No matter the size, large or small, every single person has an estate and must be able to identify the same. Every person has something they own. It may have been passed down to them, purchased, or acquired in some other way. Where effectively deployed, estate planning seeks to ensure an effective administration of a person’s assets during and after one’s lifetime[i] or in the event of an incapacitation. Estate planning is thus beneficial to everyone irrespective of class, stature, or means. Though the wealthy or High Networth Individuals (HNIs) may be more likely to secure their estate, in actual fact, it is not only a tool for the wealthy as commonly misunderstood. Everyone can deploy the applicable tools that best fit their personal and economic circumstances to organize and structure their estate.

As the name suggests, Estate planning is strategic and very intentional. It involves some basic preliminary steps such as creating an inventory of one’s tangible[ii] and intangible assets[iii],  accounting for one’s family and business needs, establishing one’s preferred directive on family and business governance, identifying your proposed beneficiaries, noting relevant estate laws, and reassessing all the above periodically as they evolve or change. Indeed, the concept goes beyond the administration and management of assets upon demise. This extends to setting up mechanisms that will ensure the estate also appreciates in value over time.

  • Forms of Estate Planning

There are well-known traditional forms of Estate planning and also modern ones as well. It is instructive that while the traditional forms only consider the distribution of wealth upon the demise of a person, modern forms can effectively begin to operate even during one’s lifetime, thus giving one the opportunity to assess, appreciate, improve, and even benefit from the estate vehicles set up.

The traditional forms notably include customary practices on succession, creation of wills, and preparation of the Deed of Gift. These forms however have their limitation which have spurred the development of modern tools.

The Modern vehicles of estate planning include the creation of private trusts[iv], foundations, and the creation of a Power of Attorney[v] to mention a few.  The Modern tools appreciate the complexity of today’s world with unconventional family structures (co-habiting parents, blended families, single parents) and varied assets (cash, digital assets, intellectual assets, cryptocurrencies, shares, pensions, amongst others).

In today’s digital world and global village, understanding international laws is no longer only a concern for multinational companies.  The high incidence of available second residency schemes and advancement in technology has greatly influenced the ease at which people can live, invest, and/or do business outside of their home countries. This has also resulted in an increased appreciation and understanding how of different laws affect our lives and their estate as well.

Furthermore, with effective family Governance one can pass both their values and their valuables to their children. Family Governance is a process where the family formally structures their relationship with each other as well as the relationship with the family business/investment company, for the benefit of the current family units as well as for generations to come. Thus, managing both the assets and the family relationships on a continuing basis is essential.

  • The Benefits of Estate Planning

The benefits of Estate planning cannot be overemphasized. This is because of the bouquet of value that it offers. Some of these benefits are discussed below:

1. It promotes the choice and preferences of a person with respect to his estate.

2. For the management of an individual’s property in the event of incapacity.

3. For proper distribution of assets.

4. For the protection of beneficiaries.

5. For a speedy and efficient transfer of an individual’s assets.

6. To minimize costs and avoid disputes.

7. To minimize estate taxes.

8. It allows for Business Succession Planning

9. It can help to promote one’s financial privacy

10. It is flexible to accommodate changing life circumstances

10. It goes a long way to guarantee peace of mind

  • Conclusion

Estate planning is an important part of your financial plan and can help you protect the assets that are most important to you. With a comprehensive estate plan, you can ensure that your wishes will be carried out after you pass away, provide for those who depend on you financially, make sure your family avoids costly probate fees and more.

While Nigeria has traditional estate planning models and trust services available, there is a lack of specialized expertise in designing and implementing comprehensive international estate, tax, and asset protection strategies. It is thus important to engage people with the requisite skill and experience to offer tailored solutions that address their specific needs, including cross-border considerations, wealth preservation, tax optimization, and asset protection, where necessary. Since death is inevitable and assets cannot be carried to the grave, it is only wise that everyone takes active steps to ensure the assets obtained through their hard toils and labor are persevered and maximized, even for generations to come.

The best time to plan one’s estate is NOW, so as not to be caught off-guard or unprepared. It is better to set up a plan and review it periodically than not to have one at all.

[i] This is critically important as in the absence of requisite plans, the court will appoint certain persons who may not align with your preferences to administer your estate to the best of their discretion and not yours.

[ii] Examples of tangible assets are lands /houses, vehicles, collectibles, gadgets and equipment, clothing, and jewelry, among others

[iii] Examples of intangible assets includes stocks, bonds, life insurance policies, retirement plans/pension, intellectual properties, amongst others

[iv] Unlike Wills, the establishment of trusts gives the trustee the power to distribute the property of the grantor without applying for probate or any court-ordered process hence, it reduces estate taxes and saves time.

[v] This is particularly helpful during one’s lifetime. It could be revocable or irrevocable and subject to registration, depending on the scope of powers sought to be delegated. Usually, the donor delegates powers to the donee where the donor is unavailable to perform the acts delegated, incapable of performing the delegated tasks due to ill health, or when the donee’s expertise is required for the proper execution of the delegated tasks.

Written bDeborah Onafadeji for The Trusted Advisors

Email us: [email protected]

Telephone Number: +234 810 159 9159

Open chat
Hello 👋
Thank you for getting in touch, how can we help you?