August 27, 2019

As we grow through life and accumulate wealth and possessions, it is essential that we develop a clear plan on how these possessions will be managed when we are no longer around, not only to be passed on to beneficiaries, but to also yield maximum benefits for them in the long term. It is advisable that this decision is not deferred till the eleventh hour because it requires much detail. The process of creating this plan is referred to as Estate Planning.

What differentiates Estate Planning from Wills?

The major point of difference is that a will addresses the distribution of one’s assets while the estate plan covers arranging the distribution of assets to ensure that beneficiaries derive maximum benefit from it. Usually, this will include naming a guardian or trustee who can ensure that appropriate protections are in place for the beneficiaries to ensure smooth transfer of business assets.

A lot of professional guidance is required for the different phases that make up this process and by inference, professionals in various fields will assist. The roles of these professionals will depend on the phase of the planning. For instance, you may require a life insurance professional to help with the technicality involved in passing money directly to your designated beneficiary, essentially bypassing the complications created by probate. A lawyer will provide advice on the process as well as draft the estate plan, etc. Another important professional required for this is an asset manager. This is quite necessary because a bulk of the plan revolves around managing the assets for consistent growth.

For the purpose of this conversation, an asset is a financial resource. It includes everything you own, ranging from money in the bank, to your Retirement Savings Account, your car, your house (for homeowners), even to personal valuables like jewellery. All these resources are included in the estate planning process.

Some functions that asset managers cover in estate planning include:

I. Preservation of liquid assets against inflation.
II. Frequent analysis of instruments for strengths weaknesses.
III. Assessment of investments for risk.
IV. Diversification of trustor’s /beneficiary’s portfolio

In achieving the asset management objectives, asset managers can use some or all of the below:

i. Asset Protection Trust Strategies: This helps to ensure that one’s assets are shielded from creditors. This covers situations where an asset owner is indebted. It is an instrument that ensures that the asset owner settles with his respective creditors on favourable terms and avoids costly litigation, without tampering with the trust instrument.

ii. Assigning assets to trusts: This provision helps with efficient management of assets. Under this method, assets are placed in the hands of third parties to be managed for beneficiaries.

iii. Insurance Protection: This is applicable for all assets as it provides an extra level of protection.

iv. Limited Liability Partnership: This protects assets by having both the trustor (general partner) and beneficiary (limited partner) in the partnership so as to ensure smooth transition of assets.

A competent asset manager can ensure that you do not worry about preserving the value of your assets; your Retirement Savings Account (RSA) being an important one. Take the Pensure Advantage today and allow our asset managers preserve the value of your funds.
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