Have you heard of estate planning and management? As people put their affairs in order in a bid to protect their loved ones, estate planning and management become integral to these processes. We cover what it is, its benefits, the myths surrounding this process, and how it relates to wills.
What is Estate Planning and Management?
This is the process of a person planning his or her estate before death. It involves several tools, including Wills, Trusts, Nominations, Gifts, intervivos, Joint ownership, and Gifts in contemplation of death. This allows one to actualise how their estate will be fully managed during their lifetime. It also gives details on how the same will be divided amongst the intended beneficiaries after the planner’s demise. It also dictates how the planner’s liabilities will be dealt with, how the estate may continually be managed, and or shared out at different periods. It gives details on how this will be done either as a continuous process or up to the time the owner of the estate may decide to cover.
What Are the Benefits of Estate Planning and Management?
Estate planning and management allow one to have control over how their properties and or assets and liabilities will be shared out to the beneficiaries and handled before and upon the planner’s death. This gives the planner peace of mind knowing that they have planned their affairs in advance. It also protects the family members in that, for example, where the Estate planner is a business person, the assets can be well preserved, thus bringing forth a seamless and flawless succession process.
This process also takes care of creditors as well as taxes.
Estate planning at the same time helps in reducing disputes that come up during the succession process, as the planner has already arranged their affairs in a clear and legal manner, thus dealing with any ambiguity that may arise and or uncalled for interferences from any quarters.
Estate planning also helps in settling matters between the beneficiaries in a smooth manner without haste upon the death of the planner. This comes in in that where a deceased person’s estate has to be determined very fast, for example because school fees is needed by the beneficiaries for the deceased’s children urgently, the planner includes in the planning details how such urgent matters are to be catered for. This eliminates the anxious and hasty decisions that may have to be made upon the deceased’s death, and which sometimes lead to undesirable results.
The planner can also nominate the guardians where there are minors to take care of these minors and or adult dependents upon his demise.
The planning assists in the management of an individual’s properties and financial obligations in the event that one becomes incapacitated and is not able to fully apply themselves to these personal obligations.
What Approaches Can You Use in Estate Planning and Management?
Modes of Estate planning include Nominations, Gifts intervivos, Gifts in contemplation of death, Trusts, and Wills. Let’s explore these in detail:
Nominations
This one provides inheritance to selected persons by taking out a life insurance policy in which such persons are nominated as beneficiaries. This can also apply to certain funds or investments, which may also be disposed of by written nominations operating upon the death of the donor. Normally, insurance proceeds do not constitute part of the estate and are normally paid out directly to the named beneficiaries without regard to the succession process.
Gifts intervivos
These are gifts passed over to the beneficiaries by the owner during his lifetime, and they must be transferred fully to the beneficiary.
Gifts in Contemplation of Death
These are gifts made in the lifetime of the donor contemplating impending death and are made conditional on the death of the donor occurring. This delivers dominion of a subject matter to the recipient.
Joint Ownership
This is a process through which the property can be registered in the name of the estate planner, together with some other person(s). The property passes to the living registered persons upon the death of the estate planner without going through the succession process. Thus the assets can be accessed by the living persons immediately.
Trusts
This is an entity created to ensure that a property is held by one person, a trustee, for the benefit of specific beneficiaries and operates on the basis of the conditions and regulations set out by the owner of the property and the benefits therein covered. When this is well set out, it covers myriad details to ensure that the trust operates seamlessly for the benefit of the beneficiaries and preservation of the estate during the period envisaged by the owner of the estate.
The Trust also removes the property transferred to it from the estate automatically, and the same is distributed to the beneficiaries named in the Trust Deed. Once registered, it does not have a legal personality of its own. It can only own properties, enter into contracts, or do any other thing in the name of its Trustees, but not in its own name.
Wills
These are documents made by the owner of the estate in his lifetime, giving clear instructions on how their estate will be distributed upon their death to specific persons.
It has to be clear so as to be understood by the persons handling it and has to take into consideration any liabilities that the estate owner may have at the time of their death, and indicate how the same may be settled. If it’s well prepared as required by the law, it considerably preempts and lessens any disputes likely to arise on the distribution of the estate. A will also ensures that the deceased’s properties benefit the intended persons.
Misconceptions and Myths Regarding Estate Planning and Management
One of the most common misconceptions about estate planning is that it is regarded as being in the realm of the wealthy. This is wrong, as anyone can plan their estate well in advance.
Another misconception is that estate planning should be done in old age, but this should not be the case, as even young people can benefit from planning their estates well in advance and start by writing a simple will that they can update as time goes on, so as to reflect their current circumstances.
There is also the misconception that one’s assets and possessions will automatically pass on to their spouses and any other intended beneficiaries upon one’s death, but in most cases, this does not happen, especially where one dies intestate and other family members lay claim to those assets. To preempt this opposition, the existence of a will or other planning methods is very important to ensure that the planner’s properties will pass on to their intended beneficiaries upon their death.
Another misconception is that estate planning is expensive, but in this regard, one can look for ways to get the process done at an affordable and manageable rate.
Taking all the aforesaid into consideration, for a seamless and smooth-flowing estate planning process to be achieved, a planner requires the services of an advocate well-versed in the fields covered.
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