"The major hurdle facing the surviving spouse or other heirs to an estate," said Rawson, "is that, as soon as the person dies, his accounts could be frozen - making it impossible to access funds. There have been many cases, which could have been avoided, where people have had to endure serious hardship: these people, being unable to access the deceased's bank account, have had to resort to borrowing money to pay for their daily expenses."
The problem, added Rawson, is exacerbated by insurance policies being paid into the estate. This is usually the case when the beneficiary shares a bank account with the deceased.
"When executors have been appointed," said Rawson, "the law requires that all outstanding debts owed by the deceased have to be settled first - and this can lead to one or more of the properties having to be sold in a hurry. After these sales, Capital Gains Tax may then have to be paid on any profit made, as well as dividend tax paid to distribute the proceeds.
"The cost of settling an estate," he said, "can be as high as 30% or 40% of the total, excluding the debt repayments. Equally seriously, it can take two or more years to reach full settlement - during which benefactors may have no access to the funds in the estate."
The best way to circumvent these difficulties, and to save a great deal of the family's assets, said Rawson, is for the bequeather to establish a trust before his death and to transfer the majority of his assets into this trust.
"One of the major advantages of a trust," said Rawson, "is that it is not frozen on the death of a spouse, as it is entirely independent of the estate and is, therefore, not subject to any estate duties. The surviving spouse, who is usually a trustee, can then draw money as and when needed.
"An additional benefit of transferring assets to a trust is that certain insurance policies may be paid into the trust, which can help cover the trust's costs and, as the trust is not responsible for the deceased debts, there will be no need to sell off properties or to pay Capital Gains Tax."
There are, however, a few objections to using a trust, said Rawson; the most common of these is that it will cost money, payable immediately, to establish a trust and the taxes incurred in transferring property into a trust are higher than those involved in passing it on to an individual.
"One must be aware that trusts are taxed at 40% on their incomes. Expert advice from legal and accounting professionals is, therefore, highly recommended.
"My experience," said Rawson, "shows that establishing a trust is the best way to achieve a smooth handover of property and assets, especially if you expect them to be passed on to subsequent generations."
When seeking a professional's advice and assistance on planning your estate, said Rawson, it is often better to deal with an accountant or a lawyer who has specialised in these matters and who has kept up to date with all the relevant legislation rather than an "expert estate planner" - whose main goal may be to sell expensive insurance policies.
