Sakina Babwani, ET Bureau:
For most people, financial aspirations are driven by a two-pronged need.
One, to derive material pleasure in their lifetime, and two, to
financially secure their progeny after they die. While the former can be
easily achieved, the latter can spawn a morass of disputes and legal
trauma if the legacy is not distributed in the right manner.
This is why amassing assets may be
important, but more crucial is to guarantee that your inheritance is
passed on smoothly to your heirs and
that they aren't swindled of what is rightfully theirs or are embroiled
in lengthy legal battles.
Legal disputes could even reduce the resale value of assets or leave
your heirs to bear hefty fees, eroding the value of your hard-earned
wealth. The only way to ensure a fluid flow of your assets is to
formulate an estate plan, no matter what your age or net worth.
Estate planning can not only help decide about the people you want to be
your heirs, but also fix important details like when, how and in what
proportion they receive your inheritance. An estate plan is crucial if
you have young children as you can name guardians or trustees who will
take care of them.
This process also helps you get your
own finances in order and tie up loopholes, such as getting a propertymutated
or converting physical shares into demat form. Consider it as an
inventory of your assets.
In such a case, it's better to part with your assets during your
lifetime, without actually selling them. There could also be instances
where you may want to assign your assets in such a way that they support
a dependent relative throughout his lifetime.
"A will works well when you want to transfer a handful of properties to
a few people. However, if you have a large estate and the number of
people likely to inherit it are also large, you require instruments that
give you better control over planning your succession," says Ramesh
Vaidyanathan, partner, Advaya Legal.
Succession needs can be complex, and
how you make a will varies from one situation to another. ET
Wealthpresents the
financial instruments that you can consider.
Leaving a legacy
The most basic instrument of estate planning is a will. All you need to
do is to jot down on a piece of paper how you wish to distribute your
assets; even a simple paper napkin will do. Given the evolved level of
technology, people are also opting for digital wills and video wills. A
will is considered a living document as you can make as many changes as
you want.
"This is especially useful when there is an addition to the family,
either in the form of a birth or marriage, and it may become necessary
to make provisions for the new member," says Sandeep Nerlekar, CEO,
Warmond Trustees & Executors
You could destroy the existing will and make a new one or attach a
codicil to the current will. A codicil is an addition or supplement that
explains, modifies or revokes a will.
Though you don't need to register a will, it's preferable to do so to
avoid legal hassles in the future. It also makes it easier for your
heirs to get a probate, which is a copy of the will that has been
certified by a court. Once a probate has been obtained, the will cannot
be challenged on the grounds of mental stability of the testator.
When you register a will, the original is returned to you, while a copy
is kept in the court. This is beneficial because if your copy gets
damaged or stolen, there is a back-up. There is no stamp duty for
registering a will, though minor costs, such as court fee or the cost of
the stamp paper, will have to be borne by you.
You should get two witnesses to
attest the will, and if you foresee any problems that may arise for your
heirs, you could attach a doctor's certificate verifying that you are in
sound mental
health while
making the will. While there is no need for a lawyer to
draft the will, taking the advice of one can help you plug any
loopholes. The lawyer's fee will far outweigh the legal cost that your
heirs may have to incur later on.
Keep in mind
A will can be used only to distribute your assets, not to dictate how
your successors are to employ them. "After a person inherits property
through a will, he is free to do what he likes with it. It is difficult
to retain control over the assets," says Aakanksha Joshi, senior
associate, Economic Laws Practice.
Though you can impose certain conditions, such as one heir cannot sell a
property without the consent of all the other heirs, you cannot
determine how the property is to be utilised. So, if you don't want your
heirs to squander your wealth, opt for a different instrument to
bequeath your assets.
Read the full article from The Economic Times
