One works hard throughout his or her life creating assets. And one of the primary reasons for doing so is to ensure financial safety and security to their loved ones. But what would happen to these assets on the person’s sudden or untimely demise? Have you given a thought to it?
That’s where estate planning comes into the picture.
Estate Planning is not only for the Rich and the Old. And it is definitely not an exercise to be looked after post retirement.
Estate planning in simple terms refers to the passing of assets from one generation to the next. The person doing estate planning decides how much of the estate – be it property, car, personal articles, financial investments, etc. – will to pass on to whom and how, after the person’s demise. It is a dynamic process that needs to be reviewed at regular intervals to absorb any changes that might happen in our life or in the laws of the country.
Importance of Estate Planning
Dying intestate i.e. without a valid Will in place, can create various complications for your family. There could be serious disputes amongst family member over the estate that can devastate the peace and happiness of your family.
In certain cases some members of the family require special care and may not be in position to handle the assets that are left for their benefit. At the same time leaving such assets to other family members for the benefit of such “special need” members does not eliminate the risk of the misuse of assets for other purposes.
Tools of Estate Planning
There are various tools that can be used for Estate Planning. Wills and Trusts remain the most popularly employed tools for Estate Planning.
A Will is legal declaration of the intention of the person making it (called the testator) with respect to property that he desires to be carried into effect after his demise.
A trust is an agreement between the person making the trust (called the settler) and other person(s) (called the trustee, who agree to receive and hold such property) to transfer the legal ownership of assets / property to the trustee with the obligation that the same should be held for the benefit of the beneficiaries as specified in the trust deed.
It is important to use appropriate tool for a planned disposition. The smooth transition of estate to the next generation with an assurance of management of one’s assets as per desire is the sole object of estate planning. The best practise for best results is guidance of an expert in this field. Take an informed decision and reduce the unwarranted hostility amongst the successors.