Page Title

What is an Estate Planning and what are the ways in which it can be managed?

Estate is the net worth, at any point in time, of a person alive or dead. Estate planning is a systematic approach to the distribution of one's estate/property according to his wishes. The ultimate goal of estate planning is to fulfill the estate owner's wishes to the extent possible.

There are several tools of estate planning, such as Will, Trust, Gift, Power of Attorney, etc. by which one can transfer/distribute his / her assets.

Every investor should not only look for wealth creation but also for wealth protection and wealth transfer. Financial literacy is the key to estate planning.

Why is writing a Will important for everyone?

• When a person dies without writing a Will, his properties are distributed as per the succession Laws of the religion the person belonged to and not as per his wish. For example, if a Hindu male dies intestate, his properties will be distributed among his class 1 legal heirs in equal proportion. Class 1 legal heirs include Mother, Spouse and Children. To everyone's surprise Father is not a class 1 legal heir. Even if he may otherwise be financially dependent, he will not get anything out of the estate of his son who has died intestate.
  
  Consider a situation where a Hindu male dies intestate, leaving his wife and two married sons, and had just one house property where they lived in. If any son demands his share, the house needs to be sold and the widow shall get only one-third share and may possibly not be able to buy her a reasonable house. If there was a Will that passed on the house to her, state of affairs would have been different.


• The other most important benefit of writing a Will is to appoint a guardian for your minor children. Just imagine if something happens to you and your spouse, who will take care of your children? And who will take care of your property which will be transferred to your children only after they become major?


• The other benefit is consolidation of assets. When you write a Will, you have to provide details of your all assets thus you will have details of all assets at one place.


• A Will helps in amicable distribution of one’s estate and shall avoid unnecessary litigations which could otherwise take place. In absence of a Will, there is a possibility that more than one successor may want a particular house/plot or even fight for the same piece of jewelry.