WILL - An Effective Tool for Estate Planning

We all dream of leaving a legacy

What is Estate Planning?

An estate is the net worth of a person at any point in time alive or dead. It is the sum of a person's assets – legal rights, interests and entitlements to property of any kind – less all liabilities at that time. Estate planning is the process of anticipating and arranging, during a person's life, for the disposal of their estate. An Estate Plan incorporates a person’s wishes about his estate, could be regarding management, preservation and distribution of his/her legacy during and post life. The primary goal of estate planning is ensuring that the estate of the individual passes to the estate owner’s intended beneficiaries in an tax efficient manner while avoiding complexity and delays by legal processes & courts interventions. Tools of Estate Planning: There are various tools that a person can adopt for getting an estate plan in place. Some tools are effective during the lifetime of an individual while some after his/her death. The following are the popular tools used for estate planning by transferring the assets to the beneficiary, with or without restrictions, A) During lifetime: Gift Trusts Power of Attorney Partition B) Post Death: Will

What is a Will:

A Will is the most practical first step in estate planning and also often the most appropriate for majority of us. The importance of drawing up a Will is often highlighted as one of the biggest financial planning steps you Will take and it is something that is ideally suitable for a majority of us. A Will is a legal declaration of the intention of a person regarding assets that the individual desires to take effect after his or her death. It is a confidential, personal document that clearly states how you want your assets to be distributed when you are no longer physically present. Not Having A Will: If you don't have a will, and thus die 'intestate', your estate will be distributed according to the succession laws of India based on your religion. Your property will then be distributed differently than what you would like it to be. Your loved ones will have no control over your estate and there are chances that conflicts may arise. A Will obstructs the natural flow of succession laws so that the assets are inherited as per the wishes of the person concerned. Further, it is most likely that your family, in your absence, will face huge problems and delays in getting the assets transferred to their names. It would involve a lot of legal procedures, visits to courts and not surprisingly, much delays at a time when your family needs emotional & financial support. The laws of succession certainly do not cater to the specific needs of your family. For example, in absence of a Will, your father may end up getting nothing as per laws and everything will go to your spouse, mother and children under the Hindu Succession Act. Another problem will arise where laws do not distinguish between handicapped or mentally challenged persons and the only way to make sure that such dependents get a higher share is through a Will. Also, apart from the legal heirs recognised by law, none of other loved ones and dependents will get anything and this will cover your siblings, even if they need care and support. One also needs to remember that even if you have appointed nominees to your financial assets, they are only 'custodians' of the assets and not owners! Your legal heirs, as per the succession act, will be the real owners after your death. Advantages of writing a Will: India is fast changing. We no longer rely on our traditions where family legacy was passed on from father to sons without much issues. Today, things are much difficult and family dynamics have also changed and so have the laws. Today, it is difficult to leave a legacy without family conflicts even though they may not be visible today. For many families wealth distribution may take place within the lifetime of the main owners. Though, this is not the case with every family, and some very famous incidents have occurred in some of the wealthiest families which clearly highlights the issue of “lack of proper estate planning” and how quickly a family dispute can spiral into a big conflict. The clear answer to avoid all this confusion and conflict is to write a Will. A Will is the best way to ensure hassle free transfer /distribution of assets to the beneficiaries as per wishes of Will writer called as the “Testator”. Having a Will greatly helps by... Consolidation of all asset details at one place Ensuring financial care of dependents, special child, and minors Appointing guardians /care takers to your child and other dependents Distribution of assets as per your wishes and not as per the laws of the land Preventing disputes in the family by stating distribution of assets clearly Ensuring your loved ones do not face lengthy legal processes /hassles in your absence Protection and handling of assets as per your wishes Avoiding courts issuing Letter of Administration and appointing an Executor Reducing chances /grounds of disputes /fights in family regarding distribution Survival and continuation of business and/or charitable causes

Who can make a Will and what are the characteristics of a Will?

