Cover (Photo: Getty Images)

In this uncertain economic climate, getting your affairs organised has never been more important

Our mortality—the one thing all of us have been acutely aware of in the past two years. While processing the unique yet blunt shock the pandemic delivers month after month, many have given more attention to financial management and estate planning to either prepare for the worst or at the very least, strengthen fiscal balance in their households. Although we dread the possibility of sickness, putting one’s financial affairs in order has become the deed and need of the times.

As early as August 2020, a Forbes article by Amy Danise already mentioned a surge in life insurance shopping amongst Americans, noting that most of their correspondents considered the pandemic a huge wake-up call to re-assess their finances. This trend was similarly observed here in the Philippines by Atty Robert Camalig, Security Bank’s lawyer for Trust and Asset Management. “A life insurance policy is just one of the many estate planning tools available to an individual,” he was quick to share. While estate planning itself is a broad concept, Camalig mentions it basically encapsulates “any activity permitted by law that allows an individual to strategise for either the preservation or distribution of his/ her assets”.

There are many options available when it comes to wealth management, the life insurance policy being one of the most popular and beginner steps. Other tools include establishing a holdings corporation, transfer through sale, prenuptial agreements, and creating a last will and testament or a personal management trust (PMT).

Contrary to common knowledge, estate planning isn’t necessarily limited only to those with families or high net-worth individuals. Camalig mentions, even young professionals or single individuals can benefit from it, particularly, the establishing of a PMT, which he was careful to differentiate from a will. A PMT, he notes, works best if and when one has “[a] diverse pool of assets, specific beneficiaries in mind and [is] eager to avoid unnecessary costs and expenses”.

In the Philippines, a will, while more commonplace, often accrues more cost, either in taxes or possible court proceedings due to its need for probation. A PMT, on the other hand, can be seen as “an agreement between a Trustor and Trustee whereby the latter manages the assets of the former which will later be distributed in favour of the former’s beneficiary/ies. The time and conditions for release may be specifically provided in the agreement”, Camalig adds. It is often a good option for those looking for a more cost-efficient process to divvy up assets and establish trustees while still alive. Camalig also drives home an important point: “Properties under [a] PMT no longer form part of the estate of the deceased; as such, they may no longer be contested by heirs or creditors as long as the disposition is not inofficious or not in violation of the Civil Code.” A useful tip, especially for those who want to avoid familial disputes with succession plans.

Whichever tool you avail of, there are five key elements to a good and well-rounded estate plan, according to Carmela T Lim, SAVP, head of Sales and Client Acquisition for Security Bank. First, it should have an accurate and complete inventory of the trustor’s assets. Second, a clear preference [or direction] with regards to the management of said assets. Third, instructions and conditions for distribution of said assets must be specific and concise. Fourth, the list of beneficiaries must be certain. And lastly, a survivorship option must be available should one’s initial beneficiary fail.

Wealth management may be intimidating to some, but both Camalig and Lim voiced out that it only takes the right partner to walk you through the process. Whether you’re setting up a will, looking to create a PMT, or simply availing of your first insurance policy, the key is to find a seasoned expert you can rely on and fits your needs and investment goals.

There’s no certainty when the pandemic will truly come to an end, but if the past two years are anything to learn from, being prepared and keeping one’s ducks in a row have proven more beneficial than ever. As the slogan goes, “make your money work for you”—understanding one’s fiscal needs has been pushed to the forefront alongside a renewed importance for health and family. And there’s no better time than now to lean into fiscal responsibility and estate integrity. “Prepare for the worst and hope for the best” rings eerily true in the backdrop of our pandemic lives. While we don’t know what tomorrow holds for any of us, we can at least know what we have in store for tomorrow and the years to come.

Debunking the Myths

Estate planning is only for the elderly.

Anyone who has assets and wants to preserve them, ensure their orderly distribution to specific beneficiaries and avoid unnecessary expenses and costs may benefit from estate planning regardless of age.

Estate planning is only for high-net-worth individuals.

There are different estate planning tools, which are recommended to every asset size and budget. One does not have to be extremely affluent to preserve his assets.

Only blood relatives may benefit from a person’s estate.

There are estate planning tools, like a PMT, which allow non-compulsory heirs to benefit from the estate of an individual.


Securing Your Future With These Digital Banks, Stocks, and Insurance Policies

Sustaining Wealth and Legacy with HSBC Global Private Banking

Get to Know Bluechip Stocks in the Philippines to Invest In This Year

© 2022 Tatler Asia Limited. All rights reserved.