THE BORNEO POST with the expert help of Rockwills trustee Bhd, the leading specialist in estate planning having pioneered wills and trust 27 years ago, is publishing a regular Q&A column on estate planning. It will feature questions which readers have in mind but don’t know who to ask.
Question 1: I run a small F&B manufacturing business with less than 10 employees. My wife is not really interested in my business and my children are still very young. What suggestion can you give on my business when I pass away?
Answer: Businesses can be willed away via will or trust depending on your concerns.
A trust can ensure your dependents are financially provided for as fast as possible. Unlike a will, trust does not need to go through the process of probate; hence it can be used immediately to provide for the dependents.
Furthermore, a trust is especially useful for beneficiaries who are minors, as their entitlement cannot be transferred directly to them. With a trust, the trustee can use their entitlements for their living, medical and education expenses.
If the trust is created to continue the business, it should also be reviewed when your children have grown up and are ready to take over your business. Instead of liquidating your business to provide for your children’s financial needs, the trust will then focus on business succession planning.
If you are able to appoint a successor capable of taking over your business, you can set up a trust that holds the business as the trust asset and direct your trustee to appoint the successor. It is not advisable to do so through a will as the time taken for probate may be disruptive for business continuity.
However, if you are unable to pick a successor capable of taking over your business, then we would suggest you to direct your executor or trustee through your will to sell or liquidate your business and use the proceeds to set up a trust to safeguard your dependents when you are no longer around.
Question 2: I have people owing me money, some of them were close friends which I don’t think I’ll press them to pay me back unless I really need the money. They may pay me today, they may pay me 10 years later, but I have no intention of forgetting them. So, my question is, can I give away these debts to my children? Also, what if those friends of mine passed away before they paid me back, can my children get it from their family?
Answer: Yes. The debt owed to you is an asset that your executor can collect. Since it is an asset, you can will it away to your children. However, you should provide proof of such amount owed to you for your executor to recover. Such proof can be a simple letter signed by you and your close friend stating the amount that you have lent to him. If you do not have this, your executor will not be able to prove the existence of the debt to be collected.
Where there is proof of the debt owed to you, even if your friend dies before paying you the amount owed, your executor can claim it from your friend’s estate.
We can see that you are a person who appreciates friendship, hence it is crucial that you appoint an executor who can handle such matters diplomatically and professionally. Otherwise, you should consider appointing a trust company that is specialised in administration of estates.
Source: www.theborneopost.com
