Geraldine Macpherson, Legal Marketing Specialist, answers the question most frequently asked by single moms: "Who will look after my child if something happens to me?"
In an ideal world both parents are financially, physically and emotionally involved in the raising of a child, but at least half of South Africa’s mothers are raising their children on their own. Fewer than 20% of these single mothers receive financial assistance from the children's fathers.
The issue of single motherhood was raised at a recent Women’s Day media event hosted by Liberty. The key concern raised by the delegates related to estate planning and what would happen to their children if they, as the single parent, passed away.
While the issue was being raised by single mothers at this event, it is equally relevant for single fathers. Here is the information every single parent needs to know.
Who can I select as my child’s guardian?
A parent is free to name a preferred guardian in their last will and testament and should do so, because it may happen that the other biological parent dies first or simultaneously, or simply declines to take on the role. This nomination will therefore provide guidance as to who should be awarded guardianship should the parent (biological or adopted) fail. That said, however, the parent cannot deprive the other living parent of his or her rights of guardianship. These rights can only be limited by the courts.
If an unmarried father is not named as the guardian, he can apply for guardianship through the High Court, which will consider what is in the best interests of the child, the relationship between the child and the father and the extent to which he has been involved in the child’s life.
The bottom line is that while South African law is certainly geared to protect the rights of children, cognisance is also given to the rights of the surviving biological parent, and in all cases there are two sides to every story. The courts have to balance the rights of all, with specific attention and care to what is best for the children. Because the courts make the decision based on facts, which vary in every case, certainty in the absence of a court order is not possible.
How do I protect my child’s inheritance from theft?
In the case of an absent parent, there is the concern that this parent will only show up and contest guardianship if there is money involved. The fear is that the previously absent parent could use the money for their own purposes before disappearing again, leaving the child penniless and dependent on family and friends.
Financial planning and advice is critical to prevent relatives from raiding the child’s legacy and can be provided by a good financial adviser. You don’t have to consult a lawyer, which can be very expensive.
Protection through a will. Make sure that you have a will and that you make use of a testamentary trust when bequeathing assets to a minor child (under the age of 18). This is a great way to ensure that the legacy is kept safe and well-managed, regardless of whether an absent parent arrives back on the scene or not.
This can also be used in the case of divorce, where you don’t want your ex-spouse to be able to control the finances intended for the benefit of your children. A testamentary trust is created in your will and so can be cost-effective.
Also, as your children reach adulthood and become capable of managing their own finances, you can amend your will to allow them to inherit directly.
Select trustees and guardians carefully. It is a good idea to have both an independent professional trustee to handle the finances, as well as family members or a trusted friend as trustees to provide input regarding the children’s financial needs. It is very important to discuss the issue of guardianship with the person you nominate in your will. This person may not be willing or able to accept the privilege, considering the impact it would have on them and their lifestyle. You need to consider whether they have sufficient space to accommodate your children and whether or not the children would have to move schools.
Use financial products effectively. Financial products can be structured to cater for your child’s specific needs. For example, Liberty Educator will pay school fees directly to the institution, eliminating the risk of the money being used for unintended purposes.
When it comes to life insurance, it’s essential to get financial advice in order to correctly structure the payments. For example, if you nominate a minor as the beneficiary, Liberty will pay the claim into a bank account in the minor’s name. This means the guardian of that child will have access to the money and there could be concerns about whether or not it will be used appropriately.
Alternatively, an adviser could assist with making sure that your policy is structured in such a way that the proceeds will be paid to the testamentary trust. It is also possible to nominate the Liberty Beneficiary Trust Fund as the beneficiary. This is like an “umbrella” inter vivos (living) trust – with professional trustees and a prudent investment mandate. The intention is for the trustees of this trust to invest and look after the money for the beneficiary and to use it towards his or her maintenance, etc.
Liberty is not the only company to offer this solution. What is important is that there is not a “one-size-fits-all” approach to this kind of planning. Every person has their own unique needs and circumstances, which need to be taken into account.
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