Home' Trinidad and Tobago Guardian : August 30th 2015 Contents AUGUST 30 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
FINANCIAL ROAD MAP | SBG7
onald a 67-year-old retired
general manager is a widower
and cancer survivor. His wife
Pauline passed 16 years ago
when Matthew, the youngest
of four children, was born.
Brian, the eldest age 35, is married with one
daughter and lives in one of Ronald s three
properties: a two-storey four-bedroom house.
Malory, 27, also recently married, lives with
her husband in their marital home. Susan, 19,
is in the second year of a four-year university
programme and Matthew 16 is still in sec-
Ronald and his two youngest live in the
family home upstairs of two fully furnished
apartments that generate $11,000 in rent per
month. This along with his NIS of $3,000
and company pension of $7,000 after taxes,
take care of all the family s expenses inclusive
of Ronald s $5,000 monthly medical bills; with
a surplus of $6,000.
Ronald has not done too badly in terms of
investments. Apart from the two properties
above, which are worth $1,800,000 and
$2,500,000, respectively, and have appreciated
at an average annual rate of five per cent, he
also owns a piece of land purchased six years
ago costing $150,000 now valued at $350,000.
Ronald also has a few other investments
including five local stocks currently valued at
$450,000, which has yielded an average annual
portfolio return of nine per cent over the past
He has $200,000 in the bank, $650,000 in
three money market accounts, a seven per
cent $186,000 government bond that matures
in 10 years and a $1,000,000 term life insur-
ance policy that expires at age 85.
Ronald has been grappling with possibility
and implications of succumbing to his illness
whilst Susan and Matthew are still in school.
He wants to ensure their daily living and edu-
cational needs are covered and that his estate
is distributed in the most equitable and func-
tional way that caters to each child s needs
whilst avoiding any potential conflict after he
He is perplexed by what to leave for whom
and how best to pass his assets to his children
so they do not have the headache of dealing
with the courts or attorneys. Brian has given
his word that if his father becomes incapac-
itated he will bring him home and take care
of his needs until the inevitable happens.
Caveat: This discussion does not adequately
cover legal considerations and implications and
appropriate counsel should be sought accord-
Ronald s case is quite common among fam-
ilies. The nature, function and value of assets
can present a challenge when figuring out how
to distribute an estate. Many individuals find
it uncomfortable dealing with death and dis-
tribution and avoid the issue altogether. Others
are pragmatic and simply do a will. Either
way, the stress is often up to the executors
and the heirs.
An executor s job is seldom easy especially
when they have no beneficial interests in the
estate. This can result in neglect and loss of
value of assets. Sometimes for the sake of
simplicity testators (individuals making a will)
instruct that all assets be liquidated and the
cash split equally or proportionately amongst
A problem with this strategy arises when
one or more of the heirs occupy an asset such
as a family home.
Ronald s objectives include: being fair to all
his children, minimising any potential conflicts,
ensuring that assets continue to provide sup-
port for himself whilst alive and for the younger
children until they can fend for themselves.
Another key issue in dealing with his estate
is the, length of time, legal costs and headache
associated with applying for letters of admin-
istration or grant of probate of a will. Even
after the courts have given approvals there is
still the task of transferring assets.
To avoid this, Ronald can consider setting
up things whilst alive. He could either transfer
assets outright or establish joint statuses so
that the survivor automatically assumes own-
ership. He must, however, seek legal counsel
regarding changes to his rights with such a
Some definitions from: http://trinidadand-
Tenants in common: Upon death, the
interest of the deceased co-tenant will pass
to the co-tenant s heirs. Joint tenancy is pre-
sumed unless there are words indicating ten-
ants in common.
Joint tenants: When a joint tenant dies,
his/her heirs have no claim in the property
because the property is left for the surviving
joint tenants ONLY.
Which asset for which child?
1. Brian, the eldest, lives rent free with
his family in a house owned by his father.
He has given a commitment to look after him
should he become incapacitated. Brian will
have the use of Ronald s pensions to help
defray ongoing medical costs. It may be a good
idea for Ronald to have a clearly defined power
of attorney to allow Brian to act on his behalf
if he loses his faculties. If possible a smooth
transition could be achieved by including
Brian s name on the title of this property as
a joint tenant with Ronald. Most probably,
Brian is employed and his current need will
be housing. The value of this asset is $1.8 mil-
2. Malory, recently married, has her own
home and living needs are likely covered
by the family s income. This makes Malory a
good candidate for any of the assets that are
not critical to survival of her siblings.
3. Susan and Matthew, both are students,
and are dependent on their father. The
home they live in has the potential to support
them with the rents of $11,000 even if Ronald
passes and his pensions of $10,000 are lost.
This property will best be suited to these chil-
dren s needs, however, Ronald has to find out
if they are legally eligible to assume title on
Tenants in common might be the better
option if it is legally practicable.
Should this property be passed to them they
can choose to continue living there if they
have separate families. Of course, the spaces
are not the same but each sibling could choose
to occupy a separate floor. The one who uses
the ground floor could convert the space into
a single-family dwelling or live in one apart-
ment and collect the rent from the other.
Moving forward, either sibling can buy out
the other if he or she wants to move out inde-
pendently or they can even decide to dispose
of the property and split the proceeds equally.
The value of this asset is $2.5 million.
Ronald will need to choose the best way to
"top up" each child s inheritance to achieve
equitable distribution. Thankfully, most of the
unassigned assets are highly divisible and with
the exception of the piece of land and the
Table 1 shows a possible distribution option
for each child. You will notice that most of
the money market funds have been earmarked
for Susan and Matthew, which could cover
their educational needs or a possible nest egg
in starting a family.
Malory, by the process of elimination,
receives all other assets including a debt of
$266,000 from Brian because the value of his
inheritance exceeds the equitable value of
$1,784,000 for each child. He can possibly
arrange a personal payment plan with Malory
or use the property as collateral to borrow the
Each child will receive an equal share of the
$1,000,000 term life policy should Ronald
pass as this is only a potential asset.
F C C
How to be fair when distributing an estate
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