Retirement Planning – Managing Your Investments (IV)

Today we will take up ‘Estate Planning’ as the second and final component of ‘Legacy and Estate Planning’ under ‘Managing Your Investments’.

Estate Planning: When we talk of Estate planning, we are not referring to the planning for the acquisition, development, and management of land and buildings (even though land and buildings might feature in your Estate planning in the context here). Instead, Estate planning and management here refers to the process of providing directions on how your assets and liabilities (collectively referred to as your ‘Estate’ should be treated in the event of your incapacitation or death.)

Caveat: Your religious affiliation, state laws, culture and traditions might impose boundary conditions around the discretionary room you may have on planning your Estate. For instance, Islam has clear and firm rulings on inheritance, child custody, Wills, Trusts, etc. that Muslims are obligated to comply with. Hence, whatever, we say here should be seen through those lenses and the reader is enjoined to take this matter matter seriously by striving to do what is right, fair, and best.

Benefits of Estate Planning: Planning for your Estate when you are alert and of healthy mind and body is important for many reasons. First, it helps you establish what you own, and probably owe, in great detail that might otherwise not be apparent to you or those close to you. This would make it possible for you to decide precisely how you would want your Estate to be shared if you were to pass on now, within the limits mentioned above. Proper Estate planning would help ensure that your heirs and other beneficiaries are not deprived of some of your assets because they are not even aware that you owned them in the first instance. Specifically, minor dependents can be protected and you can continue to contribute to worthy causes even after your demise. Outside recognised traditions and without valid documentation, your loved ones might be entirely at the mercy of state laws before they can gain access to your assets and the process might drag endlessly without much regard to their living situation. In addition, unscrupulous persons might throw their hats into legal contests, thereby making things messier and more difficult for your loved ones and rightful dependents.

One of the challenges of Estate planning is that it seems distraught and suggestive of imminent finality. In reality, the process is educative and strengthening. As importantly, it helps you provide further protection to the people you loved all your life. Try the exercise today and see how it opens your mind to the reality that it is neither intellectually difficult nor emotionally stressful as imagined.

Estate planning process: In Nigeria, as in many other countries, some aspects and documentations on Estate planning are important. These are a ‘Will’ that lays out your instructions on how your assets should be shared to whom, what, how and when; A ‘Trust’ that can also be used to transfer assets to a beneficiary through the administration of a ‘Trustee’; A Guardianship that is about appointing a guardian who will continue to care and provide for minors; and a ‘Power of Attorney’ as a document that grants a trusted person you name as your Agent to act on your behalf. The scope of the permission to the Agent can be as broad or limited as you may opt is allowed by your religion, state laws or tradition.

Procedurally, Estate planning is akin to drawing your statement of net worth that we discussed in the past and deciding on how assets and liabilities should be treated in the event you can’t make those decisions due to incapacitation or death. The process will entail:

1. Taking stock of all your possessions such as household items, bank accounts, cars, shares, houses, farmlands, investments, obligations to others, etc.,
2. As may apply to you, deciding on who (persons) and what (say, charities) you would want to bequeath specific assets to,
3. Document your directives in a Will within the limits applicable to you. Note that there are requirements as to what will constitute a valid Will. For Muslims, a Wasiyyah may not only communicate some legitimate applications of a part of your assets but also document certain matters of life that you want your loved ones to take seriously,
4. If you wish, you can consider establishing a Trust for a purpose or purpose(s) that you can define,
5. Where required, appoint an Executor.
6. Where required, funeral desires and arrangements can be provided for, etc.

Get professional advisors! In planning your Estate, you would need to involve professionals to help guide you in meeting various requirements. A Qadhi or Sheikh can help advise a Muslim on what they can and cannot do as regards their assets and indeed what they should do as regards their liabilities. A lawyer can advise on what individuals can and should do taking into consideration their cultural traditions and the requirements of the law. A financial advisor can advise on wealth protection, succession, etc. In all cases, it is imperative to get your documentations right so that your instructions are not deemed invalid and of no effect when you are no longer available to make rectifications. As our net worth changes over time, you will need to take a frequent look at your instructions and make changes as may be required. In so doing, ensure that the changes also meet all documentary validity and legitimacy requirements.

Again, all the above are personal and situational, as your religion, culture, and state laws can influence and shape what can be done, sometimes without regard to your wishes or even instructions. Involving the right professionals can help you ensure that you do what is both right and enforceable.

Next week, we will take up Health Management.