We have all heard horror stories about endless fights among family members when a bread winner dies. You can imagine how emotionally draining it is to be struggling with the loss of a loved one and arguing with your relatives at the same time to protect your future and that of your children. Death is inevitable and property acquired during a person’s lifetime will have to be distributed to the beneficiaries of the deceased upon their demise. It is important to dictate how you want your property to be divided upon your death during your lifetime. Most people only consider the use of a Will as a way of property distribution after their death. Establishment of a trust is also an effective way of property distribution that is even more private and protects the interests of the beneficiaries.
A Last Will & Testament, better known as simply a Will, is a written document setting out what you want to happen with your assets and other matters upon your death. When a person dies without having made a Will, it is called Intestate Succession. In this case the distribution of his property will be governed entirely by the Law of Succession Act (Cap 160) and may not be in accordance with what the person would have wanted. Planning your Estate through a Will and/or Trust has major advantages including:-
- preventing family wrangles about the distribution of your property among the beneficiaries
- giving effect to your wishes as relates to your property and or how your body should be handled upon your death.
- it is easy to administer a testate estate as opposed to an intestate estate where the wishes of the deceased are not known.
- giving your family clarity on your health care wishes when you are incapacitated and leaving them reassured that they have taken the right action.
A Will becomes effective if it has been executed by the testator and attested by two or more witnesses. It can either be an oral or written and the property listed in the will can only be distributed by the appointed executor.
Establishment of a trust is a suitable option to ensure that the wishes of the deceased remain private and are strictly followed. It establishes a fiduciary relationship and the trustee is compelled in equity to hold the property for the benefit of some person or object in such a way that the real benefit of the property accrues not to the trustee but to the beneficiaries or other objects of the trust. A trustee can be an individual or a company.
A trust can be a testamentary trust which is created by a will and takes effect upon death or a living trust also known as an inter vivos trust ensures that property ownership is transferred to the beneficiaries, such a trust allows property to be added to the trust over time and such property does not form part of the estate.
Below is a side-by-side comparison of Wills and Trusts:-
| Wills | Trusts |
| It is a testamentary document that becomes effective upon the death of the maker. | It is a relationship that compels someone to hold property for the benefit of some other person or object. |
| It becomes a public document once it has been read and as a result open to scrutiny. | It is private and the property under it does not form part of the Estate of the Deceased. |
| It can only become effective upon the death of the maker. | It can become effective either before or after the death of the maker depending on whether it is a living trust or a testamentary trust. |
| It can easily be contested when a beneficiary hasn’t been provided for as required by the law. | It is difficult to contest a trust but it can be contested if there are cases of fraud, coercion or suspicious circumstances. |
| It allows provisions for dependents and an inclusion of other persons renders it contestable and it can be invalidated by the courts. | They are private and allow inclusion of persons who are not close relatives or illegitimate wives who are not wives for the purposes of succession to benefit. |
| It does not fully protect the interest of the minors as the surviving spouse has a possibility of remarrying and the property may end up not benefiting the intended persons. | It enables the protection of the interest of children as it allows a trustee to transact on the property for the benefit of the minors. It also enables provisions specify when the minor will be entitled to any assets held in the trust. |
| The control over the property once the maker is gone is limited. The beneficiary mostly decides what they want to do with the bequests. | It ensures one remains in control of the property even when they are gone or when faced with their own incapacity. |
| It is cost effective to set up for it involve the drafting, execution and the attestation and it becomes a valid legal document. | It more expensive to set up for it must be actively managed after it has been created and it becomes useless unless it is funded. A trust will only be beneficial if assets are transferred into it. |
A trust and a Will most of the times accomplish similar objectives. A trust allows realizing of some objectives that a will cannot. Choosing wisely is the important thing after considering the beneficiaries and the expenses you are willing to incur.
Please reach out to us (wmuthundo@aliumlaw.com) if you require specific advice on Legacy Planning, Wills & Trusts.
