Bringing your new spouse into your estate planning may be complicated. However, if you have children thrown into the mix, the matter may be a bit more complex than it seems. Understanding some of these important issues surrounding second marriages can help you with reshaping your estate plan. Here are some things to consider when you are planning your estate after entering your subsequent marriage. 

What happens to my existing will upon divorce? 

That is a valid question asked by many people after they have divorced. When you have successfully and legally divorced from your spouse, your existing will that includes them will no longer be valid. That existing will is automatically revoked upon your remarriage to your new spouse – if you ever remarry, that is. 

The only time and exception when that will “remains valid” is its inclusion of a “contemplation of marriage” clause. However, it does not mean that the will is entirely invalidated after your divorce. It just means that you will need a new will in such circumstances. 

Restriction on your spouse’s rights 

You will have substantial discretion to determine the restriction on your spouse’s rights. It may involve naming someone else other than your spouse to be the trust or trustee. You may quite likely choose one of your children to be the trustee instead of your spouse. In other options that you have, you may want to allow your spouse to receive income from the trust property but disallow them from being able to spend on the trust principal. 

If you own real estate, it is understandable that you will want to stay in the house with your spouse from your second marriage. At the same time, you may also feel strongly that you will want the house to belong to your children from the first marriage when your spouse has died. 

You can have that done by putting the estate in a trust that allows your spouse to use it but disallow them from selling it. You can also include clauses about whether your spouse can rent the house and peruse the rent income generated from it. 

Usually, it is spouses from subsequent marriages who create these types of trusts. It may or may not mirror each other. Imagine if each spouse leave their half of the house to their children, the children from the 2 different marriages may need to work out some ways to divide its values after the parents have passed on. The children may or may not know or trust each other. In such situations, it can lead to many complications in the near future. 

What can you do in such situations? 

Choose a trustee. With any trust, a trustee can have substantial authority. Trustees can help to manage the property in trust and ensure that your spouse is complying with the restrictions on their use of trust property. They can also determine whether payments to your spouse from trust funds are appropriate. 

You will understand that your spouse and children may have fundamentally different goals and needs along with conflicts that may be unavoidable. At the same time, retain a lawyer to help you make the trust documents as clear and fair as possible. In the end, the final decision is yours to make. 

Bottom Line 

Getting a divorce is already taxing enough. To have to rewrite your will to fit in the needs of your ex-spouse and your new spouse can make things a lot more complicated. To make things easier for you, appoint a trustee – someone you can trust – to manage your estate easier for you. That way some of your worries regarding estate planning will be put to sleep.

As NFT is becoming more and more popular, more Malaysians are investing in NFTs every day. However, NFTs are relatively new in the Malaysian market, therefore not many know about what they can do with it, especially whether it can be inherited. 

If you have NFTs to your name and have earned a sizable income from it, can you put it in your wills? Can it be part of your estate planning? Find out more in this article. 

What is NFT? 

NFT is an acronym for Non-Fungible Tokens. It is a kind of digital asset. They are held in digital wallets like how cryptocurrencies are. Cryptocurrency can be considered as an NFT too. 

NFY can include digital and online assets such as photos, videos, audios, artwork, gaming tokens, or any sort of digital files. So how are these digital assets created? 

NFTs are created on a blockchain, which is a growing list of records. These records are called blocks, which are linked together using cryptography. 

Each block has a cryptographic hash of its previous block, a timestamp, and a transaction data. The timestamps are used to prove that the transaction data exists when the block is published in order to get into its hash. 

NFT does not contain the intellectual property, photo, videos, etc. It’s referred to the intellectual property. The original creator promises that work is either unique or they are only going to create a limited amount of it. 

For example, a creator says they will create only 10 of the artwork. You buy one from this creator and own, let’s say the 7th piece in the 10 piece artwork. Each of these NFTs have its own address. If you have the address and access to it, then you own the NFT. NFTs also contain a smart contract. That means when the artwork is sold, they will get a certain cut of the profit when their NFT has been sold. 

