If you are reading this blog, you probably aren’t thinking about end-of-life planning. It might not be relevant to you right now, but it might be useful to have this information for the future. It is not easy to think about, but you may be responsible for sorting out the affairs of a loved one. I hope this post will help you be a little more prepared if that time comes. Here are the five useful bits of information that will help when doing your estate planning.
1. The Probate process
The first thing to understand in the estate planning process is the role the court plays and how probate can impact your estate.
What is probate?
Probate is the judicial process whereby a will is “proved” in a court of law and accepted as a valid public document that is the true last testament of the deceased” -[wikipedia](https://en.wikipedia.org/wiki/Probate) (click for a more detailed breakdown).
Put simply, probate is the process a legal court takes to conclude your legal and financial matters after your death.
The time it takes to complete the probate process, and the fees attached will vary depending on the country you are in. But on average the fees are roughly 10 per cent of the value of the estate and in some cases can take many years to complete. Contact Alison Louw for a better breakdown of the costs involved. With the time and headache associated with settling an estate, means any step that will help understand the probate process is worth exploring.
2. A Will or Testament
If no will is provided after the death of a loved one, the state becomes the entity deciding which assets and responsibilities will be allocated to. In the case that there is no will, any blood relative can lay claim to the estate left behind. This can become a really messy process, adding to the pain you may be already suffering. A Will will help to avoid any discrepancies and speeds up the probate process. Its primary purpose is to define the final wishes of a deceased individual for the courts and for the executor of the estate. Having this prepared can help your loved ones with the process of allocating your estate to the beneficiaries, this is why it is essential to have named recipients in your will.
3. Financial Assets and Beneficiaries including examples.
Most financial assets can have a beneficiary named, for the assets to be transferred over in the case of the account holder’s death. When an asset has a recipient assigned, probate is not necessary. A retirement plan or life insurance policy are typical examples of financial assets that can be transferred, as they ask for the owner to name a beneficiary.
In addition to the listed financial asset examples, you can assign a beneficiary for a cheque account, savings account and brokerage accounts which often don’t have beneficiaries assigned.
4. Inter Vivos Trust / Living Trust
For assets that can’t be allocated to a named beneficiary, often more considerable assets like property or motor vehicle, an Inter Vivos trust may be the solution. Almost any asset placed in an Inter Vivos trust will not be subject to the probate process. The people involved in creating a trust, namely the person establishing the Trust and the beneficiaries are called trustees. An Inter Vivos Trust allows the living trustees in the trust to transfer ownership of the assets, upon the death of the trust owner. The Trust itself acts as a separate entity and in turn, technically owns the assets of the trust. Therefore transfer of the assets to living trustees should be a more straightforward process. For more information regarding Trusts, contact Alison Louw via email@example.com.
5. Power of Attorney
There are two forms of Powers of Attorney when it comes to essential estate planning. A Financial Power of Attorney which allows a person to transfer responsibility over to someone if the person is physically or mentally unable to make decisions. If one of your loved ones is not able to get access to their accounts or manage hospital bills or other expenses, a Financial Power of Attorney will be able to access the relevant accounts and make decisions.
A Medical Power of Attorney is the other primary type associated with an estate, it allows a person to transfer decision making regarding their medical preferences over to someone. A Medical Power of Attorney is then required to make decisions if the person becomes physically or mentally incapacitated.
When discussing death, it is not an easy topic, and it may seem like it isn’t relevant, but the truth is that we may never know when an estate can be useful. It may be a proper consideration to talk about your relatives’ wishes in the case that something happens. It’s not an easy conversation to have but should be considered to avoid fighting in the case of death of a loved one and instead of working together to help each other with the healing process.
For more information or help with planning your estate, contact Alison Louw via firstname.lastname@example.org.