Thinking well to be wise: planning well, wiser: doing well wisest and best of all ~Malcolm-Forbes
If your beneficiary is facing a divorce, part of the inheritance may be subject to divorce claim. This means leakage of your estate to your beneficiary ex-spouse.
If your elderly parents cannot communicate well, you need to take extra precaution to ensure your elderly parents get their share of your inheritance.
Take note for a natural person executor who face bankruptcy will not qualify to be the executor of your estate.
How you can leave a fair portion of esate to your children of previous marriage as you can expect your current spouse will give priority to own children over yours. Think this matter carefully.
If you want to provide for your extra-marital lover through the will, and if you name your spouse as executor; your estate distribution intention might never happen.
How can you plan wisely to distribute your properties or business shares equitably among the beneficiaries to avoid family in-fighting as the value of properties may be different.
A Will is the legal document expressing the deceased wishes on how the assets are to be distributed.
The person who write the Will is called testator. With a Will, the executor is required to apply the Grant of Probate through the High Court to have the estate distributed. Without the Will, the person is said to die intestate, and an Administrator will be appointed by High Court.
Provide instruction on how estate is to be distributed upon demise with less administrative matters.
Conditions for a Valid Will
A durable power of attorney is a written authorization to represent or act on another’s person behalf in private affairs, business, or some other legal matter. The person who give the authorisation is the grantor or donor, while the person who being authorised is the donee. This durable power of attorney lapses following the death of the grantor / donor.
A durable power of attorney allows a person you designate(the donee) to access and manage your financial affairs on your behalf. This is especially important when the following events are triggered :
The donor can help maintain your financial affairs until you are back to homeland or recovered. In this manner, your family’s needs continue to be provided for.
Considerations while executing a Durable Power of Attorney
A living trust (or inter-vivos trust) is a contract that holds title to and controls the person financial assets on behalf of the beneficiaries. In a trust, the assets are transferred to the legal owner which is a trustee. All the person plans, wishes and desires and written in a trust deed which the trustee is mandated to act upon.
One difference between a will and a living trust is time of effect. A will takes effect only upon your demise. A living trust takes effect when the trust deed come into force after you have transferred assets to it.
To segregate the assets so it does not fall within part of the estate and avoid the lengthy probate process.
Trust is useful in a variety of situations :
For business owners, the key concerns following their death, disability, illness or retirement is either to keep or to sell of their business, and there are many pertinent questions required to answer.
In case of business shares, the deceased partner ceases to be a member of the company upon death. It is the appointed personal representative for the deceased esate would have a legal right to the shares and the deceased portion of shares are transmitted to the personal representative by the operation of the law.
If you are operating a limited liability company with one or more partners, it is highly advisable for you to structure a business buy-sell agreement such that upon the death of any partners, their share interest is automatically purchased by the other partners. This arrangement can ensure that deceased family members get the cash fast while the remaining partners can continue operating the business without interference from the personal representative of estate and deceased family members.
Life insurance is a cheaper solution and it can be purchased to cover these buy-sell agreements and provide necessary liquidity.
Business succession arrangement address the systematic transfer of the management and ownership of a business.
Considerations on Business Succession Arrangement
Life insurance can play an important role in your estate plan. It is often your family first line of defense to support your family with liquidity upon your demise while all your other assets are frozen.
Life insurance can serve many purpose in estate planning, but not limited to :
You can also place the life insurance in an Life Insurance Trust (LIT). By doing so, the trust is the legal owner of the policy and you are the insured. A key advantage of this arrangement is that you need not worry of the the nomination of the beneficiaries and yet the death benefit will not be included in your estate.
While using life insurance in estate planning, not only you need to determine the type and amount of coverage you need, but also what type of insurance best suits your estate planning goals. There are many different types of policies to consider. You may check out our insurance planning section.
The life insurance proceeds, which are free from tax, provide immediate cash and liquidity to settle many estate administration cost
Considerations while purchasing Life Insurance
If your estate has many immovable assets like properties, how can you distribute them equally since the value of property is different ?
If you have a family business, most of the assets are tied up in illiquid business equity. How would you distribute the shares equitably between active and inactive family members or children in business ?
With advanced planning, esate planning strategies can facilitate not only anequal transfer, but an equitable transfer.A solution may be to create inheritance equalization using life insurance.