Thursday, October 31, 2019 / 02:50PM
/Samson Adetola for STL Trustees / Header Image Credit: Wealth Engineering
Estate Planning is the preparation of a plan to carry
out an individual's wishes as to the administration and disposition of his/her
property before or after his/her death. Planning also covers management of
personal affairs in the event of incapacity.
Simply put, Estate planning entails making a plan in
advance and naming whom you want to receive the things you own either before or
after you die. It is a process that involves people - your family, other
individuals and, in many cases, charitable organisations of your choice. It
also involves your assets (your property) and the various forms of ownership
and title that those assets may take. It also addresses your future needs when
you are unable to do it yourself.
Who needs an Estate Plan?
- Estate Planning is for EVERYONE.
- It is not just for "retired" people,
although people tend to think about it more as they get older;
- It is not just for "the wealthy," either,
although people who have built some wealth often think more about how to
preserve it. It however means more to families with modest assets, because they
can afford to lose the least.
Issues to Consider in Creating An
- What are my assets and what is their
- Who should make decisions on my behalf
concerning my care and welfare if I become unable to care for myself?
- Whom do I want to receive those assets - and when?
- Who should be responsible for taking care
of my children (particularly if they are minors) if I become unable to care for
- What do I want done with my remains after
I die and where would I want them buried, scattered or otherwise laid to rest?
- Who should manage those assets if I
cannot - either during my lifetime or after my death?
Estate Planning Instruments
Wills as an Instrument of Estate
- A Will is an instrument that directs how
your assets are to be distributed and your debts, taxes and expenses are paid
after your death.
- Also referred to as a Testament, it is a
legal declaration by which a person, (the Testator), names one or more persons
(the Executor(s)) to manage his or her Estate and provides for the distribution
of his or her property at death. Wills remain the traditional way of gifting
property to loved ones.
- When an individual die without a Will, it
would be necessary to compile a list of the dead person's assets in addition to
identifying beneficiaries to the assets. Unfortunately, until this process is
complete, assets cannot be distributed, even to the already identified
Essential Characteristics of a Will
- Legal Declaration:
The documents purporting to be a Will must be in legal form, i.e. in conformity
with the law, and must be executed by a person legally competent to make it.
- Disposition of Property:
The declaration should relate to the disposition of property of the person
making the Will.
- Death of the Testator: The
declaration as regards the disposal of the property must be intended to take
effect after the Testator's death.
- Revocability: The
essence of every Will is that it is revocable during the lifetime of the
- Execution: An
unsigned Will is a worthless paper and its contents are not enforceable.
Consequently, it is important for a Will to be duly signed by the Testator in
the presence of at least two (2) witnesses; and by the witnesses in the
presence of the Testator.
The Probate Process of a Will
- Probate usually refers to the legal
process whereby the deceased's assets are collected together and, following
various legal and fiscal steps and processes, eventually distributed to the
beneficiaries of the estate.
- Roughly speaking, the probate process begins
with an application by interested parties, to the Probate Registrar for the
Will to be read upon the demise of the Testator.
- The will is usually read at a designated
time or day as may be determined by the Probate Registrar.
- Afterwards Probate is usually granted
upon another application made to the Probate Registrar by the named Executors
of the Will.
- This grant is the authority that the
Executors of the Estate have to deal with the assets of the Estate in
accordance with the Will. Until this point, the Executors can hardly deal with
the assets of the Estate legitimately.
Trust as An Instrument Of Estate
Trust is a
legal instrument or device whereby a person called a Settlor delivers part or
all of his properties to another person called Trustee who administer and
manages the property/ies for the benefit of designated person/s called
Beneficiaries. The term "person" may refer to an individual or natural person
or a juridical person like a corporation.
It is a
transaction usually composed of three parties (Settlor, Trustee and
Beneficiaries), each with his own obligations and rights, and involving
properties and property interests to address various kinds of purposes.
notable feature of Trust is grounded in the fact that the legal title to the
property is in one person while the beneficial interest which is referred to as
the "equitable title" is in another person.
right ownership and control are in the trustee, subject to the duty of applying
and using the property as directed by the Settlor, while the right to enjoy the
benefits from the property is in the beneficiary of the trust.
Types Of Trust
is a Trust created during a Settlor's lifetime and which is expected to take
effect during the lifetime of the Settlor.
Unlike a Will,
which comes into play only after a person dies, one can start benefiting from
the Living Trust while one is still alive. Hence, a Living Trust covers three
aspects of a Settlor's life: when the Settlor is alive & well, when the
Settlor becomes incapacitated and when the Settlor dies.
ensures that the Settlor's assets are managed and distributed according to his
wishes and directives, without court supervision and involvement. This saves
the beneficiaries time and money and ensures that the Settlor's assets and
their values are not matters for public record.
The basic goal
of a Living Trust is to avoid probate. In a Living Trust, assets must be
re-registered, retitled or otherwise validly transferred to the Trustee. This
is particularly necessary to prevent the probate process on the Settlor's
Trust is created as part of a Will and becomes active after the Settlor's
death. With a Testamentary Trust, properties must go through probate before
they become subject to the Trust.
Trust is often created for a minor or young adult child where assets become
distributable upon the death of the parents.
who create Testamentary Trusts do so to protect minor children or children with
disabilities who will inherit the proceeds of the Trust.
terms, Testamentary Trusts are essentially driven more by the needs of the
beneficiaries (particularly infant beneficiaries) than any other considerations.
Mistakes in Estate Planning
planning at all
the myth that Estate Planning is only for the wealthy
about little details
to fund or update a created trust
to provide information regarding assets and documents
The Role of STL Trustees
management, including selling assets to pay expenses and taxes.
income and assets to your beneficiaries.
complex tax decisions.
any debts and expenses.
assets payable to the estate or Trust, including, in some situations, life
insurance or retirement benefits.
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