Easy Does It - A podcast by EasyEquities

So what happens to my EasyEquities account when I die?

• Hosted by Dj @ Large • Season 3 • Episode 53

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Nobody likes to think about and plan for their own death, but when you’re investing toward a future that results in generational wealth then you need to know your options. We invited Sascha Graham, Head of Legal at Purple Group, to tell us what happens to one’s easyequities account and investments upon death.

Did you know that your assets and liabilities form part of your estate? But did you know that you need a little paperwork (like a will) and admin (updated death benefits forms) in order to determine how your estate is distributed upon death?

Sascha untangles the complex web of legislations, investment vehicles and paperwork that govern how investments are dealt with upon passing.

While we try to make everything Easy, this conversation and topic may be one that helps when things get difficult. Hit play, and soak in the insights from the Easy Legal Eagle.

Share the love with us on social media by letting us know what you think of the episode by tweeting @EasyEquities @FinTLawyer_Girl or tagging us on the gram.

To sign up to EasyEquities: http://bit.ly/2EtcE85

DISCLAIMER: EasyEquities is a product of First World Trader (Pty) Ltd t/a EasyEquities which is an authorised Financial Services Provider. FSP number: 22588. This material is not intended as and does not constitute financial advice or any other advice and is neither exhaustive nor prescriptive. The views expressed by the contributor are his or her own (as an independently registered financial services provider, financial adviser or other independent capacity), and not necessarily endorsed by EasyEquities (as a separate financial services provider).

Introduction

Easy does it, your cool guide to investing. 

The executor will then get hold of Easy Equities.  They will submit a ticket to Easy Equities and say DJ @Large, he's passed away, I was nominated as his executor, here is my Letters of Executorship.  They will also need to include their FICA information, so we would ask for the Letters of Executorship.  Also, a certified copy of your death certificate just proving that you are in fact deceased. A copy of your ID and then the FICA documents which at the moment consists of the ID documents of the executor together with the utilities bill and then all of that together with the instruction of what we actually need to do with the investments in your Easy Equities account. 

Welcome to Easy Does It, a podcast by Easy Equities where we simplify money and investing.  No jargon, no complications, your cool guide to investing. Easy.  

Interview

DJ @Large: Hmm, hmm, hmm. Thank you for pressing play on the Easy Does It podcast, your cool guide to investing with no jargon and no complications.  Remember to subscribe on Spotify, Apple, Google podcast and all the other listing sites to get instant notifications of box-fresh episodes of the podcast. My name is DJ @Large and today I'll be hanging out with Sascha Graham, the Head of Legal at Purple Group. But she is so much more. I was stalking her a little bit on social media.  So of course, she's an investor, she's a proud cat mom, she's a bubbles enthusiast, we share that.  She's a bookworm and a retired DJ.  So many things.  Sasha, welcome to the Easy Does It podcast. 

Sascha Graham: Hi and thanks for having me.

DJ @Large: So, I heard that you absolutely love your cat.  Were you able to leave her and come to studio? 

Sascha Graham: Yeah, I mean she probably wasn't very happy about it.  [laughter] No, I'm joking.  I was actually at the office today.  So, I'm coming out after my office day.  But lo and behold, as soon as I get home, she will be sitting on the counter, literally waiting for me.  That is what happens every day. 

DJ @Large: Oh, but it's so lovely to have you.  You know, there's this legal question that keeps coming up within the Easy Equities community. I get quite a lot of DMs about it.  I see it quite a lot in different types of investor groups. And it's around what happens to my Easy Equities account and my investments when I die, which I know is a very complex one.  And hopefully as our legal eagle, you'll be able to guide us a little bit. But before we delve into that, we want to get to know you a little bit more, right?  So, seeing as how you are a retired DJ, we'll talk a bit about music and investments, right? So, what I'd like to know from you is what song best describes the current state of your investment portfolio? 

Sascha Graham: Wow, that is it. That is it. [laughter]

DJ @Large: [laughter] Because I know people's portfolios are a little bit shaky at the moment.  So I'm keen to know. 

Sascha Graham: I mean, right now, it's probably let me think.  I mean, this is not at all a song I would ever play, but it's a song that I genuinely love.  I would have to say Celine Dion.  It's All Coming Back To Me Now.  All those investment principles people told me about, they're all coming back to me now. 

