The ongoing Covid-19 pandemic has prompted many to confront their own mortality and the age-old taboos of incapacitation and death.
While estate planning is important for everyone, it is especially so for the wealthy who have other considerations such as protecting the inheritance for heirs, minimising estate taxes, avoiding the probate, ensuring liquidity and management and control of assets.
What is estate planning all about?
Estate planning is a holistic exercise typically involving your accountant, private banker, wealth planner and lawyer. They will help you create an estate plan which is a collection of legal documents that provides clear instruction on how you want your assets such as money, property or businesses, preserved, managed and distributed when you pass away. It also dictates how you want people to handle health and financial decisions if you are unable to do so for yourself during your lifetime.
Estate planning can be a lengthy process and it is easy to get overwhelmed, but don’t let that deter you. Here is what you need to take note of when you are starting out.
1. Be prepared to have intensely personal conversations with your wealth advisor
In Asia, it is not typical to speak about private matters, even with family members. And in a socially distanced Covid-19 world, some conversations about estate planning may first be conducted virtually. Do not let this prevent you from having frank, open conversations with your wealth advisor.
Be prepared for in-depth questions as your wealth advisor needs to know about you, and your intentions and priorities. Only then can they dispense accurate advice aligned with your goals.
Topics that you may not have articulated to another person, but need to speak to your wealth advisor about, may include:
2. Speak to your loved ones, and assign them roles in your estate plan
You will have to share intentions and decisions with those you hold dear, especially if they are to help execute your estate plan. Speak to the people you want to name for each role. This will help reduce any later uncertainty about what to do and what your priorities have been, should they be called upon to make decisions on your behalf.
3. Estate planning is a journey
Be prepared to review your plan on a yearly basis, especially whenever a major life change occurs, such as a new birth or marriage. We know from our 2020 experience that circumstances can change in the blink of an eye. Many wealthy individuals may face uncertainties in areas of investments or business growth – now is the time to talk to a wealth advisor and discuss what solutions can come into play to preserve wealth.
The Bottom Line
Pandemic or no, there is one takeaway that I can offer when it comes to estate planning: Do not delay. While none of us likes to think about dying, improper or no planning can lead to family disputes, assets getting into the wrong hands, long court litigation, and excess money paid in estate taxes. An experienced team will work with you to create a plan customised to your needs, family situation and wealth planning goals.Disclaimer applicable to recommendation
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Version: July 2020