Why do people create, sell, and/or own NFTs then? 

It does get very confusing when it comes to NFT ownership and creation. However, let’s put this in an analogy so everyone can understand it better. 

Take rare collectible cards and autographs for example. Items such as these are rare and close to inaccessible worldwide. Only a few people have them in physical copies. That means these items will fetch a high price if whoever have them want to sell them. 

However, with NFTs being around, it means it can take this concept of uniqueness and apply it to digital works. It gives NFT owners a great way and method to sell and monetise their digital works. 

The scarcity that was created through the NFT makes the digital work even more valuable. It can easily lead to more profits for the people who have created it. It’s the same for people who buy and sell NFTs. 

How do NFTs and estate planning tie in together then? 

Having said all of that above, I think you’d have a clear basic understanding of how NFT works. You may or may not own many valuable NFT assets in your lifetime. If you do, then this is for you and you should start seeing how you can protect it. You can also see how you can leave it behind for your next-of-kin when you are no longer around. 

The first thing you should do is to have your NFTs placed in your wills and trusts. Update them periodically if you have to. In your will, mention how it will be divided up between your beneficiaries. Say how many percent your beneficiaries will get from the proceeds generated from your NFTs. 

When you are done updating your wills and trusts for your NFTs, your next obvious step is to mention how to access your NFTs. You can put in place a list of locations where you have stored your NFTs. Then list the login details and keys to your NFT accounts. 

If it makes anything easier you can also include a step-by-step guide to help your beneficiaries access your NFT accounts. Get a lawyer to help if you need any guidance too, if that makes things easier for you and yourself. 

Key Takeaway 

If you need any assistance in NFTs and will planning, feel free to talk to us. We can help you with estate planning and wills. If you own NFTs and wish to put it in your will, we are here to assist you.

Trust and will resemble each other a lot at a cursory glance. Some people find it hard to distinguish between the two entities sometimes. Though it’s valid that they are confused between the 2, it is not so hard to distinguish it. 

Difference between a trust and a will in estate planning 

Let’s establish what a trust and a will are first in estate planning. 

1. Trust 

A trust is a legal entity that is used to protect the assets and properties in your estates and companies. Trusts are recommended mostly for people who have significant assets in their estates. This is because these significant assets can be expensive to create and administer beyond a certain monetary limit. A trust will often cover the estate’s finances and allow the details of your finances to remain private. Even when your trust has passed beyond outside of probate, your finances will still remain private. 

When you have passed away, the trust will become the legal owner of your assets. As a matter of fact, your assets already belong to the trust as soon as you have created them. 

There are many kinds of trusts available out there. However, an irrevocable trust is the most relevant one in the world of estate planning. An irrevocable trust is one that cannot be revoked. As soon as it is created and you have put your assets in there, you cannot take it out. 

Irrevocable trusts are good for people who are looking to avoid probate and keep the asset details private. In an irrevocable trust, it allows you to make more detailed provisions on how your estate is handled. It also protects creditors and potential litigations against your assets. 

2. Wills 

Wills are usually made to instruct the trustee and the executor on how to distribute the assets, monies, and properties after you have passed away. The same thing applies in estate planning as much as it does in personal assets. 

You can name your trustees, your executors, your beneficiaries, all in your wills – be it in personal wills or even in estate wills. When you have passed away, the named trustee and/or executor can come around and administer the assets, monies, and properties accordingly. You won’t have to worry too much about what’s going to happen to your assets when you have passed away. As long as your will is legal then you have (close to) nothing to worry about. 

However, if you do not have a will, or a legal will at that, then things will get super difficult and painful for you and your next-of-kin. Your assets will go into probate, which often takes a very long time to settle before a beneficiary is named. 

