When he turned 18 years old, I gave him R1million. This was the largest amount I had ever given him as I would normally give him pocket money of about R500 per month. I was sad to watch him waste it, he started drinking heavily, taking drugs and he had too many friends and girlfriends. I would say the most tangible thing he bought with the money is his sports car but even that did not last long as he got in an accident in it while he was driving under the influence. Everyone tried to speak to him to get him to use the money wisely, but he wouldn’t listen. We all spoke to him, we tried to reason with him but he was not prepared to listen to anyone. When I gave him the million Rand, I was hoping he was going to use it to study and finish his degree and maybe use some of it later to buy a car or put a deposit on his first townhouse or even start a business. It was not to be so, he was on the fast lane and not even the car accident moved him to change his ways. By the time he was 19 years old, it was all gone. Not a cent was left. Like a prodigal son, he came back home penniless, ragged and feeling very sorry.
So why did I give my 18 year old son R1 million? Why didn’t I just give it to him in stages i.e. pay his school and university fees, buy him a car when he graduated, help him with a deposit for his first car? Why did I give him my last R1million? The truth is I was dead. The R1million was my life cover pay out. When I wrote him as a beneficiary for my policy, I thought that if I died while he was young, he was going to use it for his university fees and a deposit for his car and his first townhouse. I didn’t have a Will to control when and how he would get the money. If only I had known, I would have drafted a Will and wrote that his school and university fees must be paid directly to the institutions of learning, that he must be given a deposit for car when he graduates so that he would get a job and pay the monthly installments and that the balance of the funds should only be given to him at the age of 25 when he would be a little mature. But I never understood the importance of a Will so I put him as a beneficiary for my life cover and he blew all the money.
Many parents put their children as beneficiaries for their life cover. Putting your children as beneficiaries for your life cover is very risky. Time and again, children abuse the money if parents die while they are still young. In some instances, the children never get to enjoy the benefits of the funds as the relatives who look after them sometimes use the funds for their own personal benefit. If you want to ensure that your life cover payout is used for the intended purpose, it is best that you draft a Will. With December around the corner and all the accidents that happen on our roads, I wouldn’t go away on holidays without a properly drafted Will.
I will draft your Will Free of charge [if you are nice to me]. Drop me an email at email@example.com if you want me to help you draft your Will.
For more on Wills, read chapter 9 of my book From Debt to Riches: Steps to Financial Success.
The book is available at R145 where books are sold. If you want 2017 to be a better year than 2016, get yourself and your loved ones a copy for Christmas.