DJ @Large: Everything is kicking in now.  Things are not going too well.  Everything kicks in. 

Sascha Graham: So diversity, all of those sort of things.  I'm like, hmm. 

DJ @Large: Patience, not being too emotional. 

Sascha Graham: Exactly.

DJ @Large: I love that one. Another question I have for you is what is that one share or ETF that you are holding onto with the hope that someday, one day, it will turn around and turn green? 

Sascha Graham: Sure.  This is actually the easiest question I'm probably going to answer today because it's one that is always stuck in my mind since forever. And it's actually Discovery Bank.  So I bought Discovery Bank shares probably as one of the first shares I ever bought in my Easy Equities account, which is probably about six years old now. That share,  I don't think it's ever been in the green.  I think I really did buy at the top of the top.  I think it was probably trading around R1.80 something at the time.  That share literally has never been green, but I've held on, man.  I've literally held on for dear life, as they say.  [laughter] I've been huddling.  I've been huddling so hard. 

DJ @Large: [laughter]…It's so funny. We all have that one.  We're just holding on and hoping for a change and it just doesn't look like it's going to happen. But nonetheless, that is the school fees we pay when it comes to investing.  And I guess it all makes us human.  We don't know it all.  We sort of figure things out as we go.  [laughter] So even the legal eagles don't know it all when it comes to investing. 

Sascha Graham: [laughter] No, definitely not. 

DJ @Large: So, Sascha, let’s go back to this question that I raised around the stuff I've been seeing around social media, around what happens to my Easy Equities account when I die.  Broadly, what happens and is this process different to a retirement annuity?

Sascha Graham: It is.  So very, I mean, this is a complex, complex topic in law. So, I'm going to try to keep it as very simple and as high level as I can.  So, when you die, your shares and your investments form part of the assets that will form part of your estate.  So, they call that your estate.  So, when you die, your estate is made up of all the things you leave behind, liabilities included.  Now, how your estate is distributed depends on whether you have a will or not. So, everything falls into your, and let me caveat that, not everything, because the second part of your question is where I'm going to get to what things fall outside of your estate.  So high level, your shares form part of your assets.  Therefore, they fall into your estate.  How they distributed depends on whether you have a will or not.  Now, the second part of your question regarding whether that's whether that's the same for your retirement annuity.  So, your retirement annuity is actually the one asset you have probably that does not fall within your estate. So, retirement annuities, pension funds, pension preservations, provident preservations, they are all something that's governed under the Pension Funds Act.  And that is the one piece of legislation that actually takes away your testamentary freedom.  So, there's a section in the Pension Funds Act called Section 37C.  And that section actually sets out how your death benefits, which is the benefit that you get from your retirement annuity when you die, how that is distributed.  And this is something very different from the beneficiaries and stuff that will benefit under your estates, because in your estates or when you don't have a will, for example, you have beneficiaries that will reap the rewards of your estates, obviously, if they are, and you will decide how they are distributed.  Section 37C puts the obligation and basically ability of the trustees of the fund to decide where your death benefit goes. So, notwithstanding the fact that you nominated people, Section 37C makes it a requirement for the trustees to actually go and look at who are your actual dependents. So, they try and make sure that your death benefit is distributed equally, not only to people you've nominated, but to your actual dependents as well.  So, if you don't have any dependents and you just put through nominated beneficiaries, then they will receive.  But if you've got nominated beneficiaries who are none of your dependents, but you've got a lot of dependents, they will inherit it and get the parts of your estate.  And it's not always a very easy task.

DJ @Large: It could be complex. Could be very complex.

Sascha Graham: Very complex.  So, you don't actually, I mean, I don't envy the jobs of the trustees, because they don't actually know you from a bar of soap.  So even though who you nominate might not get a portion of your death benefit as you wanted them to, just by nominating people and keeping that information up to date does give the trustees a guide.  It's to, okay, who should they be looking at when you pass away?  And it helps them with the investigation.  And sometimes, and I think a lot of people in this space and in the trustee space will know that this is when things start to get a little bit hairy, because perhaps certain individuals who weren't a part of your life when you were alive, well, that people knew about.  And I guess one of the most common examples of this is you're married.  Let's just say you and I are married. I pass away.  You think you're my only surviving dependent.  We didn't have any children.  So, we lived together.  We had a bond together. You know, we were dependents on each other.  You were dependent of mine as my spouse.  I pass away.  And then the trustees go and do the investigation.  And lo and behold, they realized Sasha had another side. 

