Developing a comprehensive estate plan is a critical part of the overall wealth management process. Essentially, there are two main aspects to an estate plan, wills and personal/family trusts. In this column, we will deal primarily with the importance of wills and highlight some of the main points why it is important to plan your estate today rather than later. In a related article on this web page, we shall walk you through the main concepts of personal trusts.

As a first step, try asking yourself the following questions and you will see why it is important to begin the process of estate planning earlier while you are still in good health:

•  What will happen to my assets upon my death?

Without a plan: Your beneficiaries (spouse, children or relatives) may fight among themselves over the control of your assets and if the disputes can not be resolved amicably, the matters will be settled in the court of law, which can be very expensive and worse of all very public.

With a plan: You pick the executioner to your estate and you assets shall be distributed in an orderly manner according to your wishes.

•  How can I be sure my money will stay in my family?

Without a plan: Your spouse may remarry and the new family may benefit from your assets. If your child passes away prematurely, your daughter or son-in-law and a new spouse may end up with your assets. Worse of all, in the event of a “blended” family from different marriages, your priorities are not likely to be considered. Children from different marriages may not be treated according to your wishes.

With a plan: A personal or family trust can help to protect your assets and you can decide who will be the beneficiaries to your estate as well as the distribution process.

  •  Who will look after my small children?

Without a plan: Usually, close relatives will take over the responsibility but there is no guarantee that your children will receive the kind of upbringing and education according to your wishes.

With a plan: You can nominate the guardian of your choice to look after your children or you can establish a trust to provide your children with living and education allowances.

  •  Will my spouse and children be able to survive financially?

Without a plan: Your family may not have the funds necessary to maintain their current standard of living. Even if they do, your spouse may not have the ability to manage money.

With a plan: Your family can potentially maintain their current standard of living through the protection of life insurance and possibly a family trust.

The Importance of Wills

Your last will and testament serves as a blueprint for the distribution of your assets to your beneficiaries upon your death. But keep in mind that your will is a fluid document that should be reviewed periodically, say, every 5 years to ensure that your will remains consistent with your current goals and feelings. Here are a few tips to keep in mind when drafting up a will:

•  Power of Attorney: A common question discussed during the estate planning process is “Who will be the executioner of your estate in the event of your disability or incapacity?” A good and reliable lawyer would be a good choice. Many people appoint their own spouse or relatives to be the executioner and quite often these people are not suitably qualified to handle the task, especially when there is a lot of money at stake.

•  Witnesses: With the help of a good attorney, you can customize and update provisions of your will. The law will require that when your will is being drawn up, you are in a healthy state of mind and make sure that your beneficiaries are not the same persons as the witnesses to the will. It will be perceived that the witness coheres you to include him or her as your beneficiary.

•  Keep track of your assets: A will is only as good as the paper it is written on. What is more important are the accounts and records of all your assets. The greater the details the better. If possible an appendix should be attached to the will outlining all the details of your assets from bank/brokerage account numbers to land title deeds etc.

•  Beneficiaries: Under Thai law, you can appoint any one as your beneficiaries except your pets. But normally, most people appoint their spouse, children and relatives as beneficiaries. Although, a good number include charities or temples (foundation) in their will as well. However, children born out of wedlock may present a different kind of problem. Unless, they have birth certificates to prove otherwise, they will not be recognized by law. One way to solve this problem is to set aside a lump sum for such purposes while you are still alive.

•  Personal/Family Trust: Unfortunately, there is no trust law in Thailand but hopefully this will soon change. (Please see related article on this subject). However, those that have assets and investments offshore, it is critical that a well -structured trust is set up to hold those assets because if you die suddenly, your investments shall be subject to all kinds of “probate” under different jurisdictions and it can be a real nightmare for your beneficiaries to sort out the mess.

•  Inheritance/Estate Tax: Here again, no such tax has been introduced in Thailand and it does look as if estate tax will be introduced any time soon because those that have the most to loose are the wealthy politicians! However, for those of you with offshore investments, it is advisable that you should consult your tax lawyer about this matter. Like probate process, estate tax can be very complicated and that's the reason why people set up personal trust to protect their assets and investments. Unlike people, a trust is a corporation and does not die. Therefore, it won't be subject to estate tax.