ADVISORY COLUMN: PERSONAL FINANCIAL ADVISER
How many times have you seen or heard of serious troubles in families after the death of a family member due to some members wanting what was not bequeathed to them or wanting more?
A significant benefit to the individual sharing property, through joint ownership, or transferring it is the control that estate planning gives to the owner of assets with respect to who gets a benefit, in what form, how and when. Inter vivos gifts may be used to transfer property during the lifetime of the transferor. A will may be used to transfer property after death and a trust may be used to give a benefit to a beneficiary during the lifetime or after the death of the grantor, or settlor – the person who owns the property. Establishing who the beneficiary is significantly reduces the risk of assets passing to people and causes other than those intended by the transferor.
Failure to make a valid will has the potential to create serious problems as it may take much time to complete the process of administration and seems to create more scope for uncertainty and instability. Additionally, it is the law that determines who qualifies for a benefit and the share each beneficiary receives, so some people may be disappointed at the end of the process.
Problems do arise in spite of proper arrangements being put in place for the transfer of the assets of the deceased. Generally, more problems seem to arise when a will is the tool used to pass assets to beneficiaries and when the asset is real property. But there are steps that can be taken to reduce the risk of such situations emerging, or to put a check on them if they do arise.
The choice of executor may help. An executor who acts promptly to settle the estate may be a great help. Sometimes a challenge may arise if there are not liquid resources to carry on the process, including the unwillingness or tardiness of family members to provide the required funds. It would be a good idea for testators to leave liquid resources to settle the estate and allow the executor to act promptly.
The executor may act to diffuse any tensions or reduce any that may arise by meeting with the beneficiaries to communicate the contents of the will. Communicating what the will says need not wait till after the death of the deceased. It would not be a bad idea for the testator to communicate what is in the will to the beneficiaries. This is not necessarily a risk-free approach as it could lead to pressure being exerted by the dissatisfied to make changes to it.
It is also important for key family members to know where important documents are. These should be stored in a secure place and access should be limited. If necessary to update them, they should be. This may help to speed up the process of settling the estate and reduce the chances of trouble.
In the case of real property, steps should be taken to ensure that registered titles are in place, property taxes are paid up to date, and all boundaries are clear, there being no encroachments.
Should difficulties arise, for example, the executor, as the personal representative of the deceased, should be prepared to act, taking legal action where necessary. Beneficiaries should also be prepared to use all legal remedies to protect what is theirs. Doing so may cost, but the courts may see it fit to award costs in favour of the beneficiary. One major setback here is the length of time it takes to settle matters through the courts.
Beneficiaries should make it their duty to take an interest in property that they inherit: pay property taxes, have someone look over it, visit occasionally and take whatever action is possible to secure it. There are people who appoint themselves as family members to make claims and even to take possession of property. Turn to the law for protection when this happens and evict them if it has to come to that.
So when a family member dies and long lost and other family members, and even strangers, show up to expropriate property to which they may not even have a legitimate claim, surrender should not be the first option. Turn to the law for redress, but, to reduce the chances of illegitimate claims or actions, be alert and do all that is possible to secure your asset.
Oran A. Hall, principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.