Estate Planning

Estate Planning

The knowledge that we are all human and will pass on someday is a prospect that most people find uncomfortable to think about and plan for.  Nevertheless postponing planning for your demise until it is too late will put your loved ones in a vulnerable position and you are not going to be able to help them at that point. Planning for the inevitable ensures that your  beneficiaries will receive what you intend for them without them having to go through the worry and expense, unnecessary taxes or family feuds that heirs can face. Estate planning is important regardless of the size of your estate. It allows you, while you are living, to decide and ensure that your property will be inherited by the people you intended.

WillLast Will

To begin making your estate plan, you will need to make use of an estate planning instrument called a Will. This instrument is in essence a rule book for distribution of your assets as directed by you and attested by witnesses. This ensures that no squabbles arise among your heirs. However if you have considerable wealth and a Will does not suit your needs there are other options to consider.

A Trust is an arrangement under which one person, called a Trustee takes care of a property for another person called a beneficiary. This type of arrangement is created on your death. You also have the option to become the Trustee of your own living Trust, maintaining complete control over all property held in Trust. A living Trust is quite simply a Trust that you create while you’re alive, rather than one that is created at your death. Several different kinds of living Trusts can be set up to help you avoid probate, reduce estate taxes, or set up long-term property management.


Trusts have been used for centuries by high net worth individuals to protect their wealth and to ensure that it is retained within their family. These instruments however can be made use of by most individuals regardless of their wealth status. Some commonly used reasons for setting up a Trust include:

  • To Avoid Probate.  Probate is the legal process of settling an estate and this could be very time consuming and expensive, especially when people do not have a Will, in which case you die “Intestate”. This means that the laws where you live specify who gets what parts of your estate.  A Trust bypasses the probate process and descendants gain access to your assets and property more quickly.
  • To Minimize Inheritance Tax (IHT) which refers to a charge on the value of your Estate after deduction of the tax exempt amount. The percentage charged varies depending on the country. In the UK for example this charge is 40% of the value assets in excess of the exemption and most Swiss cantons charge Inheritance Tax on transfers beyond spouses and children.
  • To Protect your estate
  • Trusts structure gifting to minors and those who cannot provide for themselves
  • To provide funds for educational purpose
  • To provide benefit to charities and institutions
  • Increased Privacy

It is important to note that any Inheritance Tax planning should in any case be considered sooner rather than later as many strategies tend to achieve their plan objectives several years into the plan.

Commonly used Tax planning solutions are as follows:

  • Bare Trust
  • Loan Trust
  • Discounted Gift and Income Trust
  • Reversionary Interest Trust
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