Borneo Post with the expert help of Rockwills Trustee Bhd, the leading specialist in estate planning having pioneered wills and trust 24 years ago, is publishing a regular Q&A column on estate planning. It will feature questions which readers have in mind but don’t know who to ask:
Question 1: I have two wives. They live under the same roof and on good terms. Can I name both of them as beneficiaries in my will?
Rockwills Answer: From the legal point of view, you can name both of them as your beneficiaries and distribute your assets according to your wishes.
However, the issue that you should look at is not whether you can name both of them in your will, but rather, how you should split your assets between them.
Our experience of seeing countless families suffer from relationship breakdown have taught us that writing a will properly requires careful though on the likely outcome from the distribution instructions.
We would ask client to stand into the shoes of their beneficiary and try to foresee how he or she would react on the contents of the will. Do bear in mind that you can only keep the contents of will confidential when you are still alive, but not when you have passed on.
Hence, eventually all beneficiaries would know each other’s entitlement in the will. Although currently it does seem that both your wives are on good terms, the situation may change in the future especially when it comes to the matter of inheritance.
If you feel that apportioning your assets for distribution to both wives will not make either happy no matter how you do it, a solution is to create a trust for each of them where they receive separately identified assets.
Unlike the will which is not confidential, a trust is completely confidential and each wife through the trust endowments will not know what the other receives.
Choosing the right executor is of paramount importance in your situation too.
We suggest that you take into consideration your beneficiaries’ feelings and financial needs when writing your will. It is best that you seek the help of a professional estate planner who can fully assess your situation and give proper advise for the best possible asset distribution.
Question 2: Is trust only for the rich? I do not have lots of assets, but I do wish to create a trust for my family’s expenses. What can I do?
Rockwills Answer: It is a common misconception to think that trust is only for the rich although it is true that you need to have assets in order for a trust to be set up.
In your case, sufficiency of funding is essential in ensuring that your trust is able provide for your family’s expenses in the long run. In planning for your trust, we suggest that you find out how much funds you will need in order for your trust to be viable.
To do this, you will need to have a good idea of how long you would need the trust to run. We suggest that you take a conservative estimation on how many years from now it would take in order for your youngest child to attain financial independence.
The next step is to estimate the amount of their monthly expenses, which should cover their basic day to day needs for example, living, medical and education expenses.
Then you can also include in other expenses such as upkeeping and loan payment for your house, rewards for academic achievements, birthday gifts and more importantly clearing your own debts such as credit cards debts and personal loans.
Once you have the figure, you can consider taking out a life insurance policy using the fund required as the sum assured. This is one of the most effective fund creation solutions to fund your trust. From thereon, you can transfer the ownership of the insurance policy to your trustee where he could use the insurance money for your family according to the trust which spells out all the terms and conditions that you want effected.
This Q&A Column in published as a joint public service and educational initiative with Rockwills Trustee Bhd. Please email your questions related to Estate Planning to [email protected] or Rockwills’ training and business development senior manager Sam Chan ([email protected]).