Think Broad – Think Beyond

 

Estate planning is generally considered complex and unimportant, it’s nothing but ignorance. Rather, Estate Planning is very an essential part of ensuring that your family members surviving you are taken care of, and your wishes are honoured. Having Estate Planning in place will make you feel secure for the future of your loved ones besides various other advantages like preserving assets for the future, financial support to the next generation, ensuring distribution of all your assets as per your wishes, and Tax planning.

Estate planning starts with questions like:

• It goes beyond simply writing a will.
• What do I want to achieve through Estate Planning?
• What if I’m not around?
• How my family in my absence will survive and be taken care of?
• What steps must I take now to ensure they don’t suffer in my absence?
• What are the needs of my family like education, and special requirements?
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In fact, Estate planning touches on deeply personal and emotional aspects of life, thinking of the worst and preparing for it.

Estate planning becomes more important if you have children from a previous marriage or relationship as you may want to ensure they receive a portion of your estate. Here important aspect to keep in mind is to balance competing interests to avoid any dispute and resentment.

Estate planning varies from person to person as the requirements of each person and purpose are different. Here, we’ll be deliberating about various aspects one needs to take into consideration for Estate Planning.

Who will be the Beneficiaries?

• • Family – Your spouse; Your children, maybe minor or with special needs; Parents; siblings; and extended family members

• • Friends and Loved Ones – Close friends; longtime companions; or anyone you consider family by choice can be beneficiaries.

• • Pets: your furry friends can be beneficiaries! You can set up a pet trust to provide for their care after you’re gone, however it can be through some human.

• • Educational Institutions: your alma mater

• • Charities and Nonprofits

• • Business Partners or Employees

• • any other Special Considerations
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The list goes on……………………

Listing all assets:

Estate planning includes all your assets. The next step is to make a comprehensive list of whatever assets, movable/immovable, businesses, insurance policies, Bank accounts, Shares, personal belongings, etc. you have/own. Make a list of all your debts/liabilities as well.

While making a list of all of your assets don’t forget your Digital Assets.

It can be your online banking, social media accounts, cryptocurrency, etc. Your digital assets need to be part of your estate plan. Without proper access, your loved ones might struggle to access, manage, or close these accounts. Keeping a record of digital passwords and accounts, alternative email IDs, alternative mobile and instructions to handle them is very important. Failing to account for digital assets can lead to confusion and loss of assets in your absence.

Wills and Trusts:

The first thing that usually comes to mind while thinking about Estate Planning is creating a will. A will is a legal document that details how your assets, such as property, money, and personal belongings, will be distributed after your death. It also allows you to name a guardian for your minor children, ensuring their care through trusted ones. But a will is not the only option. Setting up a Trust is also an option. Through Trust, you can hold and manage your assets for the benefit of your heirs. Both Trusts will have their advantages.  Trust offers greater control over how and when your assets are distributed. Tax benefits, as certain types of trusts can help reduce estate taxes and ensure more of your wealth is passed on to your heirs. There can be different types of trusts i.e. private trust, public trust revocable trust, irrevocable trust, etc.  The type of trust to be created varies with the purpose/objective to be achieved.

Probate: The Hidden Complexity

A Probate is a legal process where a court supervises the distribution of your assets. If you only have a will, your estate will likely go through probate, which can be a long drawn-out, and expensive process. While probate ensures that your debts are paid and your assets are distributed correctly, it can also become a burden on your loved ones, both financially and emotionally. To avoid probate, many people establish revocable living trusts. Assets placed in such trusts are not subject to probate and can be passed on to your heirs more quickly and privately.

Powers of Attorney and Health Care Directives

Estate planning isn’t just about preparing for what happens after your death; you can also plan for scenarios where you may become incapacitated and unable to make decisions. This is where a Power of Attorney and a health care directive (or living will) come into the picture. Through Power of Attorney, you can appoint some person to manage your financial and legal affairs or other affairs on your behalf. The person to be appointed will depend upon your requirements. Further, a health care directive can detail your preferences for medical treatment. A healthcare directive can include your wishes about organ donation.

Selecting your Fiduciaries

Select your Fiduciaries carefully. Ensure he also has skin in the game. There should be some motivation for him as well.

Executor It can be an Individual or an entity to execute your will. Guardian isrequired in the case of minors for their day-to-day needs. Trustee: in the case of Trust Trustee needs to be appointed to manage the assets, keep records, making Legal compliances as per the Trust deed.

Tax Planning

Estate planning can be used as a Tax planning tool also. If your estate is likely to be subject to taxes, through meticulous Estate planning you can plan your taxes. Gifting, Charity, and Trust are various tools to address the taxation aspect.

Regularly Update Your Estate Plan

Life is not static and is constantly changing. It may be like welcoming a new child, a new marriage, or a shift in your financial situation. One of the most important nuances of estate planning is that it’s not a “set it and forget it” task. Your estate plan should evolve with your life circumstances, ensuring that it reflects your recent wishes. Regularly reviewing and updating your estate plan will help avoid unintended/unexpected outcomes. Estate planning is a dynamic process.

Conclusion: Estate Planning Mattes- An Act of Love, affection

At its heart, estate planning is a thoughtful act of love and responsibility towards your loved ones. It’s about more than just dividing up assets – it’s about ensuring your loved ones are cared for, avoiding conflict, ensuring harmony in the relationship, and giving your family clarity during an emotionally challenging time. By understanding the nuances of estate planning, you can craft a plan that protects your legacy and gives peace of mind to both you and your family when you’re not around.