Discretionary Living Trusts A legacy for generations

Written by Trust Specialist, Mervin Messias, it is the culmination of knowledge and expertise that has been acquired over many years’ study and practice of Trust law.

The author recommends the use of Trusts as part of estate planning because they provide solutions to many potentially complicated problems related to asset protection, succession planning, and disability protection. Many little-known benefits of Trusts are revealed to help protect your hard-earned wealth for generations to come. A Trust circumvents the whole process of winding up an estate, together with its potential delays, hassles and frustration.

In fact, a Trust deserves pride of place in any estate plan. It means business as usual, even after death, with no executor, executor’s fees or estate duty.

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    Planning for life partner...


    Planning for life partners

    Planning for life partners

    The law is slowly evolving in the domestic partners arena, especially in estate planning. Generally, if a person does not have an estate plan, the state has a plan for him or her. It is contained in the intestacy statutes. Intestacy is a statutory inheritance framework that favors spouses and family bloodlines. The law does not recognize unmarried partners, so when one partner dies, there is no statutory mechanism for the surviving partner to inherit the deceased partner’s property. Instead, under the intestacy law, the deceased partner’s family (as defined) will inherit everything. To provide for the other domestic partner, each partner must complete an estate plan.

    Anyone in a nontraditional relationship must seriously consider seeking the assistance of an estate planning attorney to create a plan to protect both partners in the event of death or disability. The good news is that, with proper planning, unmarried couples can receive many of the same nontax benefits as married couples.

    My partner and I own everything jointly. Why do we need to estate plan?

    Although joint ownership is one method for unmarried partners to pass assets at death, it is not the most effective way to do so. There are several reasons to consider an alternative method:

    • What happens if one of you becomes disabled? Joint ownership does not resolve the challenges of making medical decisions for each other when one partner is unable to do so. Joint ownership may not allow one partner to sell an asset while the other partner is disabled and unable to execute a transfer document.
    • What happens if the relationship fails? The law does not provide a mechanism similar to a divorce proceeding to untangle jointly held assets.
    • What happens if one of you gets into financial or legal trouble? It will likely impact the other partner’s half of the joint property.

    I have a large life insurance policy. Is it possible to name my partner as a beneficiary?

    Unmarried couples often name each other as life insurance beneficiaries to effectuate their planning desires. Some assurance companies require that the beneficiary have an insurable interest on the life of the insured. An insurable interest arises from the relationship between the person buying insurance and the insured person; if there is a reasonable expectation of benefit on the continuation of the insured’s life. The benefit may be economic (as between business partners, debtor and lender, or employer and key employee) or love and affection (as between legally married spouses or parent and minor child); and a person can of course always insure his or her own life. Insurable interest serves a social purpose because it prevents speculation, as in the case of murderers insuring their victims. Some assurance companies, allow you to name anyone as your beneficiary.

    What can I do if I cannot name my partner as a beneficiary on my life insurance policy?

    You can name your estate as the beneficiary of the insurance policy and your will can name your partner as the heir. This is risky because the will may be challenged. A safer solution is to name your living trust as the beneficiary and your partner as the beneficiary of the living trust.

    If my partner predeceases me, I am worried that his family will challenge my inheriting his estate. What can I do?

    Unfortunately, these types of challenges by the deceased partner’s family are common. Even if everyone accepts the relationship while both parents are alive, many times at death that acceptance gives way to hostility. Often, the family of the deceased partner demands that the surviving partner provide an accounting of who owns which assets, including property that was jointly purchased. Most of us do not keep these types of records. These demands place more stress on the surviving partner, who is trying to cope with the loss.

    A living trust will help prevent some of these problems. Generally, a trust communicates what someone intends to accomplish in his or her estate plan. Transferring assets to the trust and maintaining it while you are alive establishes your intentions, and the trust document, in fact, states your true wishes. The family’s burden in challenging the decedent’s estate plan in this situation is often insurmountable. The key to this process is to work with a counselling-oriented attorney who will spend time with you to understand your goals and wishes and then put into place the mechanisms to accomplish them. Your planning should then be backed up by regular reviews with the attorney to consider what, if any, changes to the plan are needed to reflect your revised goals.

    How can I provide for my significant other if I become disabled?

    Let us answer your question with a real-life client situation. We represent Jack, a dentist who had done very well financially in his practice and through immovable property investments. Jack wanted to provide for Jill, the woman with whom he had been sharing his life for many years. Jill had a modest estate at best, and Jack paid for almost everything. Jack requested his trustee that Jill could reside in his house and the trust would pay for maintaining the home. Jill would also be permitted to drive any car that he owned. The trust will also pay Jill’s normal living expenses up to Rx a month. Without these requests, the trustee may not have cared for Jill. When planning for a significant other, you must think carefully about his or her needs, how you provide for that person now, and whether you would want to provide for him or her if someone else were handling your financial affairs during your disability.

    Before I met my partner, I had children from a prior marriage. How do I provide for my partner without excluding my children as part of my estate plan?

    There are numerous ways to accomplish your goals, including creating a trust for your partner and your children – everything goes to your partner in trust until his or her death, at which time the remaining trust property passes to your children. This is by no means your only option. An estate planning attorney can tailor a plan to meet your specific goals. The point is that you do not have to choose between your partner and your children – most often you can accomplish both objectives.


    JD (Juris Doctor) / BA, LLB (Wits) / TEP (Trust & Estate Practitioner) / MTP (Master Tax Practitioner – S.A)