Growth & Jobs | Estate planning vital in preventing hardships on loved ones – legal counsel

Hasani Haughton, legal counsel for the Jamaica National Group, is urging Jamaicans to plan their estates appropriately to prevent additional hardships on their loved ones in the event of hospitalisation or death.

The legal counsel explained that from his experience, many families undergo challenges when it comes to accessing their loved ones’ assets in the event of illness or death because there was no estate planning.

“I have seen where persons have been hospitalised with a stroke, a heart condition, COVID-19, and there is nothing in place. The family members are challenged in accessing the person’s resources to pay for their medical care,” he revealed.

“I have also observed family members having disputes about distribution of assets after death, based on oral promises made by a deceased relative which conflicts with how assets are distributed by virtue of the Intestates, Estates and Property Charges Act.”

Haughton added that the issue also stems from cultural beliefs.

“At my previous place of employment, I was part of a team responsible for public education regarding estate planning, and invariably, when speaking with an audience, the person with a plan in place was usually the odd one out, regardless of the size of the audience,” he stated.

“I have encountered myths such as ‘creating a will may result in death visiting you sooner’. Many persons fail to confront their own mortality and typically believe that they are not yet ready to write a will. Others believe that they do not have sufficient assets to prepare a will. Estate planning should commence the moment one has any type of asset, no matter how trifling they believe it to be,” he explained.

Haughton emphasised that estate planning was necessary to pay for medical expenses in the event of a serious illness, and also to ensure the proper distribution of assets in the event of death.

“Estate planning for illnesses could be by a combination of different instruments, such as power of attorney – this will give someone the authority to act on your behalf in the event of serious illness and an inability to carry out your daily activities. You can also have joint bank accounts, insurance products such as critical illness policies and health insurance policies,” he added.

Haughton said that entrepreneurs should also have a contingency plan for their operations in the event of illness.

“I’d also advise that entrepreneurs have a contingency plan for their businesses. This could include documentation of key suppliers, bankers, financiers, customers, assets and any other factor which contributes to the success of the business, which a successor would benefit from knowing they would be able to operate the venture at the level where you were at before illness,” he added.

Haughton affirmed that in the case of planning for death, estate planning ensured the assets are distributed in a manner that you desire.

“It will also assist in having personal representative(s) take charge of assets immediately, which will assist in preserving the value of the assets. The personal representative can be chosen by you and will be someone you trust, instead of a person appointed based on the Order of Priority provided in law.

When the unthinkable happens without proper estate planning, Haughton explained that there were certain steps that had to be taken for relatives to have access to the assets.

“In the event of death, a grant of representation will be required to access funds solely held in a bank account. Where there is a will, a grant of probate is generally a shorter process. Where there is no will, a grant of administration will be required and may take a longer time period,” he explained.

“If the deceased has children under the age of 18 years, then an Instrument of Administration will be issued by the administrator general and the assets collected by the department and distributed to the beneficiaries. This is generally a longer process than the process where a will with a competent personal representative is in place. A grant of representation is issued by the courts,” he added.

Othneil Lawrence, senior manager – sales, JN Life Insurance Company, points out that in the case of life insurance, estate planning was also important.

“For insurance policies, the client must appoint a named beneficiary. This is part of the contract, as the insurer will have to deliver the proceeds of a death claim to this named beneficiary by law. However, the client can opt for naming his or her ‘estate’ as the beneficiary,” he explained.

“However, if the client dies, all proceeds will form part of the client’s estate. If the client dies without leaving a will, then the distribution will be based on the Intestates, Estates and Property Charges Act. The personal representative will be determined based on order of priority. However, if there is a minor, the administrator general for Jamaica will administer the estate. This can only be accessed by a probated will; or, if the client dies without leaving a will, then the family members will have to ask the administrator general to take over the administration of the client’s estate,” he added.

Haughton added that there was no one-size-fits-all approach when it comes to estate planning. However, he advised that persons explore their options carefully.

“A well-drafted power of attorney is a tool which can assist in accessing funds during one’s lifetime. It is critical to note that a power of attorney loses its validity on death,” he stated.

“There are different types of estate planning tools and a combination of a few might be appropriate, depending on your individual circumstance. My recommendation to persons is to have a discussion with an attorney-at-law and a financial adviser, who can advise you on what may be best suited for your situation.”