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Estate Planning



It is never too late or too early to plan your estate.  Many people may think that estate planning is something needed or done only by very wealthy people but this is far from the truth. 


No matter how small your house, property or bank account is, deciding who is going to inherit your wealth is important for many reasons.  The beneficiary or beneficiaries of your belongings or property can be your own child, spouse, relative or close friend and what matters is that whatever you would have earned in your life time goes to the people you wish to pass your assets to and that they are distributed according to your wishes, not otherwise.  People also leave their wealth such as land or monetary donation for charitable organizations, churches, for a social cause or protection of the environment. 


Four of the main instruments used for distributing wealth include Wills, trusts, Powers of Attorney or foundations.   Trusts and foundations may be either onshore or offshore depending on the needs of the person using any one of those instruments. 


Quite often it is possible to make a will by word of mouth in the presence of an attorney and witness, but most jurisdictions may request that the distribution or passing on of one’s estate be done through a written instrument, which may include a codicil, a will or Deed, as in the case of a trust or foundation, to avoid future confusions and so that the persons wishes can be properly archived.


All of these legal documents should be properly written to avoid any misinterpretation of wishes or ambiguity, especially if the settlor’s death were to be untimely.  As a result, getting an attorney involved in the process helps to ensure that whatever instrument is used is properly executed and drafted and done in the correct fashion according to the law. 


Whenever someone dies without leaving a Will, the outcome may be devastating as this may create divisions amongst the members of the family.  If the case is taken to the court, the court decides what happens to the estate and may choose to following statutory formula for distributing the assets, which may end up in the hands of distant relatives or family members to whom the decease may not have wanted to pass on his or her wealth. The court procedure may also be very costly and time consuming and be financially draining if there are limited funds and resources available for going through with these types of procedures. However, there is also the possibility of the court making the right decision according to law.  In the event that unsettled estate is not taken to the court, property may end up derelict due to family feuds which may go on for a lifetime.  


One of the main problems that some people may have with Wills is the fact that they are public documents.  Almost anyone can visit the Registry and request the copy of a Will for his own reasons.  People who therefore want greater privacy and wish to avoid public involvement in their personal and family affairs may opt to set up an offshore trust. 


Prudent estate planning with a Will includes naming the beneficiaries, both contingent and primary, of life insurance policies, designating one or more beneficiaries to inherit your estate in the event that your spouse passes before you do and regularly reviewing the Will with the lawyer.  Lawyers often recommend that this be done once every five years.


Testamentary trusts may be used for a number of purposes which range from employee pension funds, protection from spendthrift habits, tax planning and philanthropy.  Other uses of a testamentary trust include splitting income in a way that is tax effective, protecting the entitlement of a beneficiary from vindictive creditors and providing an effective means of asset management in situations where the beneficiaries are unable to manage the assets themselves if they are minors, incapacitated or have very little knowledge about proper finance management.   Family trusts are also an option which exists for family estate planning and management. 


Where an offshore trust, for example, is formed for the purpose of a Will or estate planning, assets may be left to be given at a time when the beneficiary reaches a certain age, upon the death of the settlor or upon the occurrence of a particular event such as marriage, sickness or graduation.  In a trust, not only does the settlor have the power to plan his estate, he is also able to control his succession and how his estate is used by stating specific clauses or conditions for the distribution of the estate. 


The attorney or solicitor appointed to administer the trust is expected to do so according to the wishes and demands of the settlor, breach of which will result in prosecution under the law.  Many people who form trusts may opt to appoint a protector, who basically plays the role of police man to ensure that the trustee is administering the trust desirably.  A protector of a trust may be given the power to overthrow the decision of the trustee as may be clearly indicated in the Deed by the settlor.  In many jurisdictions, the settlor may appoint himself or a trusted colleague or family member as trust protector.


Like a trust, a Power of Attorney (POA) is typical of common law systems.  In estate planning, a POA serves as an authorization to act on behalf of the estate owner with regard to distributing estate or assets.  This duty may be given to a member of the family, spouse or friend as well as a lawyer.  Powers of attorney are issued to ensure that a Will is properly administered and that its contents are distributed as desired.  The person who issues the power can be referred to as the donor, principal or granter and the individual acting on his behalf is called an attorney-in-fact or agent.  A power of attorney issued orally is generally accepted by the court, but institutions such as banks may require a written document.  A power of attorney may also be either general or limited/special. 


An enduring power of attorney is particularly wise to set up as it allows for a nominated attorney to act on someone’s behalf in managing their affairs in the event that they incapacitated and unable to make decisions. 


Estate planning is important.  Estate planning does not only involve distributing wealth in the event of death, but also assuring that the future of loved ones is protected.  The possibility of a many years of retirement before one’s own passing must be considered, since some source of steady income is needed during retirement for survival until old age.  Offshore vehicles have been very effective in estate planning in providing privacy and being a wise way to optimize taxes.



(c) Caribbean Land and Property July 2009


Last Updated On 19 Nov 2019