By Mofoluke Keshinro TEP
As we enter the second half of the year, it’s important to reflect on our financial plans and estate plans. The past months have seen significant changes in our economy, necessitating a review of our estate plans to ensure they align with our objectives. In this blog post, we will explore the benefits of periodically reviewing and updating your estate plans, considering factors such as changes in personal circumstances, economic conditions, and the need to make realistic and achievable provisions for your beneficiaries.
The Changing Landscape
The beginning of the year witnessed a flurry of activities, including presidential elections and policy changes by the new administration. From the removal of fuel subsidies to the unification of foreign exchange rates and proposed increases in electricity tariffs, these changes have had a direct impact on the cost of living and our financial plans. Therefore, it becomes crucial to assess the implications of these changes on our estate plans and make necessary adjustments.
Reasons for Review
Several factors necessitate a review of your estate plan. These include changes in your personal circumstances, such as the addition of a new family member, acquisition of new properties, or the unfortunate events of a beneficiary’s death, executor’s death, or changes in marital status. Other considerations may include incapacitation, changes in financial goals, alterations in taxation laws, or inflation rates. In Nigeria, particularly, the current high cost of living makes it imperative for everyone with an estate plan to review it as soon as possible, ensuring that the provisions adequately meet the outlined objectives.
Examples and Recommendations
Let’s consider a scenario where a settlor has created an Education Trust for a named beneficiary with a sum of N200million. However, the settlor has also specified that the beneficiary should attend only Ivy Schools offshore, and the beneficiary is currently in junior secondary school. It becomes evident that this sum will not be sufficient to meet this objective, necessitating a revision of the plan. The settlor should explore ways to include additional assets in the Trust to ensure their wishes for the beneficiaries can be achieved.
In the case of a Living Trust, where the settlor has provided instructions for upkeep and lifestyle expenses to be met from the Trust Fund, it is essential to reassess and potentially increase the provisions stated in the Trust Deed prior to May 2023. This review should align with the current state of the economy, ensuring that the objectives set for the Trust can be realistically achieved with the available resources.
Benefits of Periodic Review
Regularly reviewing your estate plans offers several benefits, including:
- Realistic and Achievable Plans: By updating your estate plans, you ensure that they remain relevant and attainable considering changing circumstances.
- Inclusion of Additional Beneficiaries: A periodic review allows you to include beneficiaries who may not have been initially considered, ensuring their financial well-being and protection.
- Seamless Transition for Beneficiaries: Updating your estate plans minimizes disruptions for your beneficiaries, enabling them to continue their lives without lowering their lifestyles or experiencing unnecessary difficulties.
- Portfolio Adjustments: Reviewing your estate plans provides an opportunity to reassess the composition of your investment portfolio and make necessary adjustments to align with your goals.
- Replacing Executors, Trustees, or Guardians: As circumstances change, it may be necessary to replace individuals or institutions named in your estate plans with those who better fit your future vision for your estate.
Periodically reviewing and updating your estate plans is essential to ensure that your goals are achieved, and your beneficiaries can access and benefit from your assets seamlessly. By considering changes in personal circumstances, economic conditions, and other relevant factors, you can make realistic and achievable provisions for your loved ones. Let this be a reminder to take action and review your estate plans to secure a future that aligns with your aspirations.
Ready to review your estate plans? Contact our team at ARM Trustees today to discuss your specific needs and ensure your estate plan remains effective and up-to-date.