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In partnership with Morningstar: In the US, 2021 ranked as the ninth-lowest peak-to-trough drawdown in a calendar year out of the past 94 years of data. That’s quite a feat, seeing as 2021 was by no means a dull year – global bonds bottomed out, we saw the Evergrande debacle unfold, Chinese tech stocks slumped and then the contagion of it all to emerging markets. Fast forward four months into 2022 and we are back to a period where market volatility and uncertainty are the order of the day and to say that 2022 has been volatile would probably be somewhat of an understatement. In partnership with Morningstar: There is certainly no shortage of things to worry about at the moment. As with all things unknown and uncertain, it is human nature to speculate how things will pan out. Although we have no actual control over the outcome, being mentally prepared for a certain outcome brings some sort of comfort – especially when it comes to our investments. Forecasting outcomes for life is one thing but humans are notoriously bad at correctly forecasting the markets and the subsequent impact events might have on their money. In partnership with Morningstar: The year has been off to a busy start, keeping investors at the edge of their seats. One can’t help but feel like everything is ‘increasing’ or being hiked – whether it be interest rates, the price of diesel and petrol, rates, taxes and/or geopolitical tensions, the trend seems to be upward. When you have a will drafted or a trust registered, it is done given specific circumstances and at a point in time in your life. These circumstances do change. You could (and should) therefore review your will and trust deed regularly, but at least once a year, to ensure that its terms are still relevant and it represents your current circumstances. For example, you may have got divorced or married, a particular family member may become more reliant on financial support from you than others, children or other family members may have emigrated, which may introduce resultant tax complications for them as heirs and/or beneficiaries. Laws may also have changed, which may warrant an amendment of the trust deed. The beginning of the year is a good time to review your will and trust deed. Your will Most people delay addressing their wills because it is an emotional document to prepare. However, proper estate planning includes the drafting of a will, which complements your estate plan. Your will should always be up to date and reflect your current wishes in terms of how you would like your assets to be distributed upon your death. It is critical to comply with all the requirements to draft a valid will, failing which it may be open to attack. People who believe they should inherit – but do not – will try to find a loophole to invalidate the will. It is wise to draw up wills for trust beneficiaries (even as young as 16 years) to whom the trustees make distributions without actually making payment. Without a will, the beneficiary will die intestate, resulting in the money potentially landing in the hands of unintended people. Ensure your will complements a relevant trust deed. If, for example, the trust deed allows trustees (typically the estate planner and his or her family) to appoint follow-up trustees, ensure that this has been attended to in your will. Do not deal with trust assets in your will, as these assets no longer belong to you. (We often find that trust assets are still mentioned in wills.) Similarly, resist instructions in your will to trustees of the trust directing them how to deal with trust assets. You will be treading on thin ice, likely to have the trust disregarded by the South African Revenue Service (SARS), and as a result have the assets included in your estate for estate duty purposes. Trust deed A good starting point is to review the definition of, and further terms dealing with, beneficiaries in the trust deed. Have circumstances changed that warrant a review of the beneficiaries? If you want a specific beneficiary to be favoured over others in a discretionary trust, say so in the trust deed, otherwise beneficiaries may put pressure on trustees to treat them equally. The trust deed in the instance of a discretionary trust should also clearly state that beneficiaries ought not to be treated equally, if that is what you intend. It is perfectly acceptable for a trust deed to provide that a beneficiary shall not receive a benefit until the happening of some event, such as reaching a certain age (Estate Dempers v SIR case of 1977). A trust deed can also provide that a beneficiary will only receive a benefit from a trust for a limited period. The beneficiary may then have an unconditional vested right for that limited period only, and such a right will, during that time, form part of the beneficiary’s insolvent estate or his or her assets during a divorce. You cannot vest income or capital in a beneficiary in a trust deed, but you can revoke the vested right in the event of the beneficiary’s insolvency or divorce. A trust deed cannot restrict a beneficiary, for example, by prohibiting the beneficiary from marrying. However, a beneficiary can cede both a vested and discretionary right to another person or entity, and one may well want to prohibit such a cession expressly in terms of the trust deed. Be