"In this world nothing can be said to be certain, except death and taxes.”
Benjamin Franklin,the statesman and diplomat has so aptly stated.
But interestingly, many of us despite being aware of this inevitable fact, often avoid thinking about it, or defer estate planning to another day. We at Prosperria, emphasise the importance of estate planning to our clients in the interest of their family’s well being. Estate planning refers to passing assets / investments down from one generation to another, and it is a dynamic process that needs to be reviewed at regular intervals to absorb any changes that might happen in our lives or in the laws of the country. Life is quite unpredictable and hence, the earlier one thinks through and plans, the better it is.
Dying intestate (i.e. without a legal Will in place), can leave various complications for their family, as disagreements and bickering may happen.
One should begin with estate planning in the mid-asset accumulation phase, when you are between 35 to 45 years of age or latest in the protection phase of your economic life cycle, when you are between 45 to 55 Years.
Estate planning done in a systematic way prevents the addition of financial and legal grief to the emotional grief. You need to understand the host of benefits that come along with effective estate planning.
- Estate planning ensures that physical assets and investments are inherited by the people to whom you want them to be transferred to after your demise.
- Effective estate planning prevents financial, emotional, and legal grief to loved ones, if done prudently
- It also avoids complications, disagreement, bitterness, and drift in the family.
- Estate Planning might also help to reduce the tax outgoing the beneficiaries of their estate will be expected to pay from bequests. For instance, instead of passing on assets after death, you can recommend them to be gifted to their loved ones while he/she is alive. If left to the prevailing intestacy rules, there is a chance that a higher amount of tax may be applicable on the property and other assets.
Ways to carry out estate planning
- Transfer assets to beneficiaries by creating a Trust – This might also enable you to decide how and when your beneficiaries must receive their inheritance. Creating a trust is largely useful when your spouse and minor children are unable to manage their finances on their own. But, overseeing the Trust well is also a critical aspect and should not be ignored.
- Drafting a Will – Ideally, a Trust should be complimented by Wills as it is the cornerstone of all estate plans. If you write a Will, it would provide you with an enhanced understanding of your current financial strength and an opportunity to improve upon it in the remaining life span. Please ensure that you keep the following points in mind while writing a Will.
- A Will should be Simple, Precise, and Clear. It is always better to take the advice of a trusted advocate when writing a Will.
- A Will can be prepared by anyone who is not a minor, of sound mind, and free from any coercion, fraud, and undue influence.
- A Will can be hand-written; it need not be typed out, neither is a stamp paper necessary. A simple A4 size piece of paper would do.
- A Will should have be properly signed with 2 witnesses. A Will must be dated. If more than one Will is made, then the one having the latest date will nullify all other Wills. Each page of the Will should be serially numbered and signed by the testator and the witnesses to avoid any fraudulent changes.
- It is not compulsory for one to register a Will with the Registering Authority, but in order to avoid frauds and tampering; it is always preferable to register it.
- We must make a Will at a younger age. As and when events or changes in our family necessitate a change, the Will can be changed.