases if you need to wait for it to defrost first. Look at the debit orders you have – see if you can decrease your insurance, call your security company and ask them to re-look a your monthly fees, cancel any unnecessary memberships. If you haven’t been to the gym in 6 months, make a decision to go or see if you can sell your membership. Cell phones! Wow! My husband and I just halved our phone bills by changing service providers. If your contract is at its end, don’t just automatically upgrade with the same provider – shop around, look for specials, ask for discounts. And if you’ve already got 5 phones at home, take a contract without a phone – if you add up the monthly payments and see what you’re really paying for that phone after two years you might want to rethink. Beware, too, of getting to the end of your contract and not upgrading or changing, as you are then still paying the monthly amount for the phone even though you’ve finished paying it off. Take note of the cappuccino factor. This is the name given to those little spendings that you do regularly and don’t think they amount to much. Like the cappuccino you buy on the way to work. Do this little exercise: Take one thing that you don’t really need but buy regularly – the coffee out, the cigarettes, the bar of chocolate. Now multiply the cost of this by the number of times you purchase it in a week. Then times that by the 4 weeks in a month, then by the 12 months in a year, and then by 10 years (and that’s not even including inflation, interest etc). You’ll be amazed by how much you could save over ten years just by cutting out that one thing… who knows, you could even be a millionaire!! Awareness – of your spending habits, your shopping habits, your eating habits. Look at your statements and see where the money is going. Are you eating out too much? Could you be shopping at a less expensive store? Are your kids wearing name brands when a regular t-shirt could do?! Shop, eat and live consciously. This is quite a task, I know, but it’s very empowering when you get it under control. And you, your partner and your kids will benefit in the long run. Think of all those restful nights NOT worrying about the bills!!

April 5, 2014
Parenting Hub

Teaching your children the value of money

Teaching our children to be responsible with their finances is essential as financial habits are formed early. Most of what your child learns about finance , they will learn from your example. Are you sending the correct financial message?  Start of on the right foot by first setting a good example of how you manage your  personal finances and  take advantage of every opportunity to instill great money-smart habits in your child. As important as what you tell your child about money, it  is also important to watch how you talk about it. Rather than saying “We can’t afford that”, a more positive  approach is to say “We don’t buy every thing we want, we choose which are the most important things to spend our money on.”  Teaching the difference between needs and wants early and how to priorities will ensure a firm foundation for their own personal finances as they grow.  Setting a  budget with them and encouraging them to save up for those non-necessities may seem cruel but the gratification of holding an item you saved for and bought yourself is a feeling of pride. The lessons we teach our children greatly changes as they grow. So, when do you start teaching your child about money?  From about 3 -6 years : Introduce your child to easy concepts …. #Why we need money Allow them to handle the coins and notes. Start a simple piggy bank , allowing them to save . Let them know and understand that we need money to buy the items we want. Play pretend store or restaurant games . Take them shopping and allow them to pay with their own money . #Money doesn’t grow on trees Take your child to work, show them that people have to work to earn money. Point out the work people in your community do. Teach them about needs and wants. Allow them to make a wish list and help them save for an item by doing a simple chore, ie :feeding the cat. Age 6 -13 years – At this age a child becomes aware of the value of money #Choices are important Have your child ask themselves questions like Do I need this ? Can I borrow it? Would it cost less somewhere else? Teach your child to shop around and compare prices. Your child should know  that smart shopping helps your money go farther. #Budgets Set budgets from allowances . Some parents give their children an extra allowance for toiletries , birthday parties , ect and allow their child to do the planning . #Allowances Allowances are a personal choice. These can be freely given but it is always wise to have your child earn an allowance. This prepares them for a working environment. Amounts for allowances vary from household to household. We have always tried to maintain a R10 per year allowance . (So , if you are 10 you receive R100 allowance per month) #Bank accounts Open a bank account for your child at your preferred credit provider. Most have exciting packages open to children. Allow them to meet the bank manager and treat this visit seriously . Show your child how to make a deposit , withdraw and how to use an ATM. Explain the concepts of credit, interest and saving to your child. #Savings are cool You should save a tenth of all your incomes. If this habit is installed in your child early , they will develop healthy saving habits . We started with two jars – save and spend . This allowed my children to see the money go into each jar and how the save jar filled up , whilst the spend jar stayed empty. Set goals or make a wish list to stay focused on why you are saving. # Make use of resources In the world of technology parents have many apps and sites open to them to encourage and teach financial skills. One of my personal favourite apps for teaching finance skills to children is “mymoneymap” from Nedbank. It is designed to guide your child to work efficiently with their allowance and gain the required financial skills . Open to everyone , you do not need to be a Nedbank account holder to make use of this app. http://www.nedbank.co.za/website/content/products/product_detail_new.asp?SubSubcatid=6949&Subcatid=719&ProductID=657

November 8, 2013
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