Estate Planning is “ the process of making proper arrangements for the Protection, Preservation and Provision of a person’s assets for the benefit of his/her family and loved ones after his/her time”. Thus it also encompasses maintaining and enhancing of financial security,standard of living and welfare of the intended class of beneficiaries.
Many people are of the opinion that Estate Planning is an unpleasant and morbid subject. They are put it off because they are “too busy,” or because they think they don’t own enough assets to plan for, or because they don’t like to think about death.
There is no doubt that Estate Planning can raise some difficult emotional issues. Unfortunately, ignoring these issues now may cost your family thousands or even millions of rupees later, as well as cause considerable anguish. Proper Estate Planning can give one tremendous peace of mind.
Life is always unpredictable. Hence it is necessary for each and every person to plan for these unpredictable events. An estate plan can put you in control of your legacy. However, many people think building this type of plan might not be for them.
The objectives of Estate Planning is
- To ensure that the assets will provide the client with the necessary income and resources upon which to live.
- To ensure that at the time of one’s death, the assets go to the people where one intended to go
- To minimize the fees and any associated costs in inheritance of the the estate
The Consequence of improper Estate Planning are
- Intestate succession
- Inadequate survivor income and asset transfer
- Improper ownership of assets
- Failure to plan for disability or last illness
- Lack of liquidity
Benefits of Estate Planning
- Provide for your immediate family. The estate plan will provide enough money for your surviving spouse to continue to care for the family. If both you and your spouse pass, an estate plan will name appointed guardians to care for your children.
- Ensure property goes to the right beneficiaries. Your estate plan will outline exactly where your assets are to go in the event of your death. This leaves no questions to be resolved by the courts or cause for family discord.
- Minimize the expenses and costs. When you take care to create an estate plan, you should be able to keep the cost of transferring any property to your named beneficiaries.
- Ease the burdens of your family. It can be difficult to plan the funeral of a loved one when grieving. When working on your estate plan, you can outline your wishes for funeral arrangements and even set aside funds for them. This takes some of the burden off your family during this difficult time.
- Support a favorite cause. If you are passionate about a local cause or charitable organization, an estate plan can allow you to support them after your passing.
- Plan for any kind of incapacity. Life is unpredictable. If you should ever become mentally or physically incapacitated, an estate plan will outline your wishes regarding life and who will make medical decisions on your behalf.
- Establish trustees over your estate. You’ll need someone to serve as the executor of your estate to make sure everything is handled properly. Your estate plan will name this person, which will save money and simplify the administration process.
- Provide for those who many need help. Do you have a child who has a disability? Or perhaps you have grandchildren who will be attending college in the future. Through your estate plan, you can set up a special trust to provide funds to support them.
- Ensure a business continues with a succession plan. If you own your own business, you’ll want to establish some kind of plan to keep it going after you pass. An estate plan will name your successor and outline what happens to your interest in the business.
In the event of dying intestate, the property of the deceased will be distributed as per the applicable succession laws. Hindu Succession Act, 1956 is applicable to Hindus, Jains, Sikhs and Buddhists; Indian Succession Act, 1925 to Christians, Parsis and Jews and The Muslim Personal Law (Shariat) Application Act, 1937to Muslims. Laws of succession in case of interfaith marriages, under Special Marriage Act, 1954.
In the absence of proper estate planning, your heirs may not be able to receive any of your property from your estate for a long time. This is because, the succession certificate need to be obtained from the civil court. Another disadvantage of dying intestate is that you will not be able to control which heirs will receive your property.
Estate planning can be complex and it’s a good idea to seek the professional advice and assistance of both a financial adviser and a legal professional who is experienced in such matters or an Estate Planner. Estate Planner, with support from other specialists, will be able to come up with a comprehensive estate plan that complies with laws and regulations. If necessary, Estate Planner should consult other relevant professionals such as Lawyers, Accountants, Tax Consultants, Investment Advisers to ensure a unified financial recommendation.
It is important to have an estate plan even when one does not have a lot of savings or property. It helps avoid a lot of trouble and costs for your survivors at a very difficult time. Estate planning is for your loved ones and for your own peace of mind.