The topic of a will is difficult but creating one will be
peace of mind for your family or partners.
The will is your way of protecting your assets and loved ones after you pass. If you still haven’t written one, or could do with checking up on it, here are five essential things to keep in mind.
Do you own it 100%?
Have you transferred anything, sold anything, then forgotten about it? Go through your old bank statements, deeds, records of communication, etc. Also, consider the form of ownership you hold of your current assets. Common ones that might complicate your will are:
- Ownership with tenants in common: you own part of an asset, while one or more individuals hold the other part(s), and each can leave their share to whomever you prefer, without interference from the other(s). An example might be a large estate shared by extended family.
- Joint ownership with right of survivorship: you own an asset with someone else, and that person automatically gets full ownership after your passing. A typical example of this is spouses co-owning a house.
- Ownership with a designated beneficiary: you own something and have named a specific person or people whom you want to inherit that asset when you die. They get it without fail. Typical examples of this include annuities, retirement plans, or life insurance.
Executors, guardians, and trustees
There are three functions for which you need to name people in your will:
The executor manages your property and processes after your passing. They monitor who gets what items and ensure that all your leftover debts and taxes are paid. You can name more than one. For example, a spouse can be a primary executor, a law-savvy family member can be their support, and a friend can be there for backup.
The guardian “gets” your children who are under the age of majority. This person provides for them and is legally responsible for them until the children are legal adults themselves. However, as children are not property, your specifications aren’t binding. Your will carries weight in court but doesn’t have to be followed, and children may be assigned a guardian other than whom you named.
The trustee is in charge of a trust fund that you leave behind. They manage the money until the actual beneficiary can manage it themselves. Education funds for children are a typical example. You can also name trustees for elderly care, pet care, business, or project funds.
Consider your business status
If you’re a business owner, don’t let your personal feelings get in the way of the best decision. It’s tempting to leave it to a family member, but consider:
- Are they genuinely interested?
- Will they keep it running or sell it off at the earliest convenience?
- Do they have the experience and skills required?
- Will they conflict with business partners about how to run the affair?
If you prefer a trusted employee to be the beneficiary, the will alone might not be the most tax-efficient option. Consult with experienced wills and estates lawyers to see what can be done to optimize taxation and who exactly could have a claim to your assets and offices.
If you’re in a partnership, your interest goes to the executors of your will. If you haven’t made one, it passes to the administrators of your estate. They will handle it based on the specific conditions of your partnership. Your partners may have the right to buy your interest before it passes to your executors/ administrators, or to transfer it to a third party. Some of your interest may be sold to pay taxes or debt for your estate.
If you’re a sole trader, the business itself will close after you pass. The assets will be considered a part of your estate and go to the executors of your will or the administrator of your estate. They’ll pay any remaining liabilities (this might require selling some of the business assets).
In both cases, the remaining assets or money from their sale will be distributed according to the will, or according to the rules of intestacy if there isn’t one.
Keep it up to date
The terms and conditions you set in your will may become irrelevant or impossible to execute later in life. You should update your will when you marry or become a parent. Common scenarios in which it’s critical to revise this document include:
- Birth of a child
- Adoption of a child
- Death of a spouse
- Death of a child or other intended beneficiary
- Death of a named executor
You should also check up on it if you gain or lose significant property, have a falling out, or a reconciliation. If you pass without addressing these changes, your property may be treated as though there never was a will in the first place.
Arrange your funeral
Include instructions to make sure your wishes are known to your executor and family. Specify whether you’d prefer burial or cremation, if you want to be interred in a specific location, and whether you are an organ donor or donating your body to science.
These topics are often difficult to discuss in life. Including your preferences in your will keeps your loved ones informed of important procedures and will likely offer them some comfort and peace of mind.
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