Who gets what? Estate Planning
Before you can decide who gets what, you need to work out what you have.
Let’s start with your estate planning – and a good place to start is to make a summary of your assets and liabilities. Once you’ve got a clear idea of this, you need to work out the annual income your assets generate.
You might need to have a chat with your financial advisor to discuss the benefits of drawing down on pension funds compared with leaving them in place. This will have an impact on both your current financial situation and your future assets. And, with that in mind, the next step is to decide what income levels do you want in order to maintain the life you wish to have.
This exercise provides the foundation to then start deciding on any assets you may wish to gift away, transfer into a trust or dispose of and then gift the cash after taxes are paid on disposal of the asset.
Ask yourself who do you want to provide for, and what does this look like, if you want some control and protection of the cash or assets, maybe use of trusts can work.
This brings us neatly to your will.
If you have not yet considered writing a will, or maybe you feel that drafting something yourself stating, ‘I leave everything to my spouse’ is sufficient, please think again. It may be that you think there’s plenty of time to get around to writing a will, but that doesn’t take account of unexpected events, whether health or accident, even younger people die earlier than would normally be expected. That ‘it won’t happen to me’ is not a reliable way to ensure your family are well-provided for.
If you have children under 18, what if the worst happened and you and your partner both passed at the same time? Who would you want to be the legal guardians of your children? A will can contain a guardianship paragraph, which will make it clear to your executors who will take care of your children.
There is then the matter of your cash and assets, legally they cannot pass to children under 18 years of age. Your will can clarify the type of trust you wish to hold the assets for your children and how these assets will be managed if you pass before your children are 18 years of age. This can state who you wish to be trustees of the trust, type of trust and you can create a letter of wishes which will provide guidance to the trustees on what the income is to be used for and when to transfer legal ownership of the assets to the children.
While, legally, at 18 the assets can pass to them, you might want to make a provision that they get a specific amount at the age of 18, but then the remaining assets remain in a trust until such time as they attain a specific age (21, 25 or even older) or an event takes place, such as getting married. Along with this your instructions regarding what they can draw from the trust and for what purposes, will all form part of your will.
Nobody wants to think about the end of their life. But good sense says it’s wise to have everything organised, so your family aren’t left to deal with complex matters at a time when they are at their most vulnerable.
