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The problem with having a Will

by , 21 May 2013

Estate planning is the process of anticipating and arranging for the disposal of assets in an estate. The goal is to eliminate uncertainties over the administration of an estate. While estate planning has many benefits like protecting your assets from creditors in the event of insolvency, disability or divorce, it's almost impossible to reap all the benefits when you run your financial affairs in your personal name. Here's why you should consider running your affairs through a Trust.

When looking at estate planning, it’s important to understand that it’s divided into two distinct sections.

The first is designed to look after your estate or assets while you’re alive. The second is designed to look after your assets on or after your death. You can do this through the two main types of Trusts at your disposal. A Testamentary Trust (a trust set up after your death) and an Inter-Vivos Trust (a trust set up while you’re still alive).

While taking this important step towards protecting your wealth is beneficial to you and your family, you won’t achieve all your benefits if you run your financial affairs in your personal name.

That’s because if you run your financial affairs in your personal name, you’ll have to arrange the disposal of your estate on your death via a Will. And that’s exactly where the problem lies.

Here’s why a Will isn’t the best way to manage your assets

The main problem with a Will is that, on your death, your estate is immediately frozen and it can take some time to wind up your estate.

“A frozen estate can create practical problems for your family as funds may not be available for a lengthy period of time and financial decisions have to be placed on hold,” says Gavin Fourie in The Trust Report.

But if you run your financial affairs via a Trust, your family has almost immediate access to and control of the assets. All that is required is for a new Trustee to replace you (the deceased Trustee). This process takes only about three weeks.

The bottom line: “When deciding whether to run your affairs in your personal name or in a Trust, you should consider a Trust because the benefits outweigh the costs,” advises Fourie.

Remember, when trying to build a water-tight wealth protection plan, the most important question is: Will it be the best option when I pass away?




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