Add up­dat­ing your le­gal af­fairs to your new year’s res­o­lu­tions

Sunday Times - - Money - Harry Joffe

Now that peo­ple are re­turn­ing from hol­i­day full of op­ti­mism and plans for the new year, it’s time to start think­ing about get­ting your le­gal af­fairs in or­der. You should make sure to check up on the fol­low­ing is­sues:

Have you signed your will, and is it up to date?

Sta­tis­tics show that around 50% of adults don’t have a signed will. Dy­ing with­out a valid will means you lose all con­trol of the wind­ing up process, as the In­tes­tate Suc­ces­sion Act will reg­u­late who gets what.

In ad­di­tion, you don’t get to ap­point your ex­ecu­tor, a guardian for your mi­nor chil­dren [if the other par­ent is not alive], or set up a trust to pro­tect money ac­cru­ing to mi­nor ben­e­fi­cia­ries.

En­sure you start off the year by get­ting a will drawn up and sign­ing it.

If you are one of the few who has ac­tu­ally ar­ranged for your will to be signed, please en­sure it is up to date. I have seen too many wills where chil­dren have been left out be­cause they were born af­ter the will was drawn up, al­though the tes­ta­tor had many years to add them to the will, or as­sets which no longer ex­ist [like a house] have been be­queathed, and its re­place­ment as­set [like a flat] does not ap­pear any­where in the will. A will must be up­dated ev­ery few years, or when­ever there is a life-chang­ing event, to en­sure it re­mains rel­e­vant.

Are your busi­ness con­tracts signed and up to date?

Buy and sell struc­tures en­sure con­ti­nu­ity in your busi­ness while a keyper­son pol­icy pro­tects key in­di­vid­u­als in the busi­ness and a con­tin­gent li­a­bil­ity pol­icy cov­ers busi­ness debt. If you have any of these struc­tures in place, en­sure your con­tracts [buy and sell con­tract, con­tin­gent li­a­bil­ity con­tract or keyper­son res­o­lu­tion] are up to date and signed. You don’t want to find out af­ter one of your coshare­hold­ers has died that the cor­rect con­tracts are not in place.

Are the ben­e­fi­cia­ries of your life poli­cies up to date?

This is a good time to check the ben­e­fi­cia­ries of your life poli­cies. Do you have ben­e­fi­cia­ries on all your per­sonal poli­cies? Re­mem­ber, if there is no ben­e­fi­ciary on the pol­icy it will pay to the de­ceased es­tate. It will then be sub­ject to ex­ecu­tors fees, and heirs will have to wait for the wind­ing up of the es­tate.

Check that there is a ben­e­fi­ciary on your poli­cies, and that it is the cor­rect per­son. Firstly, is the ben­e­fi­ciary still alive?

Se­condly, do you still want that per­son to be the ben­e­fi­ciary — is it, for ex­am­ple, and exspouse or ex-part­ner? Or maybe that per­son has be­come in­sol­vent, and should no longer be the ben­e­fi­ciary. It would then be pru­dent to re­place that per­son with a trust. This is a good time to con­duct a “ben­e­fi­ciary au­dit”.

You should also check your busi­ness poli­cies. Is the per­son that you have in­sured, and that has in­sured you, still a part­ner or co-share­holder? If not, you should en­sure the poli­cies are ceded back to the life as­sureds, as they are no longer re­quired for busi­ness as­sur­ance pur­poses. Re­mem­ber also that if you have mul­ti­ple share­hold­ers, and there­fore mul­ti­ple own­ers of a busi­ness as­sur­ance pol­icy, and one of them leaves the com­pany, they must be re­moved as a par­towner of the pol­icy. Fi­nally, you must check that if the com­pany is pay­ing the pre­mi­ums on be­half of the in­di­vid­ual share­hold­ers, that loan ac­counts are be­ing cre­ated for each share­holder, and rec­on­ciled reg­u­larly, to avoid nu­mer­ous tax prob­lems.

Do you have life poli­cies still sub­ject to a col­lat­eral ces­sion?

Did you cede a pol­icy to the bank to cover a bond? Has that debt been re­paid? If so, you should en­sure the bank can­cels the ces­sion and the doc­u­ments are re­turned to you. I am amazed how many peo­ple have poli­cies still ceded to a bank when the debt has been paid in full.

Do a stock-take of your poli­cies

Now is a good time to take stock of all your poli­cies. Do your poli­cies have the cor­rect ben­e­fits and cover the ap­pro­pri­ate risks, like var­i­ous forms of dis­abil­ity ap­pro­pri­ate to your oc­cu­pa­tion and your in­come?

Have you re­flected your in­come cor­rectly for your in­come pro­tec­tion ben­e­fit? Do you have too many poli­cies for your needs?

Sit down with your fi­nan­cial ad­viser and check all your poli­cies, en­sur­ing the amounts and de­tails are cor­rect and rel­e­vant.

This time of year is nor­mally a time for res­o­lu­tions to im­prove health and eat­ing habits. Pro­tect your own and your fam­ily’s fi­nances by adding up­dat­ing your le­gal af­fairs to the list of res­o­lu­tions.

✼Joffe is the head of le­gal ser­vices at Dis­cov­ery Life

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