Estate planning 101 — Practical Considerations
Estate planning involves preparing for the transfer of an individual's assets after his or her death. Some examples of assets that would form part of an estate include: life insurance, pensions, real estate, motor vehicles, shares, investments, and personal items.
Why is estate planning important?
It's simple: The only thing certain in life is death. Preparing for the inevitable will help to protect your assets and loved ones when you are no longer around. There are many benefits to proper estate planning. With proper estate planning, your assets do not end up with unintended beneficiaries, family conflicts are avoided or, at the very least reduced, minors are protected as adequate provisions are made for them.
These are just a few examples of the benefits and the importance of estate planning.
Making a will is one of the best ways to achieve proper estate planning. Wills are relatively easy to create; they are not time-consuming and can be done at a low cost.
However, before preparing your will you must give consideration to many things. One of the most important things to consider is who should be in charge of your assets and affairs upon your death (executor/executors).
An executor steps into your shoes at the time of death and plays the most important role in ensuring that your estate is administered faithfully and in accordance with your will and the law.
Here are some practical considerations that must be placed at the forefront of your mind when you are deciding on an executor(s).
- Your executor must be an adult.
- You ought to obtain the consent of the person(s) you wish to appoint as executor(s) prior to making your will. Do not name someone as the executor without knowing if he/she is willing and able to take on this task.
- Try to appoint more than one executor. This is highly recommended and is very useful in situations where one executor can no longer act.
- Most importantly, choose someone who is trustworthy, reliable, resourceful, and accessible.
With a willing and capable executor the administration of your estate should go smoothly.
Other things to consider when making your will:
- Under our laws, a will is revoked by marriage. Therefore, if your will was made prior to marriage, it is time to make a new one.
- Try to be very specific in identifying the gift and the beneficiary of that gift in order to avoid uncertainty.
- Only give what you legally own, not what you think belongs to you. A gift that is not legally owned by you will not be passed on to your beneficiaries.
- Include a general clause in your will which covers any asset you may fail to mention. This is called a Residuary Clause. Make sure the person to benefit from this asset is also named and identifiable.
- When giving a gift, be practical. Do not leave one house to 10 family members living in different countries. This type of gift can make it very difficult for the executor to administer the estate. It may be best to give the executor the power to sell the property and divide the proceeds among the 10 family members. This will likely lead to less conflict.
- Keep your will in a place known to the executor. It does not make sense to hide your will and upon your death no one knows whether or not you had a will or they cannot locate it.
These are just a few considerations that ought to be at the forefront of your mind when creating a will. The list above is by no means exhaustive. Notwithstanding, creating a proper and effective will is one of the most important tools in proper estate planning, and this can ultimately be achieved with the help of an attorney-at-law.
Natasha Rickards is an Associate at Myers, Fletcher and Gordon in the Property & Probate Department. She may be contacted at email@example.com. This article is for general information purposes only and does not constitute legal advice.