It is worth remembering that one of the major advantages of a life or endowment policy is that you can nominate a beneficiary or beneficiaries to receive the proceeds immediately following death. Not only do policies where beneficiaries are nominated fall outside the estate process, they are not subject to executor’s fees which are the statutory 3.5% plus VAT. This can be significant as on a R1m policy these fees would amount to R39 900 including VAT.
This does not mean that you should nominate minor children as beneficiaries. Those under 18 cannot directly inherit capital and it is likely that such money will end up in the Guardian’s Fund which is administered by the Master of The High Court. Where minor children are concerned a testamentary trust should always be considered.
As far as retirement funds are concerned, whether they be personal retirement annuities or your employer’s fund, you can also nominate a beneficiary. However, there is a significant difference. In terms of section 37c of the Pension Funds Act, the fund’s trustees must exercise their fiduciary responsibilities to ensure that all dependants are considered regarding the disbursement of monies arising from a retirement fund’s death benefits. Nominating a beneficiary in these circumstances is no more than a guideline to the trustees. Nevertheless we advise that beneficiary nominations should be made.