DJ @Large: A side thing. Okay!

Sascha Graham: A side thing.  Exactly.  And that side thing.  Well, I was basically, I don't know what the millennial Gen Z term is for this.  I was the blesser.  Let's call it that.  And taking care of this individual. I was taking care of this individual, right?  So that individual is actually dependent on me. So, when it comes down to distributing my death benefits, there’s a very strong possibility, well, if they can prove that person was dependent on me and if that person can prove they were dependent on me.  So, you know, the sort of evidence that they would provide is like a bank statement where I've been depositing, you know, on a regular basis, monthly, you know, funds into their accounts.  You know, that's a very easy way to prove that the person was dependent on me.  And doesn't always land up in very easy things to deal with. Because, I mean, now you would be totally blindsided.  And this person will get a share of my death benefit because they are dependents of mine. 

DJ @Large: Yeah.  What I love is you split it up for us, right? So, we've spoken about your Easy Equities account and your normal ZAR investments.  And then the death benefits, which is the RN, that’s where it sits.  And what happens with the two?  Two important things come up for me.  One is if you've got normal investments, you have to have a will, right?  It makes things a little bit simpler. But even on the death benefit side, all your information needs to be updated.  And you need to sort of have an idea of how things could play out.  And consider all the dependents that you currently have.  I want to bring it closer back to your easy equities account.  Your normal investments.  So, let's just say I pass away. I've got great investments.  I've left a will.  There's specific people that need to benefit from it.  What happens from an Easy Equities point of view?  Do my family members have to request certain documents to get the funds?  What happens from that point of view, from an Easy Equities point of view?

Sascha Graham: Okay, so purely from an easy equities point of view.  So, could you have a will?  As part of your will, you would have nominated and appointed an executor of your estate.  So, when you pass away, the executor will take your will, take your death certificate, and go to the master's office.  They will get issued with something called the letters of executorship. 

DJ @Large: Okay.

Sascha Graham:  So, the executor will then get hold of easy equities.  They will send, they will submit a ticket to Easy Equities and say, DJ @Large, he’s passed away. I was nominated as his executor.  Here is my letters of executorship.  They will also need to include the FICA information.  So, we would ask for the letters of executorship and also a copy of your certified copy of your death certificate, just proving that you are in fact deceased, a copy of your ID and then the FICA documents, which at the moment consists of the ID documents of the executor together with the utilities bill.  And then all of that together with the instruction of what we actually need to do with the investments in your Easy Equities account. So, if you in your will said, I want everything to be liquidated to cash and then split it up on a cash value.  We need to know whether we need to liquidate all your investments.  And then what we will do is pay out that full amount into your estate bank account.  So that's also one of the requirements. Sorry, I forgot to mention that is that as part of the documents we need to receive, we need to receive a copy of the bank account details of your estates.  So, the executor will go and open an estate late bank account at one of the banks.  The purpose of that bank account is to hold the estate assets while the executor is busy doing what they need to do.  You know, distributing everything, doing all the stuff that they need to do.  So, we need to know what to do. So, it's either that we liquidate your investments, or you have said I want Sasha to receive my one million purple group shares. That would be amazing.  So, then what we can also do is then we will transfer those shares to your beneficiary.

DJ @Large:  Oh, OK.  So, you can either transfer the actual shares themselves or the cash value of the shares.  Just depends on what I've requested in the will. 

Sascha Graham: Exactly.

DJ @Large:  One of the questions that's going to come up is worst case scenario, I don't have a will.  So, what happens then?  Which I know is another really complex one.  But perhaps you can use a couple of examples to see what could potentially happen.

