The importance of estate planning and a will
With everyone so busy living in the present, many people often overlook the realities of the future and the importance of proper planning for the same. When Bahamians think about planning for the future, it often involves visualizing a scenario of being alive and not deceased. We limit our future to financial savings goals or meeting monthly life insurance premiums, but there is so much more to be done. In order to effectively prepare for the future, we must plan for one that does not involve us but benefits those we love and cherish once we depart this earth.
The reality is many Bahamian adults don’t have an estate plan or a will. Whenever there is an untimely demise, this fact can cause all kinds of problems, not just among family members but also other assets one may have and their family’s ability to access them. Estate planning is simply making plans for the transfer of your assets, but not all of your assets. A will is a legal document that lays out the fate of your property after your death.
Some assets, like life insurances or joint savings accounts, cannot be disposed of by will. For instance, a joint savings account will become the savings account of the other person on the account based on the right of survivorship. In the context of life insurance, no matter what the will provides, the payout will only go to the named beneficiary on the insurance documents. Other assets such as cash, jewelry, cars and real property can be distributed, by will, to your designated beneficiaries. Simple, right?
So, I know that people don’t want to talk about death because, for some strange reason, they may feel as if death will come their way sooner than expected. Sorry to be the bearer of bad news but death is coming to us all eventually, whether we like it or not. Here are a few things you should know when preparing your will:
• A will has to meet certain requirements to be deemed valid;
• It has to be in writing;
• It has to be signed by the person making the will;
• The person making the will has to have intended at that time to sign the will;
• The person making the will must have signed it in the presence of two or more witnesses at the same time;
• The witnesses must sign the will in the presence of the person making the will; and
• The person making the will has to be at least 18 years of age and of sound mind.
Drafting a will does not have to be costly, but it should be done. Did you know that if you die without a will in The Bahamas it is called dying “intestate”? If an intestate person (someone who dies without a will) leaves behind a living spouse, the spouse will receive all the estate’s assets. If the intestate has a spouse and a child or children, the spouse receives half of the estate and the children, whether in or out of wedlock, will share the other half equally. Once the child can provide proof of paternity or maternity such as a birth certificate or DNA test, they are entitled. The estate of an intestate with no spouse but living children goes to the children in equal shares. Without a spouse or living children, the estate passes to any grandchildren.
A very important thing to know is that the Inheritance Act of The Bahamas does not recognize common law marriages, which are relationships where the couple has been together for a very long time but not legally married. In fact, there is no law in The Bahamas that provides for the recognition of common law marriages. Many people in so-called common law relationships own assets jointly, but if one dies the surviving person would only be entitled to ownership of those assets based on the right of survivorship but not any assets owned solely by the deceased person.
Everyone should consider the idea of some basic estate planning, even those with few assets. Spending a little time to get all your affairs in order is one of the best gifts you can give your family and the people you love. An attorney and a certified financial professional can assist with an estate plan. The most common way to start an estate plan is creating a trust that can hold real property or money for growth over time and then later distributed to a beneficiary. A trustee will have to be identified and that person will hold title to the property or the bank account while it increases in value or earns interest, and after a set time – based on how you wish to have it set up – allow funds to be dispersed in intervals or all at once to people of your choosing.
Carefully think about who you want to receive your assets after your death. Generational wealth begins with you! Take a serious look at getting an estate plan and will. It doesn’t matter how young you are because it will only help the future of your family for generations to come.
• Quinton C. Lightbourne is a certified financial planner with the Chartered Institute of Bankers in Scotland and vice president of the Bahamas Investments & Securities Business Association (BISBA). E-mail: quinton_lightbourne@ hotmail.com.