What is Estate Planning?

Estate planning involves financial planning of a client's affairs and assets during his lifetime and the preparations for the smooth handover of the client's assets to his beneficiaries after death. Such assets include his house, cash in bank accounts, bonds and shares, unit trusts, jewellery etc. Beneficiaries are the persons who receive the benefit of the client's assets after his death, they are usually his loved ones, such as the members of the deceased's immediate family but can also include relatives, friends, charities etc.

Estate planning may involve a person giving away his assets during his lifetime to his spouse and children, making a will, using companies to hold his assets or setting up a trust.

A significant feature of a person's estate planning also involves the protection of one's assets that has been built up over his lifetime.

Importance of Estate Planning

Estate planning is important to provide financial security for your next-of-kin and to ensure that your beneficiaries have access to your assets with minimum delay or difficulty. There is always the risk that your assets are immediately frozen after your death, and your family cannot have access to it until certain court procedures are completed. This can be a lengthy process, especially if you have a large family or significant assets. Estate planning can ensure that this process is simplified and delays avoided, more importantly, it can ensure that your family has access to some of your assets in the meantime.

Estate planning also ensures that your personal assets are not adversely affected by your business affairs and liabilities. If you are a businessman and operate your business as a sole proprietor, or if you are a partner in a partnership, your business creditors can claim against all your assets, including your personal assets, for repayment of money owing to them.

If you operate your business and hold assets through a company, creditors of the company generally cannot claim against your personal assets. However, as a director of the company, you may have given personal guarantees to secure loans or credit facilities for the company. In such a situation, your personal assets may again be at risk from the creditors of the company.

Estate planning can assist by protecting some of your personal assets from creditors so that in the event of a sudden economic downturn, you will not be caught unprepared and you will at least have some assets for your personal use, which your creditors cannot claim against.

Uses & Advantages of a Trust

A trust can be established to hold, protect and administer a client's assets during the client's lifetime and after his death. There are many advantages in a client transferring assets to his or her trustees. Some of the more important examples are highlighted:

Reduction or avoidance of income or capital taxes
Avoidance of estate duties
Exchange-control planning
Pre-immigration planning
Freedom of devolution of assets on death
Provision for children for their education
Protection of particular members of a family e.g. widows, handicapped children
Holding most forms of real estate

Complete anonymity is assured by using a trust, as the names of beneficiaries are not a matter of public record and are found only in the trust documentation maintained by the trustees. The settlor or donor, having established the trust, is no longer the legal owner of the assets and can declare that they do not belong to him.

Uses & Advantages of a Will

A will is a disposition made by a client providing for the administration and distribution of his assets upon his death. The will would state the manner as to how all assets of the deceased is to be dealt with after death. The will also authorizes certain trusted persons (his executors) to take control and gather the assets of the deceased, make payment of debts and divide the assets among his beneficiaries. If the client dies without a will, his assets will be distributed in accordance with the Rules for Distribution of the Intestate Sucession Act. Often there will be delays. For instance, no one will have the right legally to carry on with the deceased's affairs until Grant of Letters of Administration is obtained.

Working with Our Specialist Partners

At NI, we provide clients with strategic estate planning solutions within the framework of their comprehensive financial plans. However, during the implementation process, there is sometimes the need to utilize specialist resources. New Independent provides clients with access to the experience and expertise of lawyers and their network of trustees. Thus, enabling us to provide a seamless solution from the onset to the end.

Our Estate Planning Business Partners are:

Note: We would require the client to take up NI's Comprehensive Financial Plan package before any estate planning is undertaken.