When it comes to deciding who is going to have the benefit of your retirement funds you actually don't have much choice.
Unlike a life assurance policy where you can nominate who will get the money in the event of your death (and the money will be paid out within days of your death), things work differently with retirement funds and retirement annuity funds.
You can nominate your beneficiaries and this will help the fund trustees.
But it is the trustees of the funds who will make the final decision on who will benefit from the fund.
It is not a matter of cutting someone you don't like out of your will.
Peter van Ryneveld, of the Business Skills Consulting Group, says the naming of a beneficiary is a guide to the trustees in allocating the money you have set aside through a retirement fund it is not a legally-binding instruction as it is with a life assurance policy.
On the death of a member of a retirement fund or the owner of a retirement annuity "all possible dependants must be identified" by the trustees.
This issue is particularly important in South Africa where many people have more than one family, either as a result of traditional marriages, divorces and even common law arrangements, where people live together without any type of marriage contract.
In identifying the people who will benefit from your retirement savings the trustee is not even obliged to adhere to the conditions of your will.
There is an actual court case where someone left all their assets in a will to the SPCA. The trustees of the person's retirement fund however overrode the bequest to the SPCA which resulted in the SPCA only receiving the other assets owned by the dead person and not the proceeds of the retirement fund.
Van Ryneveld says the obligation on trustees to identify dependants does not only mean legal dependants like a spouse and children, but also factual dependants, who depend on you for financial support. This may include parents or grandparents or some distant relative.
Carlos Amaral, assistant general manager of legal services at Liberty Life says if the trustees have reason to believe that they do not have details of all possible dependants they can delay payment for up to 12 months.
He also points out that the obligation on the trustees is not limited to providing for all your dependants, they are also obliged to share out the money fairly between the dependants.
A Liberty Life handbook for retirement fund trustees says that when trustees decide how to pay out any benefits to any dependants and nominated beneficiaries they have to take a number of issues into account. These include:
* The relative wealth of each dependant and nominated beneficiary and the normal standards of living. In other words if one dependant is a multi-millionaire and the other a pauper, the pauper will receive greater favour;
* The number of dependants each of the beneficiaries may in turn have;
* The total amount of the retirement money;
* The length of time for which the particular dependant would have continued to be dependant on the deceased retirement fund member; and
* The dependant's ability to become financially independent by going out to work.
It is virtually impossible to challenge the decisions of the trustees unless it can be shown that they have not acted in good faith or have not applied their minds properly to the allocation of the money.
A final word of advice: To ensure that there is no delay in payments to your dependants it is best to advise the trustees of all your possible dependants (even those you may not like) and to update this information regularly.