Mfon is a twenty year old undergraduate of a prestigious university in Nigeria. Her father before his death was a wealthy business man with landed properties purchased across various cities. However, five years after her father’s death, Mfon’s uncles are unwilling to give up custody of their late brother’s assets since there was no will stating otherwise. Mfon is faced with the responsibility of taking care of her four young siblings alongside her mother who is unable to take care of them alone. What hurts most is the fact that they can’t have access to their father’s assets which would solve a lot of financial problems if it was at their disposal.
The above scenario depicts the fate of many Nigerians out there who currently share similar plight. Sadly, a vast majority of Nigerians do not have an estate plan. In the world of uncertainty where we live in, it is essential that we take pro – active steps in securing the welfare of our loved ones while we are alive and in the event of our demise.
In today’s post, we’ll explain in detail, the relevant points we need to take note of where the subject of estate planning is concerned. I hope that after this, you would take the needed action required in creating an estate plan.
WHAT IS ESTATE PLANNING?
In simple terms, estate planning entails preparing for the transfer of a person’s assets and wealth in the event the latter becomes incapacitated or dead.
Estate planning entails much more than preparing a will alone. An estate plan covers transfer of assets some of which could take effect once such asset is created and after the death of the owner.
WHY CREATE AN ESTATE PLAN?
An estate plan comes with a lot of advantages;
- Assets are distributed according to wishes and even minors are taken care of.
- If properly managed, the value of the estate can be maximized for the benefit of the beneficiaries.
- Transfer of estate is done effectively.
- Reduces tax charges on assets.
FIVE STEPS TO CREATING AN ESTATE PLAN.
STEP 1. DRAW UP A LIST OF THE ASSETS YOU OWN.
You could do this with the aid of an estate planning attorney. Real estate, life insurance policies, private businesses, stocks, shares, bonds, debts owed to you etc. all qualify as assets.
STEP 2. DETERMINE HOW YOU WANT YOUR ESTATE TO BE DISTRIBUTED.
In simple terms, this means determine who gets what, where and how.
STEP 3. DECIDE ON THE MEANS OF TRANSFERRING YOUR ASSETS.
Like i mentioned earlier, you can create an estate plan that takes effect before or after death. Where you decide to have your assets transferred before death, you could opt for the following;
- Give such assets to your chosen beneficiary as a gift: Through a deed of gift, such assets are given away automatically with no conditions and becomes the property of the new owner.
- Create a Living Trust: This arrangement is recognized as lawful in Nigeria and applies in most cases where the beneficiary is either a minor or incapable of handling the assets due to health or other reasons.
In such situation, you may have your assets transferred to a Trustee (corporate or individual) to manage such assets on behalf of the beneficiary.
Such assets are released by the trustee to the beneficiary upon fulfillment of conditions as prescribed by you or the person making the transfer.
Transfer of assets after death could be done in two ways;
- Through the probate process: Under this scenario, a will is prepared and filed at the probate registry for safe keeping. Such will takes effect upon the death of the maker of the will.
- Transfer through substitutes other than a will: A classic example of such policy is the Life insurance policies created by insurance companies. Where an individual subscribes to a life insurance policy, he or she must stipulate his nominated beneficiary on the form provided.
Upon demise of the purchaser of the policy, only the beneficiary or guardian (where such beneficiary is a minor) can lay claims to the policy.
STEP 4. EXECUTE YOUR ESTATE PLAN.
This simply means, having your witnesses append their signature on relevant estate plan documents where necessary e.g. Wills, Insurance policies, Living trust policies etc. Arrangements must be made to ensure such documents are safely kept.
STEP 5. REVIEW YOUR ESTATE PLAN REGULARLY.
We live in a world where change is inevitable. Hence efforts must be made to ensure that vital information on your estate plan is updated regularly. Examples of circumstances that may call for an update on your estate plan are;
- Where you effect a change of name.
- Where there is a change of status e.g marital status, etc.
- Where there are new members in the family.
- Where a witness is deceased.
Creating an estate plan isn’t reserved for the upper class in society alone. It isn’t reserved for the elderly alone either. So long as you have assets, it’s not too early to determine the fate of your assets. Do not let the loved ones you leave behind, suffer because of your absence.
Ready to set up your estate plan? Select the link below, let’s get you sorted.