Knowledge…Shared…Multiplies
In the good old tradition, this being the first article of the year, I take the opportunity to wish all readers a Happy New Year and Best Wishes for 2020.
This is the first article in a series on estate planning. I hope in this series of articles and through advocacy in other media to explain and underscore the importance of estate planning.
I believe that the term estate planning may be new to some readers. So I ask you to bear with me as I seek to explain what is meant by the term. I will argue that the need for estate planning arises from the very nature of life. Death, it is often said, is life’s common denominator. This simply means that we must all die. We are not here forever. We have no control over this reality. And when we die the world will not end. Life will go on!
Once we live to adulthood, to varying degrees, we will accumulate assets. We might own land, houses, vehicles, clothes, jewellery, shares in businesses, computers, cell phones, bank accounts, etc. For some of us, what we own would not be much to speak of. The sole and most valuable asset we have may be a house. For others, there would be a massive amount of assets. The sum total of your assets is referred to as your estate.
When you die, your estate is not buried with you. Your assets remain behind to be inherited by others.
Even before death, you may go through a period of old age and serious illness. During that period of your life you would not be able to exercise the independence you once had to do things for yourself such as going to the bank and making transactions with your assets.
How can you ensure that your assets are available to support you if you experience incapacitating old age or illness? What happens to your estate after you die? These are two key issues that give rise to the need for estate planning. The good news is that the law provides you with tools to ensure access to your estate if you are experiencing incapacitating illness and to control how your estate is distributed after you die.
However, if you do not use the tools provided by the law, then you may have a lot of assets but no one can access it to support you while you lay bed ridden and become dependent through old age or illness. In cases as these, court action may be required to appoint someone as your guardian to access your assets to care for you. Such court action can be bitter and nasty. And the more you have, the greater the potential for a bitter and nasty legal fight.
If you do not use the tools provided by the law to determine how your estate would be distributed after you die, then the state would step in and use its own formula to distribute your estate. This formula is contained in the laws of intestacy.
Estate planning: providing access and exercising control over your estate
The use of the tools provided by the law to access your estate when you are incapacitated and to exercise control over how it is distributed after you die is referred to as estate planning. Estate planning can be defined in a variety of ways. For the purpose of this conversation, I define estate planning as,
The sum total of decisions taken and methods/tools employed by a person with a view to preserving their estate so that it is available for their use while alive and for distribution after passing in accordance with their wishes….
In this series of articles, using real life situations, I will examine different estate planning tools available to achieve the twin objective of preserving your estate for your use in times of crisis and for distribution of your estate, after your death, in accordance with your wishes.