Planning is the cornerstone of every person’s life. We often make sure that we have some plan in place when it comes to our careers, financial goals and more importantly for the safety and security of our loved ones. We always envision our future with our families wherein we have reaped the benefits of our planning and all their needs and wishes have been taken care of.
Estate Planning is passing down of your assets from one generation to another. In the absence of a clear and non-ambiguous estate plan, your hard-earned assets will be distributed in accordance with the Succession laws which will largely depend on your religion, family structure and marital status. The beneficiaries may have to approach the Court for distribution of the assets which is a time consuming and tedious affair.
Having an Estate Plan is no longer a do-it-yourself activity. With the dawn of the digital era and the impact of globalisation, things are not as straightforward as they seem, and this adds to the complexity of the situation. It is imperative to have an organised Estate Plan in place beginning with making a Will.
Professional help
It is always a wise move to have a Will in place irrespective of your personal net worth. It is prudent to take the help of an experienced professional while drafting your Will. Every person has a different family structure and circumstances, and a professional will make sure that besides being legally compliant, the Will is customised to take care of all your wishes, leaving no room for ambiguity or misinterpretation of any clause which may lead to disharmony or discontentment among your family members.
Moreover, with awareness and in hopes of better returns on their investment, people invest their money in a variety of assets, and it is always advisable to list down your assets and liabilities in your Will which will serve as a record of all your assets. Maintaining such a record of your assets will make sure that your families are well informed about your property thus preventing any leakage of assets.
A Will is a powerful and the most common tool in an estate plan but for families that consist of aged parents who are suffering from any terminal illness or any special child, having only a Will is not a comprehensive solution. A sophisticated mechanism must be created with an objective of taking care of the parents or such special child. Creating a Trust is not the most common form of estate planning, however it is the most effective one.
A Trust is, more or less, a permanent structure which can be used as a medium that helps you achieve certain objectives such as providing for health care and nursing care needs, preventing misappropriation of funds, mismanagement of assets, support, and care, etc. of your loved one in your absence. A Trust enables you to time the distribution of your wealth providing the flexibility by considering the changing necessities, circumstances etc. In fact, this structure can be moulded according to the needs of the creators and any situation that may arise in the future. It can also help in ring-fencing of assets against possible losses due to business liabilities, family related liabilities arising in the form of divorce or maintenance claims, taxation, or any potential creditors. One of the most overlooked features of a Trust is the ability of it to bypass the lengthy process of probate. As an Estate Planning tool, Trust is highly effective and efficient at allocating, maintaining, and ensuring that the assets are utilised for the benefit of the beneficiaries at the right time and in the right proportion, depending on the nature of the Trust.
Estate Planning is the need of the hour, the sooner you get started, the better it is. Whatever be the form and shape of your Estate Plan, it is crucial that it is free from all kinds of lacunae, is clear, non-ambiguous, legally viable and complete in all respects. After all, a wise and complete Estate Plan is what is needed to protect your loved ones, your wealth and transfer of that wealth smoothly to your future generations. We cannot deny that the best feeling in the world is knowing that your loved ones will be protected and cared for, even when you are not around.
The writer is Managing Director – Ladderup Wealth Management Private Ltd.
