“WILLS DON’T KILL”
What are you leaving behind; a lasting legacy or a family feud? How do you wish to be remembered? For the great work that you accomplished in your lifetime, or for World War III that erupted in your close-knit family after your demise? Here are some important issues to reflect upon regarding the transmission of your wealth (will) to avoid family palaver;
Do you have a will?
Sadly regardless of the level of sophistication and education, in our communities, there is still the taboo against talking about death or addressing your mortality, even though it is the greatest certainty of all. But dying intestate, or without a will, just causes your nearest and dearest untold hardship. It also causes inconvenience in addition to the grief of your loss.
Discuss your options with an experienced estate planning lawyer who will consider all your assets and determine the most appropriate estate planning tool for you; from trusts to lifetime gifts and, of course, the most basic tool, a will. Make sure your will is current. This remains one of the simplest and most important instruments for the orderly, peaceful disposition of your assets.
It is important that you draft your will carefully as imprecise, ambiguous language can cause confusion; if sensitive family dynamics have not been considered, relatives may still feud. Wills are often contested particularly when parents create “inadvertent inequality”.
Consider these two scenarios:
1. Chief Johnson willed five properties to his five children as follows:
- A plot of land in Lekki Peninsula
- A block of 4 apartments on Falolu Road in Surulere
- A warehouse on a half-acre plot in Warri
- A 3-bedroom house on a 1-acre plot in Old Ikoyi
- A town house at Asokoro, Abuja
The children who inherited the Surulere and Warri properties felt hard done by; they have been in court for years, fighting their siblings over the Ikoyi and Abuja properties, which are of significantly higher values, both in terms of market value and rental income,
2. Mr Bamidele left all his assets to his wife Gbemi, from his second marriage; expecting that she would pass on assets as appropriate to his son from his first marriage. She bequeathed everything to her own children. Her stepson did not receive anything and is going to court. After a remarriage, a trust might be more appropriate for the protection of new beneficiaries such as a second spouse or for children from an earlier marriage. Fairness should be a primary consideration.
Consider a Trust
A trust is an ideal estate-planning tool both during your lifetime and thereafter. It works like this; ownership of assets are transferred to a third party who then distributes the assets according to the wishes of the settlor. With a trust, one can avoid the long drawn out and expensive probate process, manage the outflow of estate proceeds and benefit from tax efficient estate planning.
Selecting the right executor or trustee whom you believe can carry out your wishes effectively is of paramount importance. Some people choose qualified family members to serve as executors; ideally a trusted professional, a lawyer or a trustee company should be appointed to perform this important role so you can benefit from their expertise and objective independent counsel.
Each one of your children is unique and in some circumstances it is wise to make special arrangements to accommodate this. There could be an irresponsible child that is a spendthrift, or one who has a drug or alcohol addiction that could decimate an inheritance. A physically or mentally challenged child may need support throughout their lives.
Through a trust, funds are managed and disbursed by trustees on behalf of beneficiaries; it is well suited to accommodate special situations. There are various types of trusts and they are so flexible that trustees can prevent and manage each circumstance.
Communication is key
Don’t leave mystery and secrecy in your wake. As far as possible (and in some families this may not be advisable), talk about your estate to your adult children when you still can. Secrecy rarely produces genuine long-term harmony. Letting lawyers and private bankers into all the secrets and leaving your loved ones, children, spouse(s) and “significant others” in the dark about who gets what, often causes chaos whilst you are resting in peace. Complicated lifestyles usually beg for extra planning.
Rather than keeping everyone in the dark, why not make specific arrangements that will stand the test of time to ensure that your wishes for your properties, businesses and social impact initiatives do not die with you.
Communication when you are well and strong makes sense. Whether you are of substantial means or not, equip your spouse and children about wealth preservation and wealth management with financial education.
Many Nigerian family owned businesses have struggled after the passing of the founder. Indeed, globally, only 30% of businesses survive the passing from the founder to their heirs. A family owned business requires careful transition and succession planning. Remember, it doesn’t absolutely have to be your own children that take over and manage the business; indeed they might not be capable or interested.
You should identify professional management and the best person for the job over time. Your children may own the business as shareholders but they do not necessarily have to run it.
Do not procrastinate.
If you don’t get round to tidying up your affairs, you may be compounding the difficulty that your beneficiaries will experience after you are gone. The causes of procrastination often include a reluctance to address one’s mortality or a feeling that the time isn’t right.
The loss of a loved one comes with huge challenges. Unfortunately it can and does bring out the worst in siblings. The best estate plans have come from engaging proactively in a process, during your lifetime. With careful thought and planning and most importantly, with tested professional advice, one can mitigate much of the potential conflict and leave a lasting legacy.
Nimi Akinkugbe has extensive experience in private wealth management.
She seeks to empower people regarding their finances and offers frank,
practical insights to create a greater awareness and understanding of
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