How to Prepare for Transferring Assets to Beneficiaries Before You Die: A Guide

Planning for the future ensures that your loved ones are cared for and your assets are distributed according to your wishes.

One important part of this process is arranging to transfer your assets before you die. This not only simplifies matters for your beneficiaries but can also help them avoid legal complications like probate.

In this blog, we will guide you through various tools you can use to prepare for asset transfers, including creating a will, making a deed of gift, and a deed of assent.

We will also cover what probate is and how transferring assets before death can help you avoid some of its downsides.

What is a Will?

A will is a legal document that outlines how you want your assets (such as property, bank accounts, investments, and personal belongings) to be distributed after your death. You also use a will to appoint an executor—a person responsible for carrying out your wishes—and to name guardians for any minor children. Without a will, the  Administration of Estates Act decides how your assets are divided, often leading to complications for your heirs.

However, simply having a will does not avoid probate, which can be time-consuming and costly. This is why many people consider transferring some or all of their assets before death.

What is a Deed of Gift?

A deed of gift is a legal document used to transfer ownership of an asset (such as property) from one person (the donor) to another (the donee) while the donor is still alive. Unlike a deed of conveyance, a deed of gift does not involve any financial exchange. The key benefit of a deed of gift is that it removes the asset from your estate, meaning it would not go through probate after your death.

However, a deed of gift can have the same tax implications as a deed of conveyance, depending on the value of the assets and local tax laws, so it is important to seek legal and financial advice before proceeding.

What is a Deed of Assent?

A deed of assent is a legal document that transfers ownership of real estate from an estate to a beneficiary, after probate. It serves as formal proof that the executor transfers the property to the named beneficiary in accordance with the will.  Note, that a deed of assent does not attract stamp duty, unlike a deed of gift. 

What is Probate and Why Should You Avoid It?

Probate is the legal process by which the High Court ensures that all legal requirements are met when someone applies for probate of a will. This process involves appointing an executor, and ensuring that the estate is distributed according to the terms of the will or the law.

The executor of the will is responsible for filing the application for probate with the court, paying any debts or taxes, and distributing assets according to the terms of the will. If the deceased did not leave a will, the estate is distributed according to laws of intestacy.

While probate ensures that debts are paid and assets are distributed properly, it has some significant downsides:

• Time-consuming: Probate can take months or even years to complete, delaying the distribution of assets.
• Costly: Attorney fees and debts associated with the estate.
• Public Record: The probate process is a matter of public record, so your estate’s details become accessible to anyone interested.

Benefits of Transferring Assets Before You Die

Here are some of the key benefits:

1. Avoid Probate: By transferring assets while you are alive, you can ensure they do not pass through probate, which means they would not be subject to lengthy legal procedures or additional fees.
2. Control and Certainty: You maintain control over how and when your assets are transferred, ensuring they go directly to the intended beneficiaries without interference from the courts.
3. Minimize Taxes: In some cases, transferring assets before death can reduce estate taxes or other inheritance-related taxes, depending on local laws and the value of the assets.
4. Provide Immediate Benefit: Transferring assets like property or money before you die allows your beneficiaries to start benefiting from them sooner, whether that is living in a home or investing financial assets.
5. Avoid Family Conflicts: By clearly transferring assets while you are alive, you can prevent disputes among family members that might arise after your death, ensuring that your wishes are followed without conflict.

Key Takeaways:

• Create a will to ensure your wishes are followed after your death, but be aware that your estate will go through probate.
• Consider a deed of gift for assets like property to remove them from your estate and avoid probate.
• A deed of assent is used to transfer real estate to beneficiaries, as part of the probate process.
• Avoid probate by transferring assets while alive, saving your beneficiaries time and money.

Proper estate planning involves a combination of tools, and it is always best to consult with legal and financial professionals to ensure your plan is effective, tax-efficient, and tailored to your specific needs.

By preparing in advance, you can help your loved ones avoid the complexities of probate and ensure that your assets are distributed according to your wishes.

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