Will Creation, Succession Planning- PlanetWealth Financial Advisory

Estate Planning

Succession Planning

Estate Planning or as we like to call it “After Life Planning” has two basic characteristics viz;

Most Critical Area

Most Ignored Area

No one even likes to think about this area; it’s unpleasant and who wants to even imagine the end of life! Besides many feel that this is just for the rich, super wealthy type of people. Basically if you earn something and you have created some asset Estate Planning is meant for you. Your estate is all the wealth that you possess; car, house, jewellery, bank accounts, Mutual Funds, shares, antiques, collectibles …everything you own. You want to make sure that it is handled well after you and that it goes into the right hands; it is distributed to your loved ones or to whomsoever you decide.

Do it yourself:

If the above holds true for you then the process is very simple. You can start right now; pick up a paper and pen and simply write down what you would like to give whom. This is your Will. There is nothing right or wrong about it; it does not need to have iron clad legal language etc. A simple wish list of who should get what signed by two witnesses should do for starters.

Let us guide you:

There are 3 fundamental things we like to do when we undertake Estate Planning assignment for any family.

1. Detailed interaction:

We note down things you want as well as make you aware of many things that might not be directly obvious. We make your draft Will followed by many rounds if needed to finalise the Will document.

2. Bypass legal issues:

In doing the above we essentially like to do this where we bypass any legal bottlenecks. If you die with a Will your family will most likely need a probate to execute the Will. If you die without a Will your family will need a succession certificate.

Then it is important to understand the popular options you have for distribution of your wealth / assets;

– Nomination
– Gifting
– Joint Holdings
– Family Agreements
– Memorandum of Understanding
– Memorandum of Settlement
– Creating a Trust
– Creating a Family Company

Why Do You Need Succession Planning?

Benefits of Succession Planning

Avoid Family Disputes

Biases will always play a role; the needy may not get what you desired.

The distribution may be inadequate & heartburns with other family members.
If you are in business then controller or group of controllers of your business may divide in unfair shares.
There is just no way for you to ensure a fair and desired level and type of distribution.

Legal Bottlenecks & Costs

Family will not get wealth without a probate process and this can take years.

Probate entails high legal costs, family goes through hardship, stress & inconvenience. The same applies to succession certificate if an individual goes away without a Will.
With a Will there may still be issues; civil court cases which may go on for years. You just cannot get what is yours easily.
Will alone is not the answer; Estate Planning is the answer.

Distribution of wealth as desired

In many cases part of the family may never get all the benefit.

The person next in line may just not reveal everything to the family due to vested interests.
Personality dynamics and interpersonal relationships also play a big role here.
You cannot safeguard interest of minors if any.
You have no control over special wishes that you may have desired to be carried out.
Mismanagement of funds is a sure possibility too.

State Succession Law takes over

Can you imagine a stranger as a guardian to your child. Care taker to your spouse & family. In many instances the state takes over and makes distribution as state deems fit or to state’s treasury if there is no beneficiary. This happens; consider an example – you make an investment and no one knows about it. When you are gone no one still knows about it. Who is going to claim this? After a good waiting period if there is no claimant the asset is transferred to the President of India. The state takes over. Think about claiming it from the state if you discover this later!

Process of Estate Planning

Estate Consolidation

In simple words this is collecting and controlling all your money.

Consolidation of bank accounts, credit cards, migration to technology (if not done already), all documents be it insurance, investment, property etc.
Making a log of everything with schedule of purchase and other relevant details.
Making a summary of proposed large outgoing cash flows in the next few years.
This enables you to get great control over your wealth as well as enable you to get your basic book-keeping in order.

Estate Transfer – Initiation of the Process

Once you have done the above and you know what you have and where the next most important step is to safeguard your wealth in the true sense.

A general rule for all assets is to check on holdings and nominations. If you and/or your spouse go away without a nomination your children will have to face a daunting list of tasks to perform and co-ordinate to have the transfer in their name. This could also take years. If the children are not aware of what you have and you have moved addresses and the bankers do not know of this… imagine where the money would go? The same principle applies to all other investments as well.

A good way to organize all of this is to prepare your will. Let someone also know where to find your Will once you are gone. There is quite a bit of complexity if you go away without a Will and without checking on holdings & nominations

Better still is to do things by which you can pretty much bypass the Will and / or succession certificate process altogether.

Make your Black Box!