Oftentimes, if you do not have a legal will and have a child out of wedlock with your partner, then you will be faced with a lot of difficulties. For one, when you have passed away, the Distribution Act/law dictates that your assets be divided and given to your immediate family. Your unmarried partner and child will not get anything out of it. They can contest it, but it will be a long and difficult battle for your unmarried partner and child. 

Which one is better for my estate then? 

Now that we have established the basic understanding of both trust and will, your next question will be which one will suit you better. 

Choose a trust if you have significant assets in your estate to distribute. It’s not that a disgruntled heir will challenge your trust when you have passed away. They can challenge the trust if they are not happy with the final outcome. However, a trust is good when you have noteworthy assets to distribute. 

Choose a will if your finances are an issue for you now. Wills are generally a tad bit more affordable than a trust, but it’s still money nonetheless. However, a good thing about wills is that it’s very specific in what to distribute and to who. If any of your assets are not named in your trusts, you can list them down in your will. That way your “unlisted” properties will not go to waste. A disgruntled heir will also challenge a will if they are not happy with the outcome and results too. 

Key Takeaway 

Regardless of which one you choose to go for, both have its own benefits. Just remember to have one done and legalized before you passed away. Because when you’ve left without leaving behind a legal trust or will, you’ll create a lot of chaos for your next-of-kin.

When people hear of trust, they often think of its application within a family setting. However, what some people don’t know is that there is such a thing as a trust for businesses. If you haven’t known there are trusts for business, perhaps this article can explain what it is. 

A business trust is, of course, for a business. It usually covers the general areas of how the income is split, if one owner dies then what happens to their portion of the company, and many more. 

How does a business trust function? 

A business trust functions almost similar to a personal/family trust. The similarity is mostly that you will be allocating which business property to who and who gets how much money in the business. It works similarly to a family/personal trust – except on a business level. 

So whatever assets and properties a business has will be divided and allocated to the named beneficiaries. 

What goes into a business trust? 

Now that you know what a business trust is and how it works, here are some things that go into a business trust. Generally, most of the contents are similar to what a personal trust has, except with a few extra clauses and items. 

Distribution and splitting of assets and properties 

This is the most common item in a business trust. Basically, when you have passed away, your properties and every asset will be distributed to your beneficiaries whom you have named. It works similarly to how a personal trust functions and is a very self-explanatory part. 

Asset protection 

This is where a very solid line is drawn between your personal assets and business assets. Sometimes, if something went wrong, it can go very wrong on so many levels. 

For example, if your business owes money, the creditors will ask you to sell your assets to pay off debts. They didn’t mention which assets, as in personal or business assets. So if you do not have a clear cut business asset in place, the creditors or debt collectors will start selling your personal assets to pay off the outstanding debts incurred by your business. 

You do not want this to happen because one thing will lead to another. It’s good to have a business trust in place and have it updated periodically. 

Income splitting and reduced taxes 

Income splitting allows the named trustee to distribute the business profits to the named beneficiaries at a different level. The reason why business trusts have income splitting is so that the lower-income earner beneficiaries can have a bigger chunk of profits. 

Besides, profit distributions may increase any of the beneficiaries’ income into a higher tax bracket. The trust can make a distribution to the corporate trustee. The corporate trustee will ensure that the beneficiary will only be subjected to a company tax rate of a limited percentage. 

Why do you need a business trust? 

I think we all know quite clearly now why you will need a business trust. Having a business trust allows you to divide your personal assets from your business assets distinctively. In the event where you have passed away but still owe money, things tend to get very messy, for example. 

Having said that, by having a business asset in place instead of having none is better than having nothing at all. If you do not have a business trust, the creditors and debtors will come for your personal assets and income, which can cause a lot of problems. 

Bottom Line 

Now you know why it’s good to have a business trust in place. It can benefit you in the long run and provide some much-needed directions for your business when you have passed away. 

If you want to learn more on how to use trust to protect your business, feel free to reach us out.