Sascha Graham: Yeah.  So, this is very complex. So please avoid this at all costs. Put a will in place and something we can also perhaps talk about a little bit later is the requirements for a will.  Have a will in place.  But to the extent that you don't in terms of South African law, you then have passed away in something called intestate.  OK.  So, you have died without a will and that is governed by the Intestate Succession Act. And that is a set of legal requirements that then says, OK, if you have died without a will, what, who is going to benefit and who's your state going to be distributed to?  So interesting, if you've got a spouse, the spouse will always receive a child's portion or two hundred and fifty thousand rand, whichever is greater.  Let's take an example of you have a spouse, three children.  Yeah, your state or your easy equity account just for all intents and purposes, just use that two-million-rand amount.  So, there are four of you. 

DJ @Large: We're even doing maths now.  You know that this conversation is serious.  I know. We're doing maths, taking our calculators.  It's very serious. 

Sascha Graham: And for a lawyer to do maths, this is quite a thing. [laughter] This is quite a thing.  So please, I’m sorry if it comes out wrong, but I'll try.

DJ @Large:  I love it. I love it.  Because you're explaining it in such a beautiful way and simplifying it.  So, I've got a spouse, I’ve got three kids and my Easy Equities account or the value of it is two million. 

Sascha Graham: So, we take two million and we divide that by four. That gives us five hundred thousand.  So, we first started with the spouse.  So, because we divided it by how many people they are, so the initial value is five hundred thousand if we divided it equally. And that's what the children would get.  So then for a spouse, we look at that.  We say, OK, that’s four hundred thousand.  Is that greater than two hundred and fifty thousand?  Yes, it is.  So, the spouse gets the four hundred thousand.  Ooh, the five hundred thousand. 

DJ @Large: I'm with you, the five hundred thousand.

Sascha Graham: [laughter] The five hundred thousand.  And then the rest gets split equally between the three children.  So, the spouse in this case will get five hundred thousand.  And each of the children will also get five hundred thousand because five hundred thousand times four is two million. 

DJ @Large: Yes, that makes sense.  But I can quickly see why things could get very, very tricky and complicated, because essentially if you don't have a will, you don't have control of who should get what. 

Sascha Graham: Exactly.

DJ @Large: Because you might have wishes when you're alive that, you know, I want my estate to go to certain people and exclude other people. And if you die in this manner, then things sort of get complicated and you have no control.

Sascha Graham: And there's a lot of there's obviously a lot of different iterations. Like, for example, what if I don't have a spouse or I don't have any kids who inherits then?  It's actually your parents.  Yeah. So, your parents would then inherit equally.  But it even gets it can get more complicated.  What if you only have one surviving parent?  Then it's your parents and what they call your parents’ descendants, which are basically your brothers and sisters, will then split.  Your one parent will take half and the rest will be distributed amongst those. So, it can get very, very complex, depending on your personal situation.  And 100 percent, as you've just said, the value of your easy equities account being two million rand can go to people you didn't want to go to.  I mean, what if you had, you know, an estranged relationship with one of your parents or both?  And I mean, now you don't have a spouse or children.  So now they are going to go and inherit your assets, basically, which might not be what you want. So, it's really, really important that you set out your wishes, you know, in your will.  I mean when you're in the ground, unfortunately, there’s nothing you can do any further.  If no one knows your wishes, you know, you're going to leave it up to, you know, these certain laws to determine who who gets your who gets your assets. 

DJ @Large: Yeah, I think you've brilliantly spelt out, you know, the consequences of dying without one and what could potentially happen.  I mean, is it difficult to draw up a will?  Is it expensive? What are some of the reasons that people don't do it? I know people don't like to think about death.  People don't like to speak about death.  That could be one of them.  But is it difficult to draw up one?  Is it expensive?  And maybe you can touch on one or two reasons why people don't want to draw them up. 

Sascha Graham: Death, unfortunately, is still a very taboo subject.  It's not something that's easily spoken about.  And I mean, you'd sort of wonder why, because I mean, it’s the only real certainty in life, isn’t it?  Yeah, I think it's taboo to speak about.  And I think probably is also just not I mean, there is information about it out there. I mean, you can just Google how do I draw up a will?  And it is all there. It's not difficult. So, I think it might be because it's just a taboo subject and people don't like to think about it. But also mixed with the fact that you think you have time, right? 

