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Recently, Justice Minister Norbert Mao said the succession of power and successor to President Museveni is ongoing in the walls that matter and between the people that matter. This, in my view, is very important.
The reason is somewhat obvious given that it is important for the continuity of the country. But equally important is the succession planning for our lives and businesses.
Many Ugandans have never planned for their lives or businesses after them. The fear apparently is that you are bringing bad luck (of death) upon yourself.
Ironically, death will certainly occur whether you plan or not, whether you like it or not; unfortunately, the biggest cause of family disputes and business disruptions is our failure to set out a plan of how things/assets/business should be dealt with at our death.
In law, the process by which someone plans how his/her assets are to be passed on to others or dealt with at her death is called estate planning. Literally speaking, the word ‘estate’ is used to mean a person’s assets (dead or otherwise).
Basically, to plan is to state, especially in writing, that I want asset A to be dealt with in this manner and by so-and-so for the benefit of so-and-so. Estate planning can also be the means by which liquidity is/can be guaranteed for taxes, expenses for administering the estate, and the like, while preserving the assets of the estate.
In short, with estate planning you can preserve your business, assets and wealth for generations. For one to plan her/his estate, there are four tools used; the first and most common one is the will; the second is trust; the third is a gift and, lastly, joint ownership.
Through estate planning, therefore, one can provide for his/her loved ones in an organised and dispute-free manner, yet the process is not complicated at all. There has been for long a misconception that estate planning is complicated, but this is only a misconception.
Let’s start with the tools and how these tools can be used. Will: a will is the declaration of a person’s wishes about the disposition of his/her assets on his/her death. The law in Uganda requires that the will must be in writing, it must be witnessed by not less than two witnesses and signed by the maker on every page thereof.
The will must name the person receiving the assets. The maker of the will must be over 18 years old and of sound mind. A will only takes effect upon death. So, it is as simple as that: get a piece (s) of paper, make sure two witnesses are with you while making the will, and that’s it.
Nothing more. The law also allows mutual or reciprocal wills; these are two wills with reciprocal terms, each written by a person who intends to dispose of her/his property/assets in favour of the other.
This leads us to another positive for estate planning, which is that a will can be revoked before death in the event you (the maker) find reason to, which is planning. For a moment let’s compare this with intestacy, which is dying without a will.
Intestacy happens all too frequently almost everywhere in the world, even in the most advanced economies. Even those who know the consequences for their heirs often put off making a will until it is too late.
One big example is former US president Abraham Lincoln, who was also a lawyer. He died without a will. So, when one dies without a will, the administrator, who can be a relative or not, distributes the assets in accordance with the law, which may sometimes, if not most times, be unfair, and this has been the greatest contributor of disputes at the Family division of the High court of Uganda.
Everyone claims to have an interest without actually being the owner; after all, the owner is dead. Like Gen Zs say, it’s not cool.
Trusts: these may be created in a number of ways: by bequest in a will; by agreement of the parties and by a court decree. In whichever way it is created, a trust is governed by a set of rules. Every trust involves specific property, known as the res (thing), and three parties, though the parties may be the same person.
Trusts are created for many reasons; for example, so that a minor can have the use of assets without being able to dissipate them or so that a person can have a professional manage his money.
A good example of a trustee is banks and insurance companies. A trust has three parties; a settlor/ grantor (this is the one who creates the trust), a beneficiary (for whose benefit the trust is created) and a trustee (the manager of the trust).
This, therefore, means that a beneficiary may usually sell or otherwise dispose of his interest in a trust, and that interest likewise can usually be reached by creditors. It is, however, important to note that a settlor may create a trust of which he is the beneficiary, just as he may create a trust of which he is the trustee, but he cannot be all three.
For example, when one takes out a life insurance policy, the insurance company is the trustee, the children or any person who will receive that money is the beneficiary, and the insured/person remitting the premiums is the settlor.
A trust can be made while one is alive; this is what we call inter vivos (or living) trusts. A trust can be created by will, which we call testamentary trusts. This becomes effective on the testator’s death.
So, the inter vivos trust can be revoked at any time. Although one may choose to make it irrevocable. The next time we shall look at joint ownership and gift inter vivos as tools of estate planning.
kafsalex@yahoo.com
The author is an advocate of the High court with speciality in estate planning
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