ESTATE PLANNING

A Guide to Estate Distribution and Planning

by Jay Chauhan *

The process of distributing an individual's assets after their death can be a complex and delicate matter. This is where probate comes into play. Probate is the legal right given to an executor, who acts on behalf of the deceased, to carry out the distribution of the estate to the beneficiaries. In this article, we will explore the importance of probate, the role of the executor, the significance of open communication with beneficiaries, and the necessity of proper estate planning.

When it comes to the distribution of assets, the first step is to locate the original will. Often, the will is kept with the lawyer who assisted in its creation, or it may be stored in a bank safety deposit box. It is essential for the executor to be aware of the will's location to initiate the probate process efficiently.

Keeping the contents of a will a secret and revealing it only after a person's death may lead to unnecessary complications and strained relationships among beneficiaries. Instead, it is highly recommended to discuss inheritance matters with the beneficiaries during the testator's lifetime. By openly communicating about the intentions and wishes expressed in the will, the testator ensures that the beneficiaries have a clear understanding of their inheritance. This transparency fosters healthier relationships and minimizes potential conflicts after the testator's passing.

Financial institutions, such as banks, typically freeze the assets of the deceased until probate is issued. Banks prefer not to take any risk in disbursing funds to beneficiaries who may have disputes or conflicting claims. They rely on the courts to handle such matters. Therefore, it is crucial to prepare a comprehensive list of all assets when drafting a will and to inform beneficiaries of the assets they are set to inherit. By doing so, the chances of conflicts arising after the testator's death are significantly reduced.

Selecting an executor who is acquainted with the beneficiaries can greatly contribute to the smooth distribution of the estate. An executor who knows and understands the individuals involved can address any potential conflicts or disagreements more effectively. By appointing an executor who is familiar with the beneficiaries, the testator ensures that the distribution process is handled with care and sensitivity.

Secrecy surrounding a will increases the likelihood of disputes among beneficiaries. It is in the best interest of all parties involved to maintain open lines of communication and ensure that everyone has a clear understanding of the testator's intentions. This can be achieved through discussions and conversations about the estate plan, promoting transparency and reducing the likelihood of conflicts.

Estate planning is a vital aspect of preparing a will and should be undertaken in consultation with a qualified lawyer. Simply writing a will is not sufficient, as proper estate planning allows for the optimization of tax savings and the reduction of court fees. In Ontario, court fees can be substantial, amounting to approximately 1.5% of the estate value. By structuring ownership of properties with the right of survivorship, one can potentially save on court fees. However, such decisions should be made only after careful consideration of the risks involved, particularly regarding second-generation beneficiaries.

In the case of corporations, estate planning can involve allocating common shares to the children and transferring equity shares to preferred shares with predetermined redemption amounts. These strategies require expert legal advice and should be executed with caution. Estate planning is a complex matter that necessitates the expertise of a competent lawyer with specialized knowledge in this area of law.

Planning your investments in older age is equally important, ensuring sufficient funds for retirement. This process should be integrated with insurance arrangements and estate planning considerations. Overcoming the tendency of professionals to deal with clients separately, a collaborative team effort can be employed to harmonize investment strategies with estate plans. By coordinating these aspects, individuals can have peace of mind and a comprehensive plan for the future.

In conclusion, probate is a crucial legal process that facilitates the orderly distribution of assets upon an individual's passing. By understanding the importance of probate, the role of the executor, the significance of open communication with beneficiaries, and the necessity of proper estate planning, individuals can ensure that their final wishes are respected, their loved ones are taken care of, and potential conflicts are minimized. Embracing proactive estate planning and transparent discussions about inheritance can promote harmony, preserve relationships, and provide peace of mind for both the testator and the beneficiaries. Remember, planning for the inevitable is not only practical but also an act of love and consideration towards those who will carry on your legacy.

* Jay Chauhan is a lawyer in Canada, England and India and is a CPD lecturer and is author of a novel called Love in the Empire which describes challenges of legal career in the British Empire.