DJ @Large: Yes.  You think you have time.  You think now, I mean, I’m almost 32. I'm like, no, I got plenty of time.  Well, what do I need a will for?  I've still got another, you know, 30, 40, 50 years in me. And then, you know, you kick tomorrow and then there was nothing.  So, I think it's a taboo subject.  And I also think people think they have time.  But then to go to your first part of the question, is it difficult?  No.  Is it expensive?  No.  It's actually for free.  So, you can draft your very own will yourself. If you don't even need to pay anyone to do it, as long as you are over the age of 16 years old, you can have mentally sound ability. You can draft your own will.  Must be in writing and needs to be signed and witnessed by two witnesses who are at least over the age of 14 years old and who are also mentally capable of knowing what they're witnessing.  It's as easy as that.  You put down what your wishes are.  You appoint an executor of your state.  So, what a lot of people do is they will ask someone they trust. For example, quite a few of my family members and friends have asked me to be an executor on the state just because of my legal background.  But it doesn't have to be a lawyer.  It doesn’t, you know, it can just be someone, someone you trust.  And so, it actually costs nothing.  Well, I mean, it costs the price of a piece of paper, really.  So exactly. 

DJ @Large: And it's such an interesting one because it's not expensive.  It's fairly easy to create, yet we still don't have them. Right.  So, I think it's about having very serious conversations about what could potentially happen and knowing that we're all going to die at some point in time.  And you don't want to leave a mess. We've seen a lot of families leaving this great big mess and families are fighting and they're crumbling and it's not going well.  I mean, I had a conversation with my mum a couple of years ago.  It was really, really uncomfortable.  But she's got a file that's got all of her important documents.  It's got her will in there.  Maybe that's that's the next thing we can talk about is this idea of, you know, having a life file.  I mean, what is it?  What's inside of it?  Why should some of our listeners even consider having one?

Sascha Graham: I can just relate this to a personal story of myself and why this is an important one.  A few years ago, my my gran passed away unexpectedly, you know, in her apartment.  And the next day when, you know, everything was found out and we now needed to start getting her affairs in order. You know, one of the requirements at the funeral home is that you need to present a copy of the ID so that they can register them in, issue the death certificate, et cetera, et cetera.  Now, the problem was my gran never had a life file.  We…it was actually my gran, and I will never forget this day.  We went to her apartment, and we were searching everywhere for her ID book.  Something that we could get our hands on to at least get her body accepted by the funeral home. I promise you, we searched high and low.  Eventually, we were praying to her saying, Gran, Gran, give us a sign.

DJ @Large: Give us a sign. Where is this thing?

Sascha Graham: Where is this? I mean, you would think and then you also start thinking all like terrible things. You're like, oh, no, maybe when the paramedics came, maybe her bag was taken.  I don't know. You start wondering because we just couldn't find her handbag or her wallet anywhere.  But eventually, and I'm pretty sure it was our prayers that worked.  She was obviously quite an old lady who lived on her own. So, she actually used to hide her handbag at night when she went to bed.  And something just told me, look, it was like looking in a wash basket that was covered with things.  It wasn't even visible.  It was covered with like washing.  That's where she used to hide her handbag.  And thank goodness, we eventually found her handbag where we could get her ID copy out and then, you know, start putting together the necessary arrangements that needed to be done.  So, to make life very easy for your family who are already going through a very difficult time is to have a life file. Make sure it contains all of your important information.  Copy of your ID, your bank account details, the various policies you have.  Also, another, you know, something when someone passes is you start thinking about funeral costs.  Do you have a funeral policy?  You know, are your parents going to be able to or are your family members going to be able to utilize something like that? Or they're going to have to fund it themselves?  Also, yeah, include all of your policies, include your investment accounts, include your passwords. You know?

DJ @Large:  Because we are on social media, we are on all these different types of accounts.  You've got your easy equities account, all of this.  So have also your passwords in there as well.

