Last week we discussed the importance of making a will to make sure that when chapter 12 of life’s book is written, those that you leave behind will be able to receive and enjoy what you have left for them. This week we look more closely at some of the things that your will should include in order to ensure that your wishes are fulfilled.
You should prepare a detailed will listing the investments and the beneficiary (ies). It would also be immensely helpful to give the intended administrator a list of the institutions where these investments are being held, if the investments were liquid (or near liquid) assets.
Statically, there are a significant number of women outliving their spouse (do the husbands mistakenly take the “death do us part” as an escape clause?) and alas some wives are oblivious of where the accounts are. Therefore they are left with the task of trying to find the institutions the husband invested funds with.
Thus begins the arduous, time consuming (and sometimes embarrassing) task of tracking down these accounts. It is always a far easier cry, to find out whom he owes. They will promptly call for payment upon due date if not before.
Consider this, if he has a repurchase agreement investment there could be some small comfort that the facility will roll until some resolution with the arbitrators, but woe betide if it is a savings or current account with only one name. Both the bank and the government would be the greater beneficiary, as the dormant fee and GCT now stand to erode the principal balance.
If it were an asset purchased (e.g. Sovereign debt bond) there could be opportunity lost when the interest cheques are uncollected or the facility matures and no beneficiary would likely know about it. The simple act of adding another name to an investment (in whichever form) would mitigate a long and needless additional legal expense.
For persons who have dependents who have to be provided for due to varied mental or health reasons, it is strongly recommended that the investor considers a trust to provide for that individual some income stream. This is very important, especially if a sizeable portion of the assets is in real estate or a business partnership.
A trust could also be utilized if you want to support your surviving spouse, but also want to ensure that the principal or remainder of your estate goes to your chosen heirs (e.g., your children from a first marriage) after your spouse dies.
Really, a trust puts conditions on how and when your assets are distributed after you die. There however are some upfront expenses involved, as the assets you want protected will have to be transferred or reassigned into the name of the trust.
Once we begin investing, owning assets and especially having dependents, if we do nothing else to take care of our legal affairs, we should write a will. Spend some time with an investment advisor to review your total portfolio and make the necessary adjustments. Visit a lawyer to get advice on the drafting of your wishes.
Alas, at some point, we all have to close the book.
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David Weir is a personal financial planner with Sterling Asset Management Limited. Sterling provides medium to long term financial advice and instruments in U.S. and other world market currencies to the corporate, individual and institutional investor.
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