Estate Planning Other Than Wills – Wills/ Intestacy/ Estate Planning

Introduction

As we grow our assets and wealth either as entrepreneurs,
employees or investors, in the tech, banking, manufacturing,
energy, agricultural, and all other sectors, it is important that
we are intentional about putting structures in place to ensure our
loved ones are well provided for in our lifetime and beyond. It is
key that we understand how to properly plan our estate to guarantee
the transfer of our wealth from generation to generation.

In this newsletter, we share useful information on estate
planning beyond traditional wills.

What is Estate Planning

Estate planning refers to the systemized way of handling the
assets of individuals or financial matters in the event of their
incapacity or demise.

Methods of Estate Planning:

While wills remain the most prevalent method of estate planning
as they are often perceived as providing comprehensive control over
the distribution of assets upon demise, the process of transferring
assets (according to the directives outlined) in a will can be
complex and protracted.

There are several types of estate planning besides utilizing a
will. Some of these methods include:

1. Living Trusts: Living Trusts are legal
   arrangements where a trustee holds assets for the benefit of one or
   more beneficiary. Trusts can provide greater control over how
   assets are managed and distributed compared to wills, this is
   because, unlike wills, which typically go through probate, trusts
   can provide a greater level of privacy. Trustees are legally bound
   to follow the terms set forth in the trust document, ensuring that
   assets are used in accordance with the wishes of the grantor. It is
   pertinent to state that a Trust must be in writing and in the
   proper legal form.




2. Joint Ownership: Assets can be jointly
   held with rights of survivorship, a legal arrangement where joint
   owners possess undivided shares and are viewed as a single entity
   in the eyes of the law. In this setup, when one owner passes away,
   the surviving owner automatically inherits the portion of the
   property of deceased coowner, bypassing the probate process.
   Individuals may choose to acquire assets jointly with their
   intended beneficiaries, ensuring that upon their demise, the assets
   transfer to the co-owner, who also serves as the beneficiary. This
   arrangement provides a straightforward means of asset transfer
   while avoiding the complexities associated with probate. An
   agreement can be put in place to achieve joint ownership
   
   rights.




3. Gifts: Individuals can gift assets to
   their intended beneficiaries during their lifetime. This can be a
   strategy to reduce the size of the taxable estate and facilitate
   the transfer of assets to loved ones. This transfer of assets must
   be by a Deed of Gift.




4. Power of Attorney (POA): This document
   serves as a legally enforceable agreement in which one party,
   referred to as the principal, designates another individual, known
   as the agent, to oversee the management of the assets or financial
   matters of the principal. The power of attorney empowers the agent
   to make decisions on behalf of the principal in specific areas of
   his or her life, particularly in situations where the principal is
   incapacitated. The validity of the power of attorney is established
   when it is properly executed in accordance with applicable laws and
   regulations.

Advantages of other methods of Estate
Planning

1. Asset Protection: Certain estate planning
   vehicles, such as trusts, can provide asset protection benefits by
   shielding assets from creditors’ claims and lawsuits. By
   placing assets into these protective structures, individuals can
   help safeguard their wealth for themselves and their intended
   beneficiaries.




2. Flexibility and Control: Trusts and other
   alternative estate planning methods offer greater flexibility and
   control over how assets are managed and distributed compared to
   wills. Individuals can specify detailed instructions for asset
   management, dictate the timing and conditions of distributions to
   beneficiaries, and appoint trustees or fiduciaries to carry out
   their wishes according to their unique preferences.




3. Probate Avoidance: Probate, often
   characterized by its time-consuming and costly nature, entails
   court supervision and potential delays in asset distribution. To
   circumvent or mitigate these challenges, individuals may explore
   alternative methods of estate planning, such as trusts, joint
   ownership, and more. These alternatives offer the advantage of
   bypassing probate entirely or minimizing its impact, resulting in
   expedited asset distribution to beneficiaries. By employing these
   strategies, individuals can streamline the transfer of assets while
   reducing the associated complexities and delays.




4. Tax Efficiency: Alternative estate
   planning methods can offer tax planning advantages, helping to
   minimize estate taxes, gift taxes, and income taxes. For example,
   trusts can be used to transfer assets to future generations in a
   tax-efficient manner.




5. Reduced Risk of Challenges: Alternative
   methods of estate planning may be less susceptible to legal
   challenges compared to wills. By structuring the transfer of assets
   through trusts and the other alternative methods, individuals can
   minimize the risk of disputes among beneficiaries and potential
   challenges to the validity of the estate plan.

Conclusion

Estate planning is essential for ensuring asset disposition
according to wishes of an individual upon demise. Exploring
alternative estate planning methods provides individuals with
privacy, control, asset protection, and tax efficiency. By
considering these methods alongside traditional wills, individuals
can effectively achieve their estate planning goals.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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