A number of clients ask me about why they should bother to have an estate plan. The thinking of many clients is that if they managed to handle their affairs till now without having a proper estate plan in place, why should they bother with one now? The need for, and the specific mechanics, of an estate plan are dependent on the case at hand. No plan is the same, and the details of it depend on a number of factors including, the type, value and nature of the assets, the family set up and the number of dependants and heirs and the long-term goal of the family, amongst others. The below provides just a handful of reasons as to the importance of having an estate plan in place: Protection of family wealth I would say that, in most cases, the main goal of any form of estate plan is to protect the family wealth. The next, is typically to increase its value, but protection is a top priority for most families. Having a carefully crafted estate plan in place provides this benefit in a multitude of ways. Firstly, by ensuring that the assets are held and managed by licensed professionals who would have vast experience in handling such wealth. Secondly, and linked to one of the below mentioned points, by ensuring that the wealth is carefully distributed to future generations whilst ensuring that the protection of it, remains a top priority, also in the best interest of the same future generations. Avoid family issues by centralising family assets One of the clearest benefits of having an estate plan in place, which is often overlooked, is the simple fact of having the family assets held in one central register, typically held by a trustee. Many times, upon the passing of a family member, the heirs are left trying to figure out what assets were owned, let alone, where those assets can be located. Having everything held by a professional trustee, makes this process much easier and ensures that no wealth is lost. Ensure future generations are prepared for the wealth they will receive A lot of planning typically revolves around young children, who would be unable to administer the wealth and assets they would receive. An estate plan ensures that future generations are prepared for the wealth they will receive and are also able to administer it. This is done by ensuring that the wealth and assets are not passed on to them all at once, or at least, not until before the administrator, typically the trustee, determines that they are able to manage the family assets. Provides peace of mind Linking to the previous point, an estate plan provides peace of mind to the whole family. This is achieved in two ways, firstly by ensuring that future generations are prepared for the wealth they will receive, and will only receive such wealth when they are mature enough to manage it. Secondly, by knowing that the wealth which the family generated over (possibly) decades will be administered by a team of professionals who will ensure the protection and also accretion of such wealth. As important as it is to ensure the estate plan achieves the desire of the family, it is just as important to ensure that the timing of such a plan is right. Far too many clients leave their estate plan too late when there isn’t much which can be done, or the exercise then becomes more costly. Nicky Gouder is a co-founding partner of Seed, an internationally focused research-driven advisory firm based out of Europe (Malta) and the Middle East. www.seedconsultancy.com | nicky@seedconsultancy.com
