This is how to write a proper succession plan

Succession battles in two of Kenya’s prominent political families have revealed why a properly written estate plan is critical for family succession.

In the first instance, the High Court in Nairobi last month distributed Sh14 billion wealth among the dependents of the late powerful cabinet minister Mbiyu Koinange. This was after a 39-year succession fight.

In the second instance, the family of the late cabinet minister for Defense Njenga Karume have been living in near penury. This is despite wealth worth billions left behind by Karume. There are many such cases.

Today, we take a look at how you can avoid these scenarios by drawing a reasonable estate plan:

Wills: You can have a written or spoken will. However, the law only allows a spoken or oral will to be valid for a period of three months (apart from persons in active service, for example, military officers serving in Somalia).

To make a spoken will, you will need to have two witnesses. These witnesses must have a uniform message as a contradiction will result in the invalidation of the will. The witnesses must be of sound mind. With a written will, you must be of sound mind when making it. You must also sign or have someone of sound mind sign it at your direction.

You will also need two witnesses who should not be among the beneficiaries. “Writing a will does not limit your rights in dealing or handling the property as you wish. For example, you can still dispose the property if you so wish,” said family lawyer Judy Thongori in a Stanbic Bank webinar on estate planning.

“If a will is done and signed properly, it is more than likely to be upheld by a court of law.” The court can however revoke your will if you wrote it before marriage. “This means that after marriage, you will need to update your will to include your dependents. These dependents are your spouse and children."

Dependents not in will: Dependents who were not adequately provided for by the will may petition the court. But according to the Law of Succession Act section 26 and 27, the court shall have complete discretion in ordering the specific share of the estate that shall be given to the dependent.

Joint tenancy / ownership: This involves the registration of a property in your name and another person who you wish to benefit. Once a joint tenancy is registered, the property cannot be passed to the person you have listed through a will. Ownership will only automatically be passed to them in case you die and evidence of your death is presented to the registering authority.

Inter vivos: This involves transferring of property given as gifts. Once transferred, this property is not considered part of the estate. “Say you leave behind a multimillion estate without a will, but have already gifted one of your sons a house worth Sh50 million. When the matter on how to distribute wealth comes to court, and the court decides that everyone is to get Sh100 million, the beneficiary who got the Sh50 million house will receive Sh50 million only. This is because they already got the balance in form of the gift,” lawyer Thongori adds.

Nomination: According to lawyer Thongori, this is common with life insurance. “If you take a life insurance, you can nominate the person who will take the benefits in the event you die,” she says. “If you nominate Jane Doe in the insurance document as the beneficiary, but then nominate Anne Joe in the will, the person to take the benefits will be Jane Doe who was listed in the insurance policy.”

Trusts: They are created through a written document (settlement document or declaration of Trust document) which sets out the duties and powers of a Trustee. As such, a trust is the legal obligation formed at the request of the property owner (known as settlor) and held by a trustee for the benefit of third person known as beneficiary.

In the case of Njenga Karume, his multibillion estate was under management by three trustees. The trustees were kicked out of management last month by a Nairobi court for breaching the Deed of Trust after a petition by the beneficiaries (Karume’s children). According to Thongori, if you own a property and want to hold it in trust for your children, you can act as a settlor, a trustee and beneficiary.

“You move the property from your name. You put it your name as holding in trust for your children. Upon your death, that property will not go to your estate for redistribution, but to the children for whom you hold in trust,” she said.

Takeaway

1). According to a report on estate planning by property and investment firm Cytonn Investments, if the deceased person did not have any will, the succession falls under the jurisdiction of the court under the Law of Succession Act. When there is an oral or written will it will apply in the property distribution.

2). According to lawyer Thongori, with estate planning, you can nominate a guardian for your children, and nominate someone to manage and handle your financial obligations in case you ever become unable to do so.