What is Estate Planning?
Estate planning is the act of preparing for the administration of one's wealth and assets after death. Estate planning is for those who wish to control the management, transfer or disposition of their properties when they are no more – to avoid maladministration of their estate or family dispute over the sharing of the properties. Real estate, cars, personal belongings, life insurance, salary/pension arrears, cash at bank, shares, floating securities and debts are all part of one's estate.
What happens if I die without an Estate Plan?
If you die without an estate plan, your property will be subject to the Laws of Intestacy. The intestacy laws apply in an illogical manner, which means the persons you would ordinarily want to receive an equitable share of your assets may get nothing, while others may hijack your estate to themselves. Your relatives may end up battling themselves over your property. By planning your estate, you can give specific instructions on how your estate should be dealt with and be rest assured that your loved ones and the most vulnerable amongst them will gain financial security and a fair share of your estate. Estate planning is a necessary step in ensuring your assets end up where you want them, without any court interference.
Through what modes can I achieve an estate plan?
You can plan your estate by creating a Living Trust or by structuring a Probate.
What is a Living Trust?
A Living Trust is a legal arrangement wherein the creator (often called the "settlor") holds and owns his assets after he transfers them into a Trust vehicle. The Trust vehicle provides for the management of the settlor's assets during his lifetime and after his death. If you are serving as your own trustee under a Living Trust, the instrument will provide for a successor trustee, who upon your death or incapacity will administer or manage the trust assets either for the benefit of himself or another person or group of people (called the "beneficiaries").
What is Probate?
Probate is the procedure of granting a legal instrument in form of "Grant of Probate" in respect of the estate of a deceased person who died testate (i.e. leaving a valid Will).
What is a Will?
A will is a legal document that indicates how you want your property to be administered, managed, distributed, shared, or even wound up after your death. It is revocable and subject to amendment at any time during your lifetime.
Who can make a Last Will?
Any adult with a sound disposing mind of 18 years and above, or a minor serving in the military or a minor who is married can make a Will.
When should I change my Will?
You can amend a Will through a Codicil, or revoke it entirely, or make a new Will at any time during your lifetime to reflect your most current wishes and when you acquire a new property. So, you can have a periodic review of your circumstances and amend your Will to reflect the changes, change a beneficiary, and represent your interests. If you are separated from your estranged spouse or embroiled in a divorce proceeding where decree absolute is yet to be ordered by the court, it is vital that you make a new Will as soon as possible. Otherwise, your estranged spouse will be entitled to inherit your property.
What is the difference between an Executor and an Administrator?
An Executor is appointed by the testator himself (the maker of the Will) in his Last Will and Testament.
Administrators are appointed by the Order of Court vide a Letter of Administration wherein there is no executor, or wherein the deceased died intestate (i.e. without leaving a valid Will).
What is the difference between "Grant of Probate" and "Letter of Administration"?
Grant of Probate is issued by the Court to the executor who was dully appointed by the testator himself in the testator's Last Will to enable the executor carry out the instructions of the testator. Letter of Administration may be obtained by any interested party where the deceased died intestate (i.e. leaving a no valid Will) to empower the interested party (called the "Administrator") administer the estate of the deceased.
Why should the estate of the deceased pass through probate?
Probate is needful to safeguard the deceased estate from falling into wrong hands; to ascertain whether the Will sought to be proved is valid before confirming the authority of the executor by a Grant of Probate. To offer the executors or administrators court protection in the administration, management or winding up of the deceased's estate. To give legal backing for the sell and disposal of the deceased's real and personal properties.
What properties cannot be included in probate?
Certain properties such as life insurance proceeds, salary/pension arrears of the deceased, joint tenancy property, trust property, etc., may not be subject to probate, such properties would rather pass directly to an already named beneficiary, survivor or next of kin.
What does the Executor do?
The Executor is the person or the firm responsible for ensuring that the wishes of the testator, as specified in his Last Will and Testament, are carried out and strictly adhered to. The executor makes sure the assets are transferred to the beneficiaries named in the Will as smoothly and efficiently as possible. The executor is may serve as the trustee, the roles do overlap.
Who can I appoint as my Executor in my Will?
Your executor does not necessarily have to be your family member or friend, your Executor can be a Solicitor, Law Firm or an institutional asset manager. Appointing a neutral and impartial person as your Executor will give you the assurance that your estate will be administered and dealt with dispassionately in accordance with your wishes as expressed in your Last Will.
When should Grant of Probate be applied for?
An application for the Grant of Probate must be filed by the executor within three (3) months of the testator's death.
Can the executor sell off my property?
No, the executor can only sell your assets where your Will instructs him to do so. However, the beneficiaries named in the Will may request the executor to execute a sale of an asset on their behalf. Situation may arise where it is practically impossible to share a property amongst all the beneficiaries named in the Will (e.g. a car), such may warrant a sale of the car to be executed and the proceeds of sale shared amongst the beneficiaries so entitled.
How am I sure that the executor shall deal with my assets properly?
Where you appoint a neutral and impartial person as your Executor, you can be rest assured that your estate will be administered and dealt with dispassionately and objectively under the supervision of the Chief Judge of the High Court of the State where the Grant of Probate was issued and under the close watch of the beneficiaries named in your Will.
What fees are charged by an Executor?
The sum total of both the executor's administrative fees and professional fees is 5% of the gross value of the estate. Where the executor pursues the deceased's debtors and recovers debts and income owed to the deceased's estate, the executor will be entitled to a fixed charge payable as Barrister fees or legal fees.
WHAT TO DO NEXT?
Even if you are a person of modest means, you have worked hard for your money and acquired your property overtime. It is important that you control what happens to your property when you are no more. Creating a blueprint for successful estate planning and protecting your assets can be very beneficial both to you and your loved ones. Your estate plan gives clear indications to the whole world on how you want your property to be administered, managed, shared or dealt with after your demise.
Estate planning involves technical and procedural complexities and the governing laws vary by states. It is important you seek legal guidance and help from a specialist Solicitor.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.