Question: How can I sort out my late husband’s estate? He died with lots of investments from rental homes in prime areas in Nairobi, huge acres of land in the village, and shares, among others. I feel overwhelmed, where do I start without losing the wealth?
Thank you for reaching out to us.
Allow us to pass on our sincere condolences for the loss of your husband. You have not revealed when he passed on, but it is never too late to pass condolences since memories of a lost loved one never go stale.
We hope that you are now in your healing and recovery phase since your questions point toward someone who is looking at how to move on; to be in control of what destiny holds for you as things unwrap into the future.
You seem to be aware of the assets and investments that your husband left behind. You also sound like you have full control of his vast estate.
We will assume that you are the nominated beneficiary since you have not mentioned the existence of any children or other beneficiaries besides yourself.
Allow us to first highlight something of great importance that most people rarely pay attention to. This is Estate Planning.
We can tell that your husband got his estate planning right and thus we commend him for that though post-humously.
Estate Planning simply refers to taking control of the destiny of one’s assets while one is still alive, and this may take different forms.
The simplest form is assigning a Next of Kin as part and parcel of one’s bio with any financial institution.
The more complex options include establishing a Trust or having a legally registered Will.
The Next of Kin in many jurisdictions is usually used to determine an individual’s closest living blood relative should a person die without an Estate Plan.
A Will on the other hand is a legal document that declares the treatment that one would wish upon their properties.
When preparing a Will, an executor is named who will ensure that one’s final wishes are honoured.
Alternatively, a Trust is a fiduciary agreement that allows property and assets to be held for the benefit of another person- or oneself.
A Trustee is named to manage the Trust. Trusts offer many benefits and, in most cases, avoid probate proceedings which means that beneficiaries receive the property and assets sooner and with fewer headaches.
Trusts are a safe way to facilitate long-term financial planning and care, especially for young children or children with special needs.
In Kenya, retirement benefits are held under a Trust and as such the regulations protect such savings by excluding them from being part of a deceased person’s estate.
This means that the administrator appointed in a Will has no legal jurisdiction over the deceased person’s assets as held under a retirement benefits scheme.
Both Wills and Trusts allow one to designate the beneficiaries of one’s property upon passing.
The biggest difference between these two legal arrangements is that a Will does not go into effect until after the death of its creator.
A Will must also go through probate before the assets are distributed to its beneficiaries. In contrast, Trusts are effective as soon as they are formed.
Unclaimed Financial Assets
In Kenya, when people die without an Estate plan and with no traceable beneficiary, the law requires that their financial assets be transferred to the Unclaimed Financial Assets Authority (UFAA).
It would be very painful to have one’s assets transferred to UFAA yet there are eligible beneficiaries who may be in need but have no idea of the existence of such financial assets.
UFAA has provided a platform for members of the public to check if any assets may have been transferred to them by financial institutions, yet the beneficiaries are available.
Could there still be other financial assets out there that your late husband held but you still do not know about? A visit to the UFAA website or offices is preferred.
Updating Beneficiary information
It is therefore advisable that one names their next of kin (at the bare minimum) and provides their updated contact information as and when there are significant life changes.
An additional beneficiary like a newborn child in the family, (or loss of one) may warrant an information update.
This should be done at least annually with every financial institution where one’s assets are held. These include pension schemes, bank accounts, insurance covers, unit trust savings, shares and all other forms of financial assets.
In the case of retirement savings, Kenyan legislation requires that one defers half of their accumulated retirement savings if they leave a scheme before they reach the age of fifty years or retirement age.
One should consider consolidating their deferred pension savings into one scheme for ease of asset tracing.
Transferring benefits from one registered retirement scheme to another does not attract tax charges.
A registered personal pension plan would be an ideal accumulation basket due to its portability and ease of establishment.
You or our other readers may contact us directly regarding this.
Estate Management & Investment Advise
We are assuming that your late husband did not allow you to go through any of the above complexities to get you to where you are today.
He must have planned his Estate well and thus included you as his nominated beneficiary.
Accordingly, therefore, as expressed, your worry is more about losing wealth through wrong investment decisions as opposed to risks related to the right of wealth possession.
You have mentioned that he left behind assets ranging from rental homes in prime areas in Nairobi, huge acres of land in the village, and shares among others.
To sustain the diversity of what was his investment portfolio, and hence to overcome the feeling of being overwhelmed, you may need to sit down with a qualified investment advisor to assist you to align your current investment objectives, and your investment horizon in terms of length of time with any of the said assets, and your current risk appetite for each of the investments.
Due to the complexities of managing such a vast portfolio of assets, please do not hesitate if the advisor recommends that you consider appointing an investment manager or a Trust entity to manage that portfolio on your behalf.
Mr Oyuga is a financial literacy trainer and General Manager, at Umbrella and Retail Retirement Solutions at Zamara.
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