mindful how you define ‘income’ in the trust deed, as it may include all “fruits” from assets, such as the occupation of a property, or it can narrowly only refer to actual revenue received, such as rental income. The term “net income” should also be clearly defined – gross income less expenses – and the trust deed should allow trustees to distribute both income and net income. This may be advantageous from a tax perspective when the conduit principle is used to distribute net income to beneficiaries, who will pay income tax on the net income, and not on the (gross) income. Income should also be clearly distinguished from capital in the trust deed, especially if some people are income beneficiaries and others capital beneficiaries. Capital beneficiaries can benefit from the distribution of an actual trust asset or from a gain made on the disposal of trust assets. The treatment of unallocated income should also be defined to reflect the founder’s intention – whether it will form part of trust capital at the end of a financial year, if unallocated, or whether it will keep its nature as income. If the trust deed is silent, it may be assumed that income and capital will always retain their nature. If the trust deed is dated before October 2001 (when capital gains tax was introduced), you should have it amended, as the trust deed has to recognise this concept throughout, and it will be required to enable trustees to distribute a capital gain to beneficiaries using the conduit principle. Conclusion Read your will and trust deed to ensure they reflect your current circumstances, with the assistance of a professional specialising in this field. This is certainly not something you want to have done “for free”. Otherwise you may very well fall within the category of people the judge referred to in the Raubenheiner v Raubenheimer case of 2012: “It is a never-ending source of amazement that so many people rely on untrained advisers when preparing their wills, one of the most important documents they are ever likely to sign.” If you would like us to assist you in compiling or reviewing your will contact Kevin in our Life Department email: [email protected] tel(011)658-1333 Written by: Phia van der Spuy Source: IOL Being diagnosed with a severe illness may dramatically impact your life in the short term and long term. You can have peace of mind, knowing that you will have sufficient funds available to pay for possible medical treatments, home nursing or any other costs that may arise. Example John has a Severe Illness Benefit of R1 000 000. John submits a claim for his illness, acute renal failure which require further treatments. This condition is life-threatening, has several causes and is a common complication after any type of surgery. Although this condition is not cancer or a stroke, only prompt diagnosis and treatment can reduce the his risk of death. John qualifies for a 50% payout, providing him with R500 000 to use towards additional expenses and homecare assistance. Due to the benefit payout, John’s family can now focus on supporting him emotionally and not worry about financial hardship. Do I really need severe illness cover? It's a good question and if you're relatively young and in good health, you may think the answer to be a resounding no. But for a more accurate assessment of your potential risk factors, a look at actual statistics might help shed some valuable light. Over the past year, the severe illness claims paid out to Discovery Life clients have painted an interesting picture with these stats Few years ago: On average, 38% of claimants in 2015 were female, while the majority of 62% were male. Of the claims made, a full 51% paid out to females were for cancer-related diseases, compared to 31% for men. While claims made for body systems such as gastrointestinal, ear nose and throat, respiratory, eye and musculoskeletal tended to be evenly paid out between genders, a total of 35% of claims made by men were due to heart and artery conditions, compared to just 8% for women. Finally, claimants between the ages of 41 and 60 were by far in the majority, representing 61% of claims made in 2015, with claimants from 26 to 40 representing only 16%. What these figures clearly indicate is that no matter your gender, age or health profile, severe illness cover always needs to be a priority not for you, then for the continued well-being and support of your family. Cover for severe illness When choosing your level of cover you should consider any outstanding debt and other liabilities that you would have to settle if you were to become severely ill. It is also important to consider the cost of modifications or lifestyle changes that would be required as a result of a severe illness. If you would like us to do a quote for your Life and Severe Illness cover please contact Kevin in our Life Department email: [email protected] tel:(011)658-1333 Every Medical Scheme includes maternity benefits.If you are not already pregnant before applying for your medical aid, you can enjoy maternity benefits when you fall pregnant. This article will focus on Discovery Medical aid company. If your medical insurance is Momentum, Bonitas, Fedhealth or Profmed, please contact us for your maternity benefits. Benefits will be activated when your pregnancy or baby profile is created on the My Pregnancy or My Baby programme on the Discovery app, or on website www.discovery.co.za or when you register your baby onto the Scheme. You can also activate the programmes by calling 0860 99 88 77 and following the voice prompts. These benefits are available per pregnancy per child up to two years after birth. Once these limits are depleted, you will have to pay for out-of-hospital healthcare expenses related to your pregnancy. Benefits Overview During Your Pregnancy For Two Years After Birth Benefits Details
