Senior Portfolio Manager and Wealth Advisor Moize Goulamhoussen benefits from more than 20 years of experience of the financial services industry. A Portfolio Manager licensed by the Canadian Investment Regulatory Organization, Mr Goulamhoussen specializes in helping professionals and business owners to grow and protect their wealth. This article will look at estate planning, outlining the steps necessary to help ensure a smooth and efficient transferal of assets to loved ones via a process that is as pain free as possible.
Death is a taboo topic among many people today. After all, nobody wants to think about what will happen after they have gone. Nevertheless, a will is one of the most important documents an individual will make throughout the course of their lifetime. Not only does a will make the estate administration process smoother for executors and loved ones while protecting the estate for the beneficiaries, it also helps testators to gain a clearer picture of how much Inheritance Tax (IHT) might be due.
Estate planning involves assessing the benefactor’s net worth by adding up all assets and subtracting all liabilities. The testator needs to consider who should receive what following their death, i.e. who will inherit their house and other assets. They may also wish to consider stipulating conditions beneficiaries need to fulfill in order to receive their gift.
Essentially, a will is a legally enforceable document that records the testator’s wishes. However, estate planning goes far beyond will writing. Since individual estates can vary widely, estate planning can be a complex task.
Where a benefactor leaves their home to their spouse or civil partner, the survivor is not liable to pay IHT. However, if it is left to someone else, the property counts towards the value of the estate, potentially triggering an IHT liability. It is sensible for benefactors to seek legal advice to understand the IHT implications in their particular case.
Where a couple owns their property as “joint tenants” the deceased’s share in that property automatically passes to the survivor upon death. That share cannot be left to someone else under the will. However, where a property is held as “tenants in common” the benefactor is free to leave their share in the property to whomever they so choose. Key points benefactors need to consider include whether there is an outstanding mortgage on the property that will need to be paid out of the estate and whether they wish to give someone a right of residence in their home.
Making a will ensures the right people receive the right assets, including the testator’s money, possessions, and any insurance policies that may pay out when they die. It is important for testators to have an accurate picture of their estate’s total value, ensuring they have worked through any IHT implications with a trusted professional. Wills can also be used to convey intended funeral arrangements. Although these wishes are not legally binding, documenting them provides family members with a clear outline of their loved one’s wishes.
Estate planning can involve much more than just will writing, in some instances setting up trusts and implementing strategies to limit tax liabilities – for example – through charitable donations. Rather than being the remit of the ultrawealthy, estate planning is for everyone, ensuring a smooth and efficient transferal of assets following the testator’s death and providing a clear record of their wishes to avoid misunderstandings and potential disputes.