Dear Heather,

I own a house and I want to leave it to my children, some friends tell me I need a will, But won’t they just inherit it automatically?

— I don’t have a will, Sandy’s

Dear I don’t have a will,

The answer to your question is complex and here’s why...

None of us want to face our own mortality. Arranging to have a will means admitting to yourself that, you won’t be on this earth for ever. Sadly, the fact is that everyone’s number is up at some point. Often essential ground work is overlooked because it isn’t convenient, involves some time, some paperwork and possibly some fees. Bottom line, you cannot afford not to.

The truth is if something happens to you, your property and assets may not automatically go to those you love. The probate process can be long and drawn out and may not always aw3ard to the estate as predicted.

In Bermuda there are an amazing number of people male and female — old and young — who are not prepared for the inevitable. You work, you have savings, you own a house... your intention is that your loved ones benefit from this. However all too often this is not the case unless you have put the following check list in place:

Your will: Don’t assume your estate will automatically be transferred to your children if you die. One in three persons in Bermuda has a step family.

Scenario: John and Eve married in 1995 they had twin daughters Johnette and Evette. In 2000 John died and in 2005 Eve remarried a man called Cal (who already had three children from a previous marriage) and they had a son Calvin. In 2010 Eve died, she had no Will so her assets went to Cal her (next of kin) husband. Cal died two weeks later (also without a Will). All Eve’s estate went to Calvin and Cal’s other three children (his next of kin) on his death, although Eve had intended for her twins to benefit from her estate what did they get? Nothing! Did Eve care about this? I’m sure she did but she’s dead so we can’t ask her. The message is — you owe it to yourself and your family to get a Will.

Your executor: In your will you will need to name an executor of your estate. Why not choose a member of your family? Well let’s look at their personalities:

There’s the one who thinks he knows everything.

There’s the one who wants everything done her way.

There’s the one who wants everything nice.

There’s the one who wants everything cheap.

There’s the one who just couldn’t care less.

And there’s the one who works 24 hours a day and wouldn’t have time... the list is endless.

Unless you have someone in your family who is knowledgeable, responsible, fair or objective enough to be your estate representative, this responsibility is best given to a professional person who is a neutral party — eg your lawyer.

Your POA: In the event you are incapacitated during your lifetime everyone will be spared a lot of unnecessary trouble if you have in place an ‘Enduring Power of Attorney’. This will allow a person that you designate to take care of your business and affairs if you become incapable of doing so. Failure to make an Enduring Power of Attorney will result in your loved ones having to hire an attorney to make an application to the courts for a ‘Receiving Order’, which will enable them to oversee your affairs when you are incapacitated. A word of warning here, Power of Attorneys can be abused by greedy family members. Choose someone trustworthy and responsible.

Your Registered Primary Dwelling: Your main residence is exempt from death tax if you have registered it as your Primary Family Homestead. Which I have covered in another article click on link to read.

Mortgage insurance: This will cover a lump sum payment off the balance of your mortgage should a party to the mortgage die before the mortgage is paid off. This is a tremendous help for your surviving spouse or loved ones. Bank of Bermuda and Bank of Butterfield both offer this service as do many of the independent insurance companies. Cost varies depending on sex, age, health and if you are a smoker. No exam is required up to $500,000. If you work at your own business also consider disability insurance.

Taxes: If you or the people you designate to inherit your property, have dual citizenship or are an alien spouse of a Bermudian, you will need to investigate any tax repercussions of property ownership in Bermuda with a good tax advisory specialist. Tax policies vary from country to country, it will be pricey but it will save you money in the long run.

Joint Accounts: If you are on a joint bank account with someone at the time of your death, assets in that account will automatically go to them as the joint account holder. Do not keep large amounts of money in a joint account as these monies are beyond the control of the instructions you leave in your will.

Remember this – your procrastination now will cost your family additional money later. Put in place all the paperwork outlined above and with the peace of mind it brings you, may you live a long, happy and healthy life!

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or on 332-1793. All questions will be treated confidentially.