Friday, July 09, 2021 / 11:00AM / Proshare Finance / Header Image Credit: iStock
Being an excerpt from the #PFSeries4 Report - Planning for the After Life: Focus on Wills and Trust"
Estate Planning has been defined by Laura Hendrix Ph.D (Assistant Professor Family and Consumer Economics, University of Arkansas System Division of Agriculture Research & Extension) as arranging for the orderly transfer of your assets (property following death).
I.O. Smith in his book; "The Law of Succession in Nigeria" also defines Estate Planning as an arrangement for the use, preservation, and transfer of one's property for one's lifetime and at death. The process of creating an estate plan is called "Estate Planning".
Estate planning takes different forms; ranging from Wills and codicils to Trusts to Deed of Gifts and Power of Attorney.
Estate planning is important for a variety of reasons one of which is that it is ambulatory as it speaks from the grave. It is regarded as speaking and taking effect immediately as if it had been executed immediately before the death of the testator unless a contrary intention appears in the will.
There exist several myths around estate planning as culled from Forbes which includes and are not limited to:
i. "I'm too young for estate planning"
Human beings overestimate their mortality, this is further compounding by the uncertainty as to when every individual will be no longer exist on the face of the earth. Planning one's afterlife allows for the families which a deceased person leaves behind to be better provided for such that they are not incapacitated and are prepared to deal with the demise of the deceased.
ii. "Estate Planning is just for the wealthy"
The idea that one must plan their estate when hit they a major milestone financially or investment wise is best described as "being penny wise and pound foolish" which loosely translates to being careful about small amounts of money and not being careful about larger amounts of money. An individual can also update/amend his estate planning instruments at any time regardless of what was already in the earlier which is to be revoked or further amended by a codicil or addendum to agreements.
iii. "I need a lawyer to draft these documents"
Although, it is emphasized that parties who seek to plan their estate should seek the professional services of a lawyer to draft the necessary documents. This myth is limiting and evasive as realistically not every individual can afford the services of a legal professional. It is also not in all circumstances, that an individual will have the luxury of time to settle the affairs of his estate which might also include the period of the lawyer commuting and appearing in time just before any uncontrollable circumstance has taken its course. Any individual can plan his estate in so far as the instrument drawn by the individual meets the requirement of the Wills Law.
iv. "I don't need a lawyer at all"
It is highly doubtable that the services of a lawyer can be dispensed with by an individual when drawing up the instrument of estate planning, he/she decides to opt for. This is especially as failure to meet these requirements could result in the commutation or the misinterpretation of the true intent of the individual who may at such point be deceased and unable to guide the interpretation of the court where such a dispute becomes contentious.
v. "If I pass away without a will, the state gets my assets"
This myth is wrong and misleading as the state does not receive the assets of an individual when he/she is no more. The customary law would apply in an instance where it can be proven that he faithfully abided by the rules during the period of his life on earth, where he contracted marriage under the statutory law of the state and transacted his business whilst alive under the common law, the statutory law governing his marriage to his/her spouse will apply.
Section 49(1) of the Administration of Estates Law of Lagos State provides for the order in which everyone shall take under the deceased's estate, and it is as follows:
i. The husband or wife where either of them leaves no issue, parent, brother, or sister of whole blood.
ii. Where the intestate leaves no husband or wife, no issue and both parent, then the residuary estate of the intestate shall be held in trust for the father and mother in equal shares absolutely.
iii. Where the intestate leaves no husband or wife and no issue but one parent, then the residuary estate of the intestate shall be held in trust for the surviving father or mother absolutely.
iv. If the intestate leaves no husband or wife and no issue and no parent, then the residuary estate of the intestate shall be held in trust for the following persons living at the death of the intestate, and in the following order and manner, namely;
(1i) Blood Brothers and Sisters of the intestate
(1ii) Half Blood Brothers and sisters of the intestate
(1iii) The grandparents of the intestate and if more than one survives the intestate in equal shares
(1iv) Uncles and Aunts of the Intestate (being brothers or sisters of the half blood of a parent of the intestate)
It is only where there exists no family relation whatsoever to the intestate as mentioned above and where there exists any such person; but such a person has defaulted in taking absolute interest that the residuary estate of the intestate will belong to the state as bona vacantia (which means a property which is left without any clear owner), and in lieu of any right to escheat.
vi. "If I have a will, I don't have to worry about probate"
Probate is a process which can be described as giving legal validity and enforcement to a will made by a testator. This is done through the official proving of the will by beneficiaries under the will and any other interested party to the will. It is thus impossible that a testator will not have to worry about probate as executors appointed under a will are required to approach the probate registrar for a set of application forms in the absence of any opposition or citation of the will.
Obtainment of Probate from the Probate Registry of the state in question entitles the executors to a Bank Certificate in order to provide them with the assets which may range from shares, monies and stock which formerly belonged to the deceased testator.