Be it a man or a woman, young or old, we are all busy with something or the other. Job, family commitments, investments and vacations keep us occupied.
Between all this hullaballoo, we often forget to protect those very assets that make our estate. It’s a myth that an estate plan is mostly required by only the supremely rich. In reality, a smart estate plan is required by everyone.
Here are a few common myths about estate planning that need to be busted:
Not just for billionaires
You need not own luxury yachts, personal aircraft and European castles to make an estate. Irrespective of your net-worth, the fact is you will mostly have an estate that comprises your home, property, investments, bank accounts and direct/indirect interests in businesses.
So, estate planning is not just for flamboyant billionaires. If a person doesn’t have a will or a private trust, he/she is creating problems for the estate both during their life and after demise as well.
Both a will and private trust are used to transfer assets, but are unique in their use. A private trust is a smart structure that takes care of assets when you are alive and continues to follow your wishes after your lifetime.
On the other hand, a will takes effect after your lifetime. Private trusts are an important part of your estate planning, even if you are not super-rich.
It safeguards family wealth when you no longer be able to actively handle them, protect the family assets from spend-thrift family members and provide for minors during and after your lifetime. Plus, creditors and family members cannot simply barge in to take control of your assets once a trust is in place.
A well-planned estate can remain a nest-egg that provides life to your chosen ones for as long as you wish for.
Plan for ‘What if’
The timing of estate planning is crucial. Plan your estate while you still have time. To understand if your plan is fool-proof, ask yourself what happens to your estate if you die tomorrow or if you are unable to take care of yourself. If you don’t have any answer, it is time to set a plan in motion. Having nominees is just not enough.
The lack of clarity about your property, your wishes and knowledge about even the most well-arranged legal papers and investments can be devastating.
It’s important to ask the tough questions today, so that nobody has to search for those answers tomorrow. Start those conversations, even if they ruffle a few feathers.
Since wives are often younger than husbands, women often outlive their partners. In the absence of husband, it is reckless to leave a woman’s fortune in the hands of family members who may be well-wishers today but could turn against her tomorrow.
Please be aware that without a proper estate plan, the personal succession laws will dictate who will receive the assets.
This might just be the opposite of what you want. If you are divorced or separated from your partner, you probably do not want this person inheriting from you or making life and death decisions for you.
Never say never
A lot of people come up with excuses to postpone estate planning.
“I do not require any planning because our family has no issues”
“My father did not do anything and all is well.”
“I am not married, thus I don’t need to plan for my assets.”
These statements ignore the obvious. Money has a long history of creating problems. Unless you want people to conduct lengthy fights for your assets, or even worse be amongst many estates that are handled by court receivers, don’t use excuses to delay crafting a plan for your estate.
One last thing. Don’t make a secret will. “I have made a will which you will get to know when I will die,” is probably the unkindest way to split a family. Please don’t keep surprises for the family on this subject. A family should not be kept in the dark pertaining to the family wealth.
Points for planning:
A Will and clear nominations in place
A trust to take care of your requirements
Keep the documents updated
(The writer is Head of Trust & Estate Planning at Motilal Oswal Private Wealth Management)