Minimising Inheritance Issues – Part 2
Rules. We often don’t like them, but they make life so much better. Imagine if we didn’t have rules around waiting at the red light or paying our taxes. Rules is the topic of conversation on our new episode of Legacy Series. And by rules here, we mean rules of Inheritance.
This discussion concludes our episode from last week on minimizing Inheritance issues. Some of the issues touched on include intestacy (dying without a Will) and ensuing family disputes. Today, we will suggest 5 rules that should guide your planning process so that you are able to develop a more robust Estate Plan sufficient for today and tomorrow.
Rule 1: Goal Setting
Focus on your Estate Planning goals – what do you want your Estate Plan to achieve? When and how do you want your assets distributed? It is important to address the end result of your Plan. Take out time to document important concerns that may arise in planning your Estate – e.g. leaving unequal amounts of property/assets to different children or avoiding potential conflicts.
Rule 2 – Do the Groundwork
What exactly do you own? How do you intend what you own to be administered when you are no longer there? Functional planning requires that you have at least a rough idea of the worth of your Estate. Preparing a worksheet is the way to go. Have a list of all your (or major items) assets, their various locations, ownership status and possible value (estimate of current value will do). The essence of having this done is simply to ensure that you have not overlooked anything.
Rule 3 – Consider Your Beneficiaries
Do you have young children? If the answer is yes, your most probable first concern is who would raise the children if you become unable to do so. In your Estate Plan, you can name someone to serve as the “personal guardian” for your children — this could be an adult who would be responsible for raising them if neither you nor your spouse is available. The second big issue you should consider is who will manage any property you leave to your young children. Minors cannot legally own property without adult supervision. So leaving property to your young children requires you to specify a plan for adult management.
Rule 4 – Remember Probate
Probate is the name given to the legal process by which a court oversees the distribution of property left by a Will. Probate proceedings are usually cumbersome and lengthy. During probate, your assets are identified, all debts and estate taxes are paid, and professional fees are settled before the remaining property is finally distributed to your inheritors. The average probate proceedings drag on for at least a year before the estate is actually distributed.
Rule 5 – Think About Reducing or Eliminating Estate Taxes
In most cases, you would be expected to remit at least 10% of the value of your Estate (cash, near-cash and real property) as Estate tax. The use of a Trust comes in handy here. Remember that Trusts are separate legal entities different from the creator. Therefore, they are not subject to Estate taxes and allow for privacy and seamless running of your Estate without delays. You can consider Generational Skipping Trust, Irrevocable Trust, Legacy Trust etc.
In summary, please note that the peculiarities of our system of inheritance mean that substantial amounts of money and time can often be saved if assets are well titled and transferred by expert legal methods. Speak with a professional Estate Planner at FBN Trustees and we will be happy to offer advice on how you may go about your estate planning.
We hope you have found this post insightful. Send us any additional questions you may have on Estate Planning, Trusts, Wills, Executorship and Estate Administration via SMS to 0706 1331 146, Twitter (@fbnquest), LinkedIn or Facebook (fbnquest). You may also tune in to listen to the Legacy Series radio programme on Classic 97.3 FM Lagos by 7pm on Mondays or Cool 96.9FM Abuja, by 8.30am on Tuesdays.
Our next article will cover Islam and Inheritance Laws in Estate Planning. Look out for the post on this page next Thursday.
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