None of us know how much tread is left on our tyres or how much runway we have left in life. However, formalising your wishes through estate planning can provide peace of mind and clarity for those left behind.
The Role of a Will
Most individuals hold their assets through a family trust, so having a ‘Last Will and Testament’ is crucial. This legal document specifies how your personally held property will be distributed upon your passing. It also designates an executor to carry out your wishes. While Wills typically cover valuable assets, smaller items can lead to disputes. Dying intestate, or without a Will, means your assets will be distributed according to the Administration Act 1969, which may not align with your desires. Regularly updating your Will and ensuring you are of sound mind during amendments can help minimise the risk of contestation.
Trusts vs. Personal Assets
The distribution process differs significantly between personal assets and those held in a family trust. A family trust is a separate legal entity, and assets transferred into it remain protected from your personal estate. As the settlor, you may also create a “Memorandum of Wishes” to guide the surviving trustees in managing the trust’s assets.
Obtaining Probate
Before an executor can act, they must obtain ‘Probate’ from the High Court, which formally recognises the death. This process can take up to six weeks and is essential for managing the deceased's estate. During this time, it’s advisable to secure a copy of the death certificate, as it is required for many administrative tasks.
Administering the Estate
Once Probate is granted, the executor assumes responsibility for administering the estate. This includes notifying Inland Revenue, preparing a final tax return, and stopping any income streams. It’s important for the executor to maintain detailed records, as the death certificate will often be required for various transactions.
Handling Everyday Affairs
In addition to formal processes, there are practical matters to address after a loved one’s unexpected passing. Access to passwords and account information can be a significant challenge, particularly if one partner manages the couple's financial affairs. Keeping a secure, up-to-date list of essential passwords can greatly ease this transition.
Bank Account Considerations
There can be confusion regarding joint bank accounts and signatory rights. It’s crucial to understand the difference between joint ownership and granting signatory rights. After the passing of an account owner, access rights for joint signatories may be affected, potentially complicating financial matters.
Looking Ahead
This overview introduces the essential steps following a loved one’s death, but the complexities of equitable distribution of assets and planning for this process require further discussion. Stay tuned for the second part of this series, where we will delve deeper into valuing and distributing assets fairly among beneficiaries.
