Estate Planning |
December 20Estate Planning
“An effective estate plan can minimize
hassles and cost on and after your death, and provide benefits to your
surviving family members over the long term.”
As an Estate Planner, I encounter a lot of clients who
are still not aware about or conscious of Estate Planning. An overwhelming majority of Indians still do
not have a professionally written Will and the actual numbers will be closer to
85%+. They think they don’t need to do any sort of estate planning as they
think “Estate Planning” is for wealthy people.
In India, millions of people die each year without any
type of estate plan in place, and this forces their families into the court
system, where they experience the high cost and time delay characteristic of
Succession Certificate/ Probate proceedings.
There are lot of myths floating around and it is due
to lack of knowledge and open discussion on this subject. In Indian society it
is still a “Taboo” to talk about planning after death. Whether or not we plan
to do so, each of us will face death eventually. However, by planning, we can
make our passing easier and better in many ways for those we leave behind.
This article briefly touches about estate planning. We
will be talking about various issues around estate planning in a series of
articles.
What is estate planning?
Around the world, Indians have one of the highest per
capital saving rate. The reasons for saving include lack of social support for
senior citizen from government (in short planning for our own retirement),
habits (we have seen our parents saving extra pie for rainy days) and goal
based saving (like for buying house, car, etc.) among others. They believe in
passing down their hard earned saving in a judicious manner to next generation.
“Estate planning can be defined
as the process of anticipating and arranging for the disposal of an estate.
Estate planning typically attempts to eliminate uncertainties over the
administration of a probate and maximize the value of the estate by reducing
taxes and other expenses.”
Young individuals do not feel the need to plan when
they should start planning. They think estate planning as the thing to be done
at the time of retirement. Little do they realize the uncertainties of life and
equate planning with dying. They don’t realize the problem faced by inheritors.
The main
objective of estate planning is that to decide who will receive and control
your assets. If you desire that every penny of your hard money should go to
your next generation, you should be doing estate planning.
The people
defer estate planning for later date or time. They used to avoid for various
reasons such as-to avoid discussion on demise, avoid difference of opinion with
better half on distribution of asset, lack of knowledge, etc.
Now is the best
time to plan. The same needs to be updated once a year. We must put this on our
priority list and not postpone it, thinking it to be irrelevant.
How to do estate planning
Transfer of assets from one generation to next
generation can happen in following ways:
1. Gift during one’s lifetime
2. Through a Will
3. Application of Succession Law (if one dies without
a Will)
4. Through a Trust
5. Family Settlement
For any Information regarding estate planning. Please contact shammi@myfindoc.com