Without careful planning, gifting an inheritance can be a real challenge. Many people assume that the beneficiaries of their inheritance will receive their gifts with little or no hassle. However, family dispute is a potential threat to a smooth inheritance transfer. Conflicts between beneficiaries are not limited to the right to inherit large assets but may extend to the prerogative to keep the most mundane items.
There is also often a poor appreciation of the effects of the laws that guide wealth transfer. Your failure to understand these laws could impact the value of the assets you leave behind. A poor plan to organize the transfer to beneficiaries may give an individual undue power to decide on how the inheritance is spent and also lead to clashes between beneficiaries. To avoid such unpleasant outcomes, there are a few tools that you can use to arrange the transfer of an inheritance.
The first thing is to write a Will. This is a legal document that you can use to declare your wishes about who gets what from your inheritance. There is nothing more legally enforceable than the instructions that you have spelt out in a Will. You may think that it culturally unpopular to discuss your passing but there is nothing more pragmatic than to do so in your Will if you want to avoid inheritance drama. A Will also facilitates the administration of your assets by the executor and to avoid any ambiguity, you can also state other instructions such as who you choose to be the guardian(s) of your young children.
Another useful tool for the transfer of an inheritance is a Trust. This involves the appointment of a trustee who manages assets on behalf of beneficiaries. A Trust facilitates a more efficient distribution of wealth between beneficiaries and the management of estate taxes. In addition, the Trust can help you avoid lengthy legal procedures such as probate, where a court distributes certain assets owned in an individual’s name. A trust can also be useful in managing assets that are to distributed in a particular sequence over a period of time.
Most people only begin to put structures in place to transfer their wealth in the later stages of their adult life. Is this how you are running your life? If so, writing a will and creating a trust are simple steps that you could take to get you started as soon as possible.
You can also acquire assets in the name of the beneficiary. When an investment is acquired in the name of a child or other beneficiary, the benefit bypasses your estate Will and is not subject to probate and other estate administration fees. The transferred assets are free from claims by creditors and unaffected by challenges to the validity of the Will.
There are clearly several options to consider to organise the assets that you will like to gift to others and understanding your objectives and the options available will make a huge difference in getting it right. FBNQuest Trustees can guide you through the process of putting your house in order and make life easier for your beneficiaries. We are happy to advice you on how to draft a will and put you in touch with professionals that can make the process seamless and efficient. We can also help you draft a trust deed in line with your wishes.
Seemingly simple wealth transfer mistakes can lead to legal battles that can diminish the value of your inheritance. So write a will and review it regularly, especially after a major a life-changing event that impacts your wealth. A little extra effort will ensure that your assets are administered appropriately. In the process, you get your wish about how your assets are distributed and prevent squabbles about the rights to certain benefits by beneficiaries.