So many at times, I have received this question on what works better when safeguarding one's estate after death. The issue arising from the right one has of freedom of testation, which is bequeathing your property to the person that you want to benefit from your assets after death. Estate planning is the preparation of tasks that serve to manage an individual's asset base in the event of their incapacitation or death .In some circumstances giving away all your property and assets before you die, can have the effect of battles and commotions due to undesirable expectations. So one asks that how can you safeguard your property and your loved ones at the same time? Planning tasks include making a will, setting up trusts and/or making charitable donations to limit estate taxes, naming an executor and beneficiaries, and setting up funeral arrangements.
A trust is a relationship, in which one party gives another party the right to provide a method of managing the assets of belonging to an individual or couple while they live, as well as to specify how the assets are to be distributed when they pass away. A trust has three parties and these include the grantor (a person donating or giving), trustee (a person holding the property on behalf of beneficiaries) and the beneficiary (a person who is set to benefit from the set up). The main purpose of a trust is to transfer an asset from one person to another. Advantages of a Trust is it can hold different kinds of assets. Investment accounts, houses and cars are examples. One advantage of a trust is that it usually avoids having your assets (and your heirs) go through a phase of establishing validity of a will (probate) when you die.
A will is a legal document or testament which lays out the wishes of the deceased, regarding distribution of one's assets after death. A will is a legal document created to provide instructions on how an individual's property and custody of minor children, if any, should be handled after death. The individual expresses their wishes through the document and names an executor that they trust to fulfill their stated intentions. In Zimbabwe, Wills are governed by the Wills Act.
Advantages of a Trust
- It is less costly. As a result of the limited tax benefits associated with transferring assets to a trust, the focus has shifted to transferring assets that will outgrow any tax cost, as well as personal assets, such as investment paintings and antique furniture, as well as assets with sentimental value.
- Surviving spouse avoids paying estate taxes when the first spouse dies as is done when one is transferring property from one's name into his or hers.
- Erodes incidents of family bickering
- Clearly communicates how beneficiaries will benefit and clearly deal with uncertainty and conflict that can arise in circumstances where there is no clear plan.
- A family can actually invest or run a family business through the trust and the manner in which the proceeds will be shared will be clearly and unequivocally provided for.
- Allows the family to choose as trustees people with expertise to run the affairs of a trust professionally
Many people find that a trust is a superior alternative to simply leaving a will, as the trust is not subject to probate, as is a will, and it is kept private, rather than becoming a matter of public record. The validity of a will can be contested. What is important to note is that in terms of a Trust, the asset becomes wholly divorced from the grantor's estate and becomes the Trust's property which will be used for intents and purposes for which the trust was formed.
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.