With the recent spate of high-profile celebrity deaths, we have been privy to the manner in which the rich and famous structure their assets and the importance of estate planning.
Estate planning is a complex topic, particularly for expatriates who are likely to have assets in more than one country. Each country has it’s own taxes and rules regarding inheritance, and these may be in direct conflict with each other.
What is a Will? Generally speaking, a Will identifies who will serve as the executor of the estate, as well as who will receive assets belong to the decedent and under what terms. In theory, this means that your assets will be distributed in accordance with your wishes after your death.
However, there are better ways to structure your assets while you are alive to make sure the right people inherit the right portions of your estate, at the right time. With or without a Will, it could take two or more years to distribute an international estate.
During this time many assets could be frozen, leaving your intended heirs in a very difficult financial position. Probate, which establishes the validity of the Will, will need to be conducted in each and every country that you hold assets.
The way we purchase and structure assets during our lifetime can simplify estate planning by keeping certain assets out of the probate process. A Will substitute allows you to transfer property directly to beneficiaries at the time of your death.
A Will substitute, or non probate instrument, can include contracts such as; life insurance policies and IRAs, life estates and future interests, joint tenancies, and trusts. It can also include community property such as bank accounts and real estate with rights of survivorship.
Structuring parts of your estate in this manner will not only expedite the distribution process, but also avoid any costs associated with probate.
Some of the Advantages
• Avoid probate,
• Easy to amend
• Revocable until death
• Inexpensive to establish
Consider which tax jurisdictions apply to you and your family. While most would agree that a person should have the freedom to leave their estate to whomever they choose through their will, there are numerous incidents where a Will has been contested, resulting in distributions very different to those stated by the decedent.
New York Hotelier Leona Helmsley left $12 million dollars to her dog, intentionally cutting two of her grandchildren out of her will. They successfully contested the will and were award $6 million each.
In a recent court case in the UK, a mother left her entire estate of almost £500,000 to various animal charities upon her death. Despite side letters making it clear she did not want her estranged daughter to inherit, the daughter was able to challenge the will, and was awarded a provision for future maintenance.
Structure your finances well today to ensure your final wishes are met – even if you do want it all to go to the dogs.