No one really wants to think about their eventual death. However, it is crucial you make plans for what happens to your assets when the time comes.
Your Estate Plan
Your estate plan should include your will and specific instructions regarding the distribution of assets once you pass away. You should be mentally sound and over 18 years old to ensure the validity of your estate plan. An estate plan will aid in preventing family disputes and minimising tax that your heirs will have to pay, so you must have legal guidance when drafting it.
Your will takes effect immediately upon your death. It can include instructions on asset distribution, legal guardianship of your children (if applicable), trusts, charitable donations and your funeral arrangements.
It must be witnessed and signed properly to be considered valid. Update your will in the event that your legal rights change, such as when you get married, separated or divorced. Make changes when you have kids or grandkids, or if your beneficiaries or spouse passed away.
Changes are also in order if your financial circumstances change. The accounting firm Accountingnorth.co.nz says compliance with the tax laws is important in managing a business. Know the value of your business to figure out the specifics of your will.
A court-appointed administrator will pay all taxes and bills using your assets, and distributes the remainder if you pass away intestate — without leaving a will — or with an invalid will. This depends on your area’s intestacy laws. Should you pass away without any remaining relatives, your entire estate will become the government’s property.
Your Testamentary Trust
This is a trust that will only take effect upon your death. It is normally set up to ensure asset protection. The trustee/s you appointed in your will administers the testamentary trust.
It is the responsibility of the trustee to take care of your assets to ensure your beneficiaries will benefit from the trust until it expires. Consult a lawyer when planning a trust to ensure the right people will organise everything upon your death.
An estate plan aids in carrying out your wishes even after your death, or if you’re no longer capable of making sound decisions. Appoint someone you fully trust to take care of your affairs. Additionally, it’s a good idea to list all your legal documents and where they’re stored to help the family and executor sort things out.