Antenatal consultations You are covered for up to 8 consultations at your gynaecologist, GP or midwife covered from the Maternity Benefit at the Discovery Health Rate. Pre- and postnatal care You have cover for up to five pre- or postnatal classes (including online classes) or post-birth consultations with a registered nurse, up until two years after birth. Once these have been used, we pay antenatal classes from the available funds allocated to your Medical Savings Account. Prenatal screening You are covered for one non-invasive prenatal testing (NIPT) or one T21 chromosome test subject to clinical entry criteria and/or amniocentesis or chorionic villis sampling (CVS) from the Maternity Benefit at the Discovery Health Rate. Blood tests Cover for a defined basket of blood tests per pregnancy from the Maternity Benefit at the Discovery Health Rate. Ultrasound scans You are covered for up to two 2D ultrasound scans including one nuchal translucency test from the Maternity Benefit at the Discovery Health Rate. 3D and 4D scans are paid up to the rate we pay for 2D scans. Medicines for morning sickness, iron supplements and folic acid (Medical Savings required) Discovery pays for medicines and supplements that are taken during your pregnancy from the available funds allocated to your Medical Savings Account. If these accounts are more than the money you have available in your Medical Savings Account, you will have to pay these costs. GP and specialist care after birth Your baby under the age of two years is covered for two visits to a GP, paediatrician or an ear, nose and throat specialist from the Maternity Benefit at the Discovery Health Rate. Other healthcare services You are covered for one flu vaccination during your pregnancy. You also have access to postnatal care which includes a postnatal consultation within six-weeks post-birth for complications postdelivery, a nutritional assessment with a dietitian and two mental healthcare consultations with a counsellor or psychologist. You are also covered for one breastfeeding consultation with a registered nurse or breastfeeding specialist from the Maternity Benefit at the Discovery Health Rate (DHR). Point-of-care devices (Medical Savings required) If you are registered on the My Pregnancy or My Baby Programmes, you also have access to the latest remote monitoring medical examination device called TytoHome until your youngest child turns six. Discovery pays up to 75% of the Discovery Health Rate for one device per family every five years. You will need to pay 25% of the cost of the device. For more information, refer to the Connected Care for healthcare at home guide available on www.discovery.co.za under Medical Aid > Manage your health plan > Find important documents and certificates. Discovery covers normal deliveries or home births or birthing home delivery with a registered midwife If you choose to have a water birth or normal delivery at home or birthing home, Discovery will pay for care from a midwife for your approved delivery from your Hospital Benefit. The midwife must be registered with a valid practice number. For a water birth at home, Discovery will pay for the cost of the hire of a birthing pool from your Hospital Benefit at the Discovery Health Rate. This must be hired from a registered provider who has a valid practice number. If you use a midwife within our network, the birthing pool is included in the amount we pay. Hospitalisation for your delivery You have cover for hospitalisation for your delivery from the Hospital Benefit, if approved. We pay the hospital account from your Hospital Benefit up to the Discovery Health Rate. You have cover for a water birth in hospital. The midwife must be registered with a valid practice number. Treatment for neonatal jaundice If your baby needs phototherapy due to neonatal jaundice, Discovery will pay for the phototherapy lights from the Hospital Benefit as long as you call for authorization. Please consult the treating doctor for the treatment codes so that we can provide you with the authorization number of the treatment. Is Baby Immunization Covered? Baby immunization is paid from your available Medical Aid Savings, if you are on a hospital plan (Core Plan) then you need to pay for it from your own pocket. The suggestion we would provide, whether you have Medical Aid Savings, is that you should call the Dischem near you, ask them if they have stock for government/public immunization shots, this would not only save your time from queuing at a Public Clinic, but also save you money, as the price difference between the private and public immunization shots can be huge. If you would like to know more about your Maternity Benefits, please contact Jo or Namhla in our Health Department email: [email protected] Tel: (011)658-1333 |
AuthorKevin Yeh Archives
January 2025
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