We are celebrating our youth and our Fathers this month. My articles are about the obligation that parents have to create and protect a legacy that will educate and assist their children with their futures.
In essence, I believe this comprises three elements – the drawing up and revisiting of a legally binding will, which I covered in my last article (Link to the first article on website); the planning of an estate and the appointment of an Estate Administrator; and to have adequate life insurance in place to ensure the legacy you leave is substantial, regardless of when you pass on.
We look at Estate planning, as there seems to be little purpose in working all your life to build a legacy for your children unless it is well set up and fully legally protected. The setting up of the correct trusts, for example, is of great importance…
Why trusts?
The main reason individuals set up trusts is to protect your assets and estate. For example, a property in a trust does not form part of your estate and is therefore not subject to estate duty, inheritance tax and Executor fees. The protection and administration of funds for your children and grandchildren is another reason to have the correct trust in place.
There are four types of trusts; ‘Revocable’ and ‘Irrevocable’, the latter of which is usually set up for children and grandchildren as they cannot be revoked or changed, ‘Testamentary’ and ‘Living’ trusts – the former going into effect only after the maker’s death and the latter in their lifetime.
The third generation syndrome
It is commonly known that the immediate inheritors of your wealth, your children, respect your hard work and how you handled your finances, and therefore use their inheritance wisely, but your grandchildren may not.
Individuals who leave an inheritance to their grandchildren may want to set up a specific trust (usually the ‘Irrevocable’ trust) for that purpose and an Estate Planner can ensure that the right trust is in place.
The importance of the Estate Administrator
Estate planning without appointing the right person to ensure its correct execution is like creating the blueprints for a building without appointing a builder. As one Authority put it “The Administrator of an Estate, usually named within the Estate plan, is the person in charge of compiling assets and managing the estate through probate court. They are in effect your representative when you are no longer around and you must appoint one whom you trust and preferably who has assisted you to prepare and register the estate plan.’’
Estate planning is a part of a lifetime of wealth planning
In June, through my association with Estate Planning experts, Quintus Wealth can point you to those offering a good rate on drawing up a Will and can assist you in Estate planning.
Remember that building wealth ultimately leads to the peace of mind and benefits your family so contact me to talk about every aspect of your financial aspirations. Through a process of assessing your needs, charting your course and ensuring that you stay on course, you can achieve these aspirations within this lifetime – and beyond!