Sascha Graham: Have your passwords. Obviously, keep this file very, very safe.  I mean, only tell your trusted family members where you keep it but try to keep it as comprehensive as possible.  It was actually a company and it's funny, it was a set up by a colleague of mine.  And for sure, I don't think it exists anymore.  I'm not actually sure.  I haven't seen anything on social media about it for a while, but they actually started a legal tech company called Life file.  And the whole purpose behind that business was to help people create a digital life file.  So, they could log on to this platform, you could upload all of your information.  They obviously, as part of the service, would ensure that all your personal information is kept secure.  And you then only really needed to give your family one login and one password to log into your digital life file. And they could go get everything out of that. So, I mean when I saw them start that business, I was actually very excited.  And I, yeah, actually, I think I signed up for like the free version at some point.  Also, again, thinking, I’ll get to it when I get to it.  I didn't get to it, like most of us, I'm sure.  But it's so important that your family members and your loved ones are going through such a difficult time already. Try and make the other stuff as easy as possible. It's stressful enough to now have to go and wonder where things are.  What did you have?  What didn't you have?  It really is stress that can be avoided.  I know these things are difficult.  You've got to sit with yourself and say, check yourself.  I'm not immortal.  This is going to happen one day.  I need to get my life in order and just, you know, for the benefit of my loved ones so that I just leave everything in good order.

DJ @Large: So, we can spend time mourning and celebrating your life.  Instead of being so stressed out that we can't find documents and we don't even know if you have a funeral policy.  And now we're trying to put money together to bury you.  But if you had just taken some time to do all the right things, have a will, ensure that, you know, all your policies are updated with the right beneficiaries.  And you're spending time creating this life file and updating it as well.

Sascha Graham: Yes…

DJ @Large: Cause sometimes you create it and leave it. But so many things start to change in your life, and you don't update it. So, I know it's a very difficult conversation for a lot of us, but it's such an important one.  And of course, we had to bring a legal eagle to help us figure it out.  Earlier on, you did mention that there is a resource on the Easy Equity site, particularly in relation to investment accounts.

Sascha Graham: Yes.  So, if you go onto the Easy Equity support portal, or even if you just Google Easy Equities, what happens to my account when I die?  An FAQ will pop up.  And in fact, we also have specific FAQs on the retirement stuff.  So, it actually sets out the difference. You know, what happens if it's in your retirement annuity?  Or, you know, we also have the preservation funds as well. So, what happens if it's in one of the preservation funds?  So, we do have this content available on the Easy Equities support portal.  And of course, if anyone has any questions, they can submit a question to the Easy Equities help desk at any time.  And, you know, we will point them in the right direction and try to help them as much as possible.

DJ @Large:  Yeah. So, there's so many resources. There's this episode that you can always rewind, you can fast forward, you can press play.  And then, of course, you can also go into the Easy Equities portal and look for some of this information as well.  So, there's this quite a lot of information, but it's just about taking those steps.  So, Sasha, before we wrap it up, I want to bring it back to investing, right?  What's that one investment principle that you live by?  I know you mentioned that when your portfolio is not doing well, you start to remember a lot of these things.  But what's that one to you that's like, this is the big one for me?

Sascha Graham: I would say, don’t panic.  Hold on for dear life.  If that stock is something that you've purchased because you actually believe in the company and, you know, you've done your research. You know that you believe in this company with its fundamentals, right?  So, discovery is a good one for me.  I even though, unfortunately, that wasn't the very start of my investing career, I bought way at the top.  So, it's been a while.  Well, it's never been green for me.  But I believe in the business as a whole, you know, it’s a big business. It's growing.  I feel like it's growing in the right places.

DJ @Large: Yes…

Sascha Graham:  Easy Equities is obviously partnered with Discovery Bank as well.  So that's why I'm holding on.  I'm not panic selling.  I mean, if I panicked, I would have sold it ages ago.  Don't panic.  Hold on to the stocks you believe in. 

DJ @Large: Yeah, it's about controlling the emotions.  It's about controlling the emotions.  Thank you so much, Sasha Graham, for joining us on the Easy Does It podcast. 

Sascha Graham: Thank you so much. It was great. 

DJ @Large: Yes. And that's our legal eagle at purple group.  She shared her knowledge, her expertise, and I really love that she was relatable. And, you know, she even told stories of her grandmother passing away.  And that's what the Easy Does It podcast is all about.  We're not using fancy and complicated language to confuse you, but just to be real and to give you as much information as you need along your investment journey. Thank you so much for pressing play on the Easy Does It podcast, your cool guide to investing.

Thank you for pressing play on the Easy Does It podcast. A big shout out to you for hanging out with us. Don’t forget to subscribe, we are on Spotify and Apple podcasts. Let us know what you think of this episode on Twitter and Insta, our handle is @EasyEquities.