Making the best use of legacy planning in uncertain times
TO say that we are currently living in challenging times is putting things rather mildly. In addition to having to cope with the repercussions of a health pandemic, we are grappling with the effects of an economic, financial and political uncertainty that doesn’t seem to have a light at the end of the proverbial tunnel.
Despite the gloomy backdrop, as licensed financial planners, we continue to work with clients to ensure that there is clarity and certainty for them and their loved ones so that in case of the inevitable, their legacy planning will be effected and fulfilled.
For a successful wealth distribution process, I would like to suggest five simple ideas to keep you on track:
- Set up your estate planning documents
The last will and testament is the legal document that captures your final wishes on how to distribute your assets, to whom, in what manner and timeframe. This document also gives you the opportunity to name your executor (ie the person who will carry out your final wishes) and your chosen guardian(s) for minor children.
With a will, the distribution process can be carried out in a fast-tracked manner with fewer legal hurdles compared to the estate of someone who passes away without one.
For those with minor children, other estate planning tools such as a living trust can be considered to ensure that your family has immediate access to funds as the probate process will take some time – from months to years – depending on the complexity of the estate.
Nominations for your EPF (Employees Provident Fund) and PRS (private retirement schemes) savings as well as insurance policies are examples of other estate planning tools available to you to expedite their access to funds.
- Review your estate planning documents from time to time
You might have already written your will, set up a trust or named your nominees but do these documents remain relevant to your current situation and circumstances?
Over time, we have seen how the legacy planning needs of our clients change as they go through different life stages – from having young children to the college and university-going phase or from having young adult kids to children with their own families.
As your life cycle changes, have you reviewed your beneficiary list and distribution wishes to keep up with these changes?
- Update your financial information
One of the main challenges that families and executors face is knowing what the assets (and liabilities) of the testator are.
For those who have a comprehensive financial plan in place, the information is closer at hand but often the detailed nuts and bolts such as bank and investment account numbers or property title information are not specific enough.
What about information of your digital assets? As such, the assets and liabilities inventory list is a handy document that can facilitate a smoother estate administration process when the time comes. Make it a habit to constantly update it should there be any changes.
- Communicate your wishes
Sharing our last wishes with our loved ones is something that seems like a taboo especially for the older generation.
However, if your intention is to make the transition as easy as possible and to ensure that your wishes are carried out, there is probably no better way than to share your wishes directly with your family and loved ones.
What is your preference for the final rites? How would you like your family to carry out your legacy? Better for them to hear it directly from you than the executor who might only be able to inform you of matters after the fact.
- Ensure your documents are easy to locate and access
The best laid out plans are the ones that can be found and executed. Many testators – in their quest to keep their will contents shrouded in secrecy until their demise – end up putting their will under lock and key in a location only known to themselves, leaving the next of kin oblivious.
To avoid such a situation which can surely derail your testamentary plans, you will need to ensure that your final wishes and important documents can be easily located.
If you have engaged a trust company to keep your will, do ensure that your identification card is kept in a secure yet accessible place, together with other important documents such as your assets and liabilities’ inventory list and insurance policies.
Better yet – let your family know where you have placed it.
The benefit of legacy planning is in the successful execution of one’s final wishes when the time finally comes.
We often think that we can delay this to a more opportune time later. If this pandemic has taught us something, it is that the time is now. Make the most of our time today to ensure the well-being of our loved ones tomorrow.
First published in Focus Malaysia 10/17/2021
Felix Neoh
Director of Financial Planning at Finwealth Management Sdn Bhd
