No one likes to think about death, their own in particular, but there’s something reassuring about planning for the things that you can control instead of worrying about things that you can’t. For instance, making a plan for what will happen to your assets and debts after you pass away can make a world of difference, especially to the loved ones whom you will leave behind.  

In South Africa, many families are caught off guard by surprise costs and legal complications simply because the deceased didn’t plan properly – or didn’t realise they needed to. The last thing you want, is for your loved ones to be in that position.  

So, let’s talk about what actually happens to your car, your house, and your debt when you die. 

Your Estate Takes Over 

When a person dies, their financial affairs don’t vanish – they’re transferred to what’s called an ‘estate.’ No, this isn’t a fancy property from the world of Bridgerton that you’ll leave for your nearest and dearest. In fact, the term ‘estate’ simply refers to your net worth, including all property, possessions, and other assets. Your estate is managed by an executor, often appointed in your Will.  

If you don’t have a Will then the courts will appoint an executor so that someone is legally responsible for winding up your assets and debts. 

What Happens To Your Car 

It seems trivial to worry about your car, but in the event of your death, your car will need to be dealt with. If your vehicle was financed and you still owed money at the time of your death, the finance provider has the right to claim the vehicle or demand repayment from the estate. You might have thought that your spouse, partner or family member would just be able to have the car as their own, but this isn’t always the case.  

They can decide if they want to take over the payments and then they can approach the finance provider. The finance provider agrees to reassign the contract, then they can take the car over and pay it off until it becomes theirs. 

Now, if the vehicle was fully paid off when you died, it becomes an asset of your estate and can be passed on according to your Will. If you forgot to mention this in your Will, the executor will work out how to distribute the vehicle among your heirs. 

What Happens To Your Home 

The process for a home is similar to what we just covered about your vehicle. Essentially, if you fully owned your home, then it becomes an asset that can be inherited. However, if there’s an outstanding home loan, the bank still expects repayment. In this case, there are a few options. Your spouse, partner or family member can approach the bank to take over the payments. Another option is that your estate settles the debt. If neither option works, then the bank may repossess the property.  

Generally, it’s advised that you take out bond protection insurance, a type of cover that settles your home loan in the event of death. It’s worth checking if you have this in place or if your insurer offers it as this policy can really impact what happens to your loved ones after your passing.  

How Insurance Helps 

Speaking of insurance, this is the part where we strongly urge you to consider taking out appropriate cover. For the most part, life insurance is the ideal option. You see, having a standard life insurance policy will provide a lump sum to your beneficiaries that will go towards covering your debts, legal fees, funeral costs, and month-to-month survival.  

If life insurance seems out of reach for your current budget, then it’s worth noting that this isn’t the only solution. For instance, credit life insurance can be a great help. This lesser-known policy covers specific debts, like your car loan or personal loan if you die, become disabled, or are retrenched. Many finance providers include this in your agreement, so check your paperwork. It could save your family from major stress. 

What Can You Do Now? 

We would say that your first step is to draft a Will (if you haven’t already) as this is the most powerful document in ensuring your wishes are carried out. Next, you should take the time to review your insurance policies, checking which policy is best suited to your budget and circumstances. As a side note, you should also make sure beneficiaries are up to date.  

Lastly, make a point of talking to your family. It’s not always easy, but it’s the best way to avoid confusion and heartache later. 

Feeling Informed? 

Ultimately, planning ahead doesn’t mean that you’re expecting the worst. It means you’re looking after the people you care about – even after you’re gone. We trust that this information will help you make a decision that aligns with your financial goals and cares for your loved ones.  

For more insights on insurance and financial planning, visit the AA Inform website.