In business, we sometimes hear the term ‘succession planning’ used when talking about what happens when a business owner, partner, or other stakeholder step down, retires or passes-away. For stokvels, succession planning is also an important way to protect the wealth you build through collective saving and investing. Part of your stokvels’ constitution should carefully outline who the successor (or beneficiary) is for each member and what better time to do this then now; if not done; during the COVID-19 pandemic. Remember, a constitution is an important document that must be drawn up when you start a stokvel. Think of it as your group’s guidebook.
In that way, should a member suddenly pass, the money due to them will be safeguarded and passed on to the rightful person. This limits the possibility of any unwanted disputes or disagreements.
We have seen it happen at times that no provision is made for this. In cases such as these, funds might be wrongfully withdrawn by someone the member did not appoint as a beneficiary (for example a family member who gains access to their mobile phone after their passing). Beneficiaries should not only be named, but their contact details should also be provided and recorded by the stokvel.
Should the member not offer any details of their beneficiary; then the stokvel is obliged to pay the members due benefit to the members estate. Usually this will be directly to the members bank account which will likely be controlled by the assigned estate executor. If you as member prefer this, please make certain you have a last Will testimony to guide this process.
The members of a stokvel should look at ways to cover themselves in case of emergency or unexpected situations, such as the death of a member. This will of course, not only affect the family of the deceased and bring up the topic of any claim due to the beneficiary, it will also affect the group as a whole if there is a long term project in place.
Therefore, considering life cover at a nominal cost each month for each stokvel member in this case, looks like a good idea. When a member passes, the group can also receive a payout to help cover any money owed by that member. It is also possible that with such a payout, some additional contributions can be made to the group for a limited period of time, until they are able to introduce a new member to stand in the place of the deceased.
What must be done to process on a claim when a member passes?
If you have life insurance for your members, when someone passes, a member of the stokvel executive committee will need to submit a claim. The following is typical information need to be provided to the insurer and may vary per insurer:
- Name and surname of deceased
- ID number and copy of deceased
- Death Certificate
- Name and account number of the stokvel
The stokvel leadership will then be responsible for distributing the funds correctly from the claim once they are processed, according to the governing rules of the stokvel as outlined in their constitution.
Should your stokvel need assistance with setting up the rules that govern your constitution succession planning for your members, StokFella is here to help.
Get in touch with us today on firstname.lastname@example.org or call us during office hours on +27 (0)11 568 3497 to find out more.