Protecting your legacy via estate planning

Venice
Williams-Gordon

Wednesday, December 12, 2018

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ESTATE planning can be daunting, but it is one of the most important aspects of life preparation. It helps you to arrange, manage and dispose of assets during your life. Therefore, when you begin acquiring assets it's necessary for you to decide on the who, what and how. Proper estate planning can save your beneficiaries a great deal of money.

Believe it or not, age has nothing to do with death. Therefore, as soon as you begin to acquire and accumulate assets you should at least consider writing a last will and testament as a first step to estate planning.

Having a will does not mean that you are going to die, it simply means that you are being prudent.

VALIDITY

The person who is writing the will is referred to as either a testator (male) or testatrix (female), and he or she has the liberty to decide whom to give their assets to during their lifetime. A will cannot be written after death. The will can only be executed by the person making it, and if that person is not able to read or write, or is ill and lacks mental capacity, legal advice should be sought.

A person is required to have testamentary capacity to make a will, therefore where it is found that a testator lacks mental capacity, s/he should not be asked to make a will or make changes to an existing will.

Marriage can automatically revoke (cancel) any previous will. If you do not make a new will, when you die the law of intestacy will determine how your assets are divided. To avoid this, you must prepare a new will after marriage.

Divorce will not void an existing will, so once your divorce is finalised a new will should be prepared if you do not wish your ex-spouse to receive the benefits previously stipulated in the will.

Stay away from will forms. These forms are usually available at book stores, and if they are not used properly, they can become very challenging at the stage of probating the estate of the deceased.

If you cannot afford an attorney, it is best to type or write legibly your wishes for your estate on a sheet of white paper. You should, thereafter, ensure that the will meets all the necessary specifications to ensure its validity.

WHO

Once you have decided on making a will, you should give careful consideration to who should be your executor and/or trustee.

The people you select to represent your estate are very important because they will be responsible for carrying out your wishes. They must be reliable, trustworthy, caring and able to exercise patience.

The executor is the person who will receive grant of probate and will have a fiduciary responsibility to administer your estate in accordance with your will. It is recommended that you nominate at least two executors because should one die or become unable to perform the fiduciary duties, there will be another who can carry on with the administration of your estate. If all the named executors die, then you must update your will.

The 'who factor' becomes important when there is a need to provide for a minor, an elderly or sick family member, or friend.

Remember that not all friends and family are what they present themselves to be. Often, friends and family fail to carry out your wishes after you have left your assets to them. For example, they often fail to care for a young, elderly or sick relative. Having an older or more educated child does not mean that you should leave all or most your assets to that child to care for their younger, less-educated or sick sibling. It is very important that parents who are writing their will assess their family members' and friends' behaviour towards other family members and friends (eg young siblings or elderly or ill relatives or friends) before deciding who to provide for in your will.

Make sure you consider the following important questions:

Will your partner or relative care for your children after your death?

What would happen to loved ones if your partner remarried?

Will your partner care for your ailing mother or father, or for your child who is not also your partner's biological child?

Will your child be cared for by other siblings if need be?

WHAT

An asset is defined as any item of economic value owned by an individual or corporation, particularly one that can be converted to cash — for example, cash, securities, inventory, office equipment, real estate, and cars and other property.

Mortgage property usually has a life insurance component, therefore, before making a will you should investigate whether the mortgage property (eg car or real property) has such a component.

Even if you do not have a car, house or investment, you should have a will. If you are making only a salary and the account for your salary is held solely by you, then you still need a will.

Having a life insurance policy is a great way to make provisions for your loved ones however, you must ensure that the policy you have states a beneficiary name. If you fail to state a beneficiary, then the law of intestacy will determine how your life insurance policy will be divided.

Additionally, after a divorce or a change in relationship status, always remember to amend your policy if it is not your intention for your ex-spouse to receive the benefit stipulated in your existing will.

Remember that your ownership share in a joint tenancy property cannot be willed to your heirs. However, if you own property in a joint tenancy, you and the other owners can receive any deceased owners' shares upon their deaths.

HOW

Where a testator or testatrix has a company or several types of assets, such a person should consult with an estate planning attorney because a will may not be the best option. Several types of plans are available and could be examined to suit this type of individual need, for example, a living will, living trust, trust, or life insurance.

A trust is a great tool to use in estate planning; it is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. A trust has the following benefits:

Control of your wealth: You can specify the terms of a trust precisely, controlling when and to whom distributions are made. You may also, for example, set up a revocable trust so that the trust assets remain accessible to you during your lifetime, and you designate to whom the remaining assets will pass thereafter — even when there are complex situations such as children from more than one marriage.

Protection of your legacy: A properly constructed trust can help protect your estate from your heirs' creditors or from beneficiaries who may not be adept at money management.

Privacy and probate savings: Probate is a matter of public record—a trust may allow assets to pass outside of probate and remain private, in addition to possibly reducing the amount lost to court fees and taxes in the process.

Venice Williams-Gordon is an attorney-at-law. She can be contacted at vwilliams@ lswlegal.com.


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