One of the much-overlooked aspects from the bear market may be its likely impact for estate planning.
Understandably, most investors would have focused on what the severe downturn may mean for them right now and for their financial futures - particularly if they are on the eve of retirement.
But a recent article in The Australian by journalist Michael Laurence makes some telling points for investors whose once carefully structured estate-planning strategies may have been disturbed by the fall in share prices, depending on the makeup of their investment portfolios.
Laurence quotes estate planning lawyer Andrew Frankland of solicitors Bartier Perry in Sydney as saying you shouldn't wait to see how long the market takes to recover before reviewing your will and the rest of your estate planning. Frankland says this particularly applies to older people and anyone with health problems.
Keep in mind that the 1987 bear market took more than six years to climb from its lowest point to reach a new high. (That bear market, nevertheless, regained 35% of its lost value in the first 12 months after the low - so the force of a possible early rebound cannot be ignored.)
Another estate planning specialist, Peter Bobbin of The Argyle Lawyers in Sydney and Melbourne, suggests holding a family meeting to explain any of your plans to rewrite your will following the sharemarket shakeup. "These meetings can be unpalatable," Bobbin tells The Australian.
However, Bobbin suspects that such family meetings could reduce the likelihood of family disputes following the benefactor's death. For instance, your existing will may allow for all of your listed shares to go to one adult child and other assets, such as directly owned real estate (of equal value at the time the will was written) to go to another child.
As with any matters flowing from an extremely severe market downturn, one of the smartest moves is not to overreact but to gain advice from respected professionals. Perhaps your will has been structured in such a way that - given the nature of your assets and of your wishes - it is appropriate for all sorts of markets.
Like most things in investment and in life, much can depend on the circumstances.
19th-November-2008 | 