A Will is a must if you want to pass on your assets as per your wishes, but that comes into effect only after the testator passes on. A trust and a power of attorney takes care of people when they are alive. A solid estate plan includes all three.
In our last column, we discussed the role and importance of an estate plan for women. It is essential that women do not surrender the responsibility of managing their financial affairs and devising their estate plan to their family, but take complete charge of this important duty. Usually, women are forced by life circumstances such as the demise of their spouse or a loved one, incapacitation of the breadwinner of the family, divorce, or terminal illness to look into their financial matters. However, managing these affairs in a timely manner safeguards not only your assets but also your wishes and choices.
Let’s us discuss the important aspects you should consider when designing your estate plan.
Last Will and Testament
A Will is a document that enables you to capture your wishes in terms of how you would like your wealth to be distributed after your lifetime. In the event you choose to not create this document, intestate succession laws will prevail whereby your assets may get inherited by individuals and in a manner not necessarily aligned to your wishes. Hence, putting a Will in place should be one of the first steps to safeguard your wishes as well as the interest of your intended beneficiaries.
As a mother with minor children ― married, divorced or widowed ― there is a greater responsibility to ensure you appoint a guardian in your Will who would manage the financial affairs of your children until they attain 18 years of age. Also, you need to ensure you have put a plan in place to ensure the child is brought up under the right supervision, guidance, caregiving, and set of value systems by entrusting the responsibility to the right set of individuals.
Further, as a married woman, it may be worthwhile to consider coordinating your estate plan with your spouse so that you both can be on the same page in terms of safeguarding each other’s interests as well as deciding on the subsequent manner of your inheritance.
As a single woman, you may not have dependents, such as children, and therefore, may not feel a compelling need to have a Will. However, do understand that in the absence of legal heirs, your hard-earned wealth may ultimately be taken over by the government. Hence, by writing your Will you hold a chance to decide whomsoever you wish to pass on your wealth to such as confidantes, friends, staff members, or perhaps even a charitable institute that supports the causes dear to you.
Power of Attorney
While a Will takes care of your affairs post your lifetime, a power of attorney is a document that can ensure your financial affairs are taken care of during your lifetime, for instance, in case of your incapacitation. In the event you are unable to manage your financial affairs due to any medical condition, you may consider appointing an individual, of course, someone trustworthy, to ensure your finances are not left in abeyance.
Private Family Trust
A Will may not suffice for large families where a complex mechanism of succession planning is warranted. A Trust is a structure that can be created during one’s lifetime whereby the beneficiaries are defined and the do’s and don’ts on the manner in which the Trust should be operated are mentioned by the creator/settlor of the Trust in the document known as the Trust Deed.
Typically, more often than not the men folk in the family set up the Trust for the benefit of their spouse, children and lineal descendants. A Trust is generally set up for a long tenure that may outlive the lifetime of the settlor, in which case the Trust is to be managed by the Trustees for the surviving beneficiaries. There is a certain struggle for the family members who outlive the creator of the Trust as they may not understand the exact mechanics and thought process for the Trust creation if not involved in the process of its creation. Hence, it is essential that women who are beneficiaries/Trustees of the Trust actively participate in the conception and structuring stage so that they can comfortably manage the affairs thereafter.
As you can understand each document has an important role to play as part of your estate plan, and you can choose one or a combination depending on your objectives. However, remember to review these documents on an ongoing basis to capture the changes in your life as well as laws. Further, ensure the individuals who will be responsible for carrying out your wishes, as per your estate plan, have quick and easy access to the requisite paperwork for your estate.
Therefore, as a woman do not overlook this important aspect of your life and wait for a life-changing event to take charge of your financial affairs, in which case it might be too late. The right time is now, as the saying goes, ‘Someone’s sitting in the shade today because someone planted a tree a long time ago’. So, ensure your loved ones enjoy the benefits of your hard-earned wealth by planning today.