Estate planning

[voltage]

Thinking about updating my will. As most people on this site are passionate and consumed by direct share investing it is unlikely any beneficiary would be.
I would be interested in how people have planned for someone to take over their share portfolio. Should the shares be held in a trust?

[777]

Why would you want the shares held at all. The beneficiaries should be able to do what they wish with their share of the estate. You should not rule from the grave.

[Harvey Specter]

Why would you want the shares held at all. The beneficiaries should be able to do what they wish with their share of the estate. You should not rule from the grave.Depends on the age of the beneficiaries, I agree.

[BIRMANBOY]

Sort of depends on who and what are the beneficiaries don't you think?
Why would you want the shares held at all. The beneficiaries should be able to do what they wish with their share of the estate. You should not rule from the grave.

[Brovendell]

In my will I have left each beneficiary a % of my estate. This allows for inflation distorting the values of different assets. Also, you wouldn't want to leave one beneficiary your shares in Wynard Capital and another your shares in Auckland Airport as a rough example. If you set up a Trust you can write a Memorandum of Wishes for the future Trustees as to how you would like your Trust's assets handled. The Trustees of said Trust are under no legal obligation to follow your wishes. I also am not a believer in ruling from the grave. However, I don't think beneficiaries should receive bequests at a young age excepting for educational purposes.

[voltage]

ok thanks for those points, you are quite right that you should not rule from the grave. I am concerned whether the beneficiaries have the financial acumen to make good decisions. There are many vultures out there. I suppose it is about getting good independent financial advice which is quite difficult to find these days.

[percy]

I am a trustee of my late friend's trust.His wife and their lawyer are the other trustees.
His wife keeps a bit of an eye on the market,although for her comfort we increased the amount of bonds, the trust holds.
Having the lawyer onboard means the trust is "water tight",as we do everything by the book..
The trust performs well.
Warning.Make very sure you have the right trustees.

[jmsnz]

ok thanks for those points, you are quite right that you should not rule from the grave. I am concerned whether the beneficiaries have the financial acumen to make good decisions. There are many vultures out there. I suppose it is about getting good independent financial advice which is quite difficult to find these days.

I am not sure there is actually such a thing as 'good independent financial advice'. This is an interesting topic as my wife and I get older and see our children become independent and (soon) into relationships themselves. Our 'solution' has been to establish a trust for them each into which they can, if they wish, dissolve our trust assets into. That way it gives some protection against them getting rogue partners and some independence for them to hold or sell assets to suit their individual needs. It will rely on good trustees as well though.

Still, at this stage my plan is that I will live (just) long enough to spend it all anyway!

[Harvey Specter]

Still, at this stage my plan is that I will live (just) long enough to spend it all anyway!Good luck on your 'Estate planning'.

[voltage]

jmsnz, your decisions are what I am looking at, protecting assets from rogue partners. I have been to a few lawyers and the advice does differ from trust protection to no trust protection. Another way is to have a testamentary trust. Percy you are quite right about having the right trustees. Estate planning can get complicated very quickly.

[Harvey Specter]

jmsnz, your decisions are what I am looking at, protecting assets from rogue partners. I have been to a few lawyers and the advice does differ from trust protection to no trust protection. Another way is to have a testamentary trust. Percy you are quite right about having the right trustees. Estate planning can get complicated very quickly.If you are only concerned with rogue partners, and dont want to control the beneficiary themselves, then a testimentary trust, with the beneficiary as one of the Trustees to guide there own fate seems reasonable. That will keep the funds separate from relationship property, but still give the beneficiary control.

Alternatively, get them to set up their own trust before they enter a relationship, which you can then bequest to. I think there are issues with one trust giving money to another so best talk to a lawyer about that (I dont think a trust, or string of trusts can last more than 80 years???).

[jmsnz]

jmsnz, your decisions are what I am looking at, protecting assets from rogue partners. I have been to a few lawyers and the advice does differ from trust protection to no trust protection. Another way is to have a testamentary trust. Percy you are quite right about having the right trustees. Estate planning can get complicated very quickly.
Voltage, More detail that might help. We are actually in the middle of the process at the moment and are establishing a testamentary trust (TT) for each of our children (who are in their late teens) into which any distributions from our trust can be placed. Having those TT's established well before they are in relationships means that those assets will always remain separate from their personal assets so safe from any rogue partner as they are never personal assets.

Our memorandum of wishes will then outline what we would like to happen with the existing trust and TT's. This I understand could include suggestions about apportionment of trust assets, suggestions on appropriate trustees etc. Of course those suggestion can be ignored, but then I won't be here to care really.

When we discussed the process with the kids they raised some really interesting points, including the issue of wanting to retain some assets within a shared trust. We have never shied away from discussing the family finances with the kids and so they have a fairly good understanding of the values we are talking about and the decisions we have made along the way. Hopefully that will get them in a better position to make the right decisions if they have to.

That gives me some (perhaps false) confidence that they will act responsibly if I have been unable to spend their entire inheritance before I depart this world.

[iceman]

I am not sure there is actually such a thing as 'good independent financial advice'. This is an interesting topic as my wife and I get older and see our children become independent and (soon) into relationships themselves. Our 'solution' has been to establish a trust for them each into which they can, if they wish, dissolve our trust assets into. That way it gives some protection against them getting rogue partners and some independence for them to hold or sell assets to suit their individual needs. It will rely on good trustees as well though.

Still, at this stage my plan is that I will live (just) long enough to spend it all anyway!

I have done exactly the same. Our children all have Trusts setup into where their inherited or gifted assets will go. The wishes are for the Trusts to then lend them money for their use as they choose, a debt that would be forgiven later in their lives. A lawyer has been appointed as a Trustee in each Trust but as Percy says, choosing the right Trustees and managing Trust affairs correctly, is of paramount importance.

[artemis]

I have not gone down the trust route. Nor have I set down wishes for after I fall off the perch.

Here is the approach I have used.

- set up children and grandies with Kiwisaver (kickstart only) and shares for the adults and Fisher Growth Fund for the littlies. Not huge amounts as the intention is a bit of financial literacy by osmosis over time.

- I pay the grandies pocket money - around $150 pm once they are teenagers, a bit less before that. No strings attached. Once working (one now is, apprentice so not flush) I pay the same amount into Kiwisaver.

- Specific bequests to the grandies, a decent amount, also no strings once they reach 16. My lawyer didn't like that, too young she said. But if they blow it or make mistakes, that's OK by me.

- Not bothered about rogue partners. But I have discussed relationship property, inheritances and intermingling.

- They all know they can talk money matters to me any time.

- I have appointed one as executor, and set up a shared document on Google Drive which has account numbers, passwords, vital stats, what documents are where, who to advise, final wishes (eg organ donation, disposal). Also some thoughts about assets and the family business - what is worth keeping and why etc. (The executor knows the doc is there but refuses to look at it.)

And finally, the main reason I have taken this education / hands off approach if that I wanted to make sure they don't get overwhelmed if they suddenly find themselves well off but without me.