Death is inevitable – it’s going to get us all in the end. But if death is predictable why are many people ill prepared?
The importance of a will
If you don’t have a will when you die you are intestate, and the law steps in to say who is entitled to share your estate. This is determined by whether you are survived by a partner, children, parents, brothers or sisters etc, as well as the size of your estate. Who will administer your estate is also decided.
Dying intestate is relatively expensive and takes time to sort out. Even worse, your assets may be frozen indefinitely and may not go to people you intended.
This situation can be avoided by making a legal will, reviewing/updating it regularly, and ensuring it can be easily found.
Your Executor administers your will and applies to the court for probate. Once probate is received the executor deals with the estate and distributes property as set out in the will (or under law if the deceased was intestate).
Sometimes the executor may need to wait 6 or even 12 months after receiving probate before the estate can be distributed, especially if the will may be contested. This delay can cause serious financial hardship for survivors if the deceased’s bank accounts and assets are inaccessible for the duration.
A life insurance policy can save the day by providing ready cash to pay bills, reduce debt, and support your loved ones. Ideally your life insurance policy will be owned by your family trust or partner so that funds can be accessed quickly.
To avoid payout disputes ensure you make full disclosure of all health issues when applying for life insurance.
A trust continues after your death and is administered by your trustees. Your will may appoint your replacement trustee, or may pass the power of appointment to a trusted family member, friend or advisor.
If your assets are owned by your trust there is less financial disruption on your death. Best practice is to prepare annual financial statements so that trust assets and liabilities are easily identified.
Although a memorandum of wishes is not legally binding, it does provide valuable guidance as to your thinking and wishes to your trustees.
If you own a business then there is a further layer of complexity if you die.
Your business may be a substantial asset, may employ staff and support many households, as well as provide important products and services to customers. Business value includes goodwill, an intangible asset that can be quickly eroded if the business owner dies without a succession plan.
What happens to your business if you die needs careful consideration and planning. Advice from your financial and/or legal advisors is important. Key person insurance and a well drafted shareholders’ agreement can help ensure business value is maximized for the benefit of all – partners, staff, customers, suppliers, and your loved ones.
Documents and Passwords
Being able to quickly access legal documents on your death is highly advantageous. Details of bank accounts, investments, household account numbers, assets and liabilities, along with passwords and access codes will eliminate much time, stress and frustration for your executor(s).
A digital password vault is invaluable – the master access login details can be left with a trusted family member or your lawyer.
And don’t forget about social media accounts. It can be very distressing for family and friends to get Facebook reminders to wish you a happy birthday years after your demise!
As the saying goes “There is nothing certain in life but death and taxes” – so why be unprepared for either?
Contact Q2 Ltd for a complimentary discussion about how you can be better prepared.