Children under 18 should not be beneficiaries of your life policies.
Policyholders often don’t consider all the implications of nominating a minor child as a beneficiary on a policy
It is common for parents to nominate their children as beneficiaries on policies – which children are often minors at the time of death.
Under South African law, a minor (a person under the age of 18) on his or her own, in general, cannot inherit, because they do not have contractual capacity.
So, the first thing every parent should do is to have a properly drafted will. Second, the parent should consider setting up a trust to prevent assets from being liquidated and paid into the Guardian’s Fund.
Upon the death of a parent, assets bequeathed to a minor in terms of a will, or assets the minor inherits because the parent died intestate (without a will), are liquidated and the proceeds invested in the Guardian’s Fund (this fund forms part of and is being regulated by the Master of the High Court) at low interest, with limited access thereto, until the minor turns 18.
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