From the time you get into your mid-twenties, you spend most of your life creating wealth through investments, assets, real estate and more. But what happens when you are gone?
Estate planning is one of the most important steps to ensure that your final property and wealth distribution happens according to your will. Amongst your children, you may want to give more to the financially weaker one. Not only wealth, you may hold sentimental value with specific things, and would like to give it to particular members of your family. Thus, a prior estate planning reduces any confusion regarding wealth distribution in your absence.
What is an "Estate"?
Your "estate" consists of all property owned by you at the time of your death, including:
- Real estate
- Bank accounts
- Stocks and other securities,
- Life insurance policies,
- Personal property such as automobiles, jewellery, and artwork.
Estate planning includes preparation of a Will. In the absence of a Will, the law of succession will apply, i.e., your property will be distributed equally amongst your spouse, children and other family members (natural heirs), even if that is now how you plan to distribute your estate. Succession laws varies depending upon not just religion but gender also.
For example, if a Hindu married women dies without preparing a Will, her entire property will be inherited by her husband and children. As per the law, her parents and siblings will not be able to inherit anything, even if she wished to do it differently. Thus, we are answering an important question, read below.
How to prepare a will?Personal Details & Declaration:
You will state your full name and residential address, with a declaration that:
- You are of legal age to make will and are of sound mind and memory;
- This is your last will and testament, revoking all previously made wills and codicils;
- You are not under pressure or undue influence to make this will.
Creating a list:
List down all your assets – investments, bank accounts, bank locker and contents, jewellery, demat accounts, property, cash, vehicle, etc. Mention all of these with their clear addresses and location (online & offline documents, if any). This list will provide you greater clarity on your inventory of assets. The good thing is even if you miss out on anything, it will get covered under Residual Assets and will be transferred to your loved ones.Name the beneficiaries:
After making the list of assets, name your spouse or life partner, children and other beneficiaries specifically and without leaving any doubt as to their identity. It is prudent to name alternate beneficiaries in the Will. In case of simultaneous deaths or beneficiary’s death prior to yours, Will would be required to change accordingly. If you mention a beneficiary who is a minor, ensure that you appoint a trusted guardian to look after the asset till the minor reaches adult age.Signing the Will:
Your Will shall be considered valid only if it has your signature or thumb impression on it. You have to sign your will in the presence of two eye witnesses. The witnesses have to sign in the presence of the person making the Will. They are required to sign the Will after you, to certify that it is your Will. The actual date and place of the signing must be recorded and it is recommended that you sign every page of the will.Executor details:
People generally name a trusted person as an Executor, as he/she will have a huge responsibility of getting your property transferred as your wishes in your absence. Appoint a person who has time, energy and willingness to execute the entire process. Also, appoint an alternate Executor in case your first choice is unavailable or unwilling at that time.Points to Remember:
- After the preparation of the Will, store it in a safe place and tell your Executor about it.
- If you have any doubts during the preparation of the Will, consult a lawyer.
- If you fear someone would challenge the Will on your mental fitness ground, attach a medical certificate to the Will.
- Due to the changing relationships with your family members, you might consider making changes in the Will.
- Ensure that your intentions are very clearly recorded in the Will, there is no ambiguity in the content of the Will.