From time to time articles in periodicals or magazines set out the advantages of estate planning through the use of wills and/or family trusts. These advantages are generally summarised as ensuring that your heirs receive their intended entitlements after you have passed on and that your assets are protected while you are alive. However these articles do not always make clear the benefits for the average person. Estate planning is not only for those with large assets, it is for everyone and it does not cost much.
Older People and Estate Planning
Older persons who have owned a home for a number of years are often surprised by the huge increase in value of their assets, which will form their estate on their death. This is especially true in the Auckland area where any house will be worth at least $500,000.00 in today’s market.
Young People Need Wills Too
Younger people whose homes may have large mortgages also need to consider their increasingly valuable estates as they progress through life and reduce those debts.
A legal adviser can draft standard wills for a few hundred dollars, an amount that is minimal compared to the costs of legal advice or legal proceedings which may be required to remedy an unfair distribution of an estate when no will has been made (Administration Act 1969).
There is peace of mind in knowing that assets will be passing as intended by the will-maker.
Risks with DIY Wills.
Homemade (or ‘off the shelf’ type) wills are usually valid but any defects in their wording or signing and witnessing does result in additional and sometimes considerable cost and delay in having them proved in the High Court. A lawyer is inevitably required to file the will in the Court so it pays to have the will drafted properly in the first place.
A Family Trust
A family trust can protect assets, which can survive a business failure or the family home while the financial problems are worked through. The cost will depend on the level of protection required but is justified by the benefits. A family trust may be a bit more costly to set up and involve some ongoing administration but the benefits on protecting assets will far outweigh the costs.
Estate planning is for everyone and should be regarded as insurance for the future. It may not prove to be necessary but if it is, your heirs will thank you.