Well, any person who is an adult, in sound state of mind and free from influences, can write a will. Further, there are no restrictions as to how a will needs to written or drafted. A hand written will signed by you and at least two witnesses is good enough as per law. The following are the important characteristics of a will: 1. Will is a very flexible document and easily modifiable 2. A Will can be in any written in any language, manner or form as there is no specific requirement for same 3. A Will is not required to be written on stamp paper or be registered by law 4. Will ensures the proper method and proportion of distribution of assets 5. A Will can be modified or altered at any time and any number of times during life time. 6. A Will is revocable during the lifetime

Requirements of a good Will:

While there appears to be no big requirements for writing a Will, it is very often seen that such Wills are often contested and are held up in disputes. The entire effort and purpose of writing a Will can go for a toss if the Will document is not correctly drafted. Hence, proper care & time should be taken while drafting the same. The following are the requirements for a Will to be considered good & properly drafted... 1. All necessary identification details of the all parties including, Testator, Beneficiaries, Executor and Witnesses. 2. Clear & detailed information of all assets and liabilities 3. Clear information about the

10 relatively easy steps:

The hardest part of writing a will is often finding the will to write it. After all, it's a document you hope won't be used for a long time. By writing it, you're acknowledging that you may not be immortal. Add in the many other activities that are more fun than writing a will, like going to the beach or hanging out with friends and family, and you have a surefire recipe for procrastination.

If you’ve been putting off the task, here's your chance to cross it off your list. Get started now, and finish your will in 10 relatively easy steps.

1. Lawyer, online software or do it yourself? Because there are so many opportunities to make mistakes, don’t opt for a DIY will.

2. Select your beneficiaries. When you die, someone is going to get your money, your house and other assets. You probably won't have to think long about beneficiaries, unless your family structure is complicated. There will be a place to identify beneficiaries on the form, and if you have an attorney, he or she will write your will for you. But it isn't a bad idea to first get everything on paper, just for your own thoughts.

3. Choose the executor of your will. This person is tasked with making sure the wishes in your will are carried out, so you'll want to choose someone who is responsible. If you designate one of your children as the executor, and your kids don’t get along, that could also be a problem. In the interest of "family harmony," he says you may want to consider designating a neutral party, like a bank. The job of executor is also difficult work, and even a trusted, smart family member could make a mistake. Your family might get more for their money if you hire an attorney or bank to execute your will.

4. Decide if your executor will receive compensation. If you choose a bank or lawyer as your executor, there will be a fee involved, which is usually between 2 percent and 4 percent of your estate's assets.If you're designating a family member or friend, it’s a good idea to be clear about whether they’ll be compensated and, if so, whether it will be an hourly rate or a percentage of assets. "Oftentimes, people will want to leave it sort of vague, where they have language that allows for reasonable compensation. Keep in mind that closing an estate can be an arduous, complicated slog. You may have your reasons for not wanting your executor to earn some money closing your estate, but hopefully they're good reasons.

5. Pick a guardian for your kids. Do you need to get permission from your friend or family member before appointing them guardian? No, you do not.

6. Be specific about who gets what. If you want your jewelry to go to your daughter or your antique armoire to go to your son, put that down. And if someone in your family isn't going to receive anything, make note of that, too. "Otherwise, the implication could be that you forgot about them, and you could find your will challenged in court". You may also want to explain in the will why someone isn't receiving money. For instance, if you've given one child a lot of financial assistance as an adult and the other virtually none, you may want to leave the bulk of your assets to the one you didn't help.

7. If there's more you want to say, attach a letter to the will. In the movies, there's often a reading of the will where heirs come together and hear who will receive what. That doesn't happen often in real life. Wills, being legal documents, are often impersonal, although there's sometimes room for the occasional sentimental or humorous aside. "You might write a letter to the child or spouse or guardian. You see that a lot with letters to guardians where you express your hopes and desires in how your child would be raised.

8. Other people need to sign the will. You need witnesses, and in many states, the witnesses can't be people who stand to inherit anything in the will. Your witnesses also need to be at least 18 years old. And ideally, they should be people who are likely to be around when you aren't. That’s because if something goes wrong and your will is contested in court, the judge may want a witness to testify.In some states, you'll need two witnesses; in others, three. "When wills are signed incorrectly, they can become invalid. As you can imagine, that can be horrible,"

9. Find a place for your will. Don’t just throw it in a shoe box and forget about it. What if the unthinkable happens and your heirs need it? (E-Vaultz) .Make sure someone you trust knows where to find your will as well as any other important papers and passwords to financial institutions like banks.

10. Now that you're done, you aren't done. Assuming this is still an unfinished part of your agenda, you should work on a power of attorney and a living will in case you're ever incapacitated.