Estate Planning

Step 1: List the Assets you own
(a) Moveable properties such as cash, stocks, bonds, policies and so on which will keep changing till the demise of the person;
(b) Immoveable properties, such as land, apartments, which are less likely to change; and
(c) Lastly a bucket comprising jewellery, family heirlooms, which have sentimental value for the family.

In respect of moveable properties, it may be wise to include the heir to be added as a joint account holder / nominee such that transmission/transfer of the asset post your demise is a smoother process.

With respect to immoveable properties, it would be wise to leave specific properties to a particular individual, rather than leaving it to two or more persons jointly to prevent disputes among heirs over the management of such properties. If it is not possible to segregate individual properties to individual heirs, then it can be provided in the Will as to how the heirs can distribute the properties among themselves. For example one way would be to state in the Will that one party can buy out the other heir at market value or at a pre-fixed price. It must be noted that a nomination for a house/flat with a housing society only makes the nominee a trustee of the property (post the owner's demise) and not the legal heir unless the nominee's name is specified in the Will as the heir to that property. In respect of heirlooms which have sentimental value, not only is it important to mention the heir to a specific heirloom, it may also be wise to mention why such person should receive it.

Step 2: List down your liabilities and subtract the total liabilities from the Total value of Assets
It is also important to bear in mind that the liabilities of the person would be adjusted against the overall estate (assets) of the person thereby reducing it to some extent. Consequently, the testator should keep this in mind while distributing his/her assets in the will.

Estate = Total assets – Total Liabilities

Family
Names and ages of family members and their relationship to you.

Special circumstances
Does any member of the family require special care because of poor health? Are you expecting to receive an inheritance. . . or sell a business . . or retire in the near future?

What a Will does and does not control
Your Estate, generally speaking, consists of everything you own. However, certain types of properties are not usually governed by the terms of a Will. Please Note – Life insurance, death benefits from pension plans and funds that have accumulated in other retirement plans generally pass directly to named beneficiaries. Immoveable property held in joint names with right of survivorship normally passes directly to the surviving owner. Although your Will does not control these elements of your Estate, you will want to keep in mind the amount of such property and who will get it as you consider the way you wish to divide or distribute the rest of your properties.

In your Will you can leave specific items to specific beneficiaries. You can make cash gifts. You can leave certain beneficiaries a life income. Finally, you can designate certain people or organizations to receive shares of your “residuary estate”. This term simply means everything your Will has not otherwise disposed of.
Certainly the overall plan of your Will should be uniquely yours, reflecting your own hopes and concerns for those whom you wish to benefit. Never-the-less, one practical point is worth remembering. In our modern era, market values of securities and other property often fluctuate rapidly. And so, while you can estimate the size of your Estate today, it is far harder to guess what its size might be in the future. You might leave much more – or less – than now seems likely. For this reason, you may wish to make major gifts in the form of shares or percentages of your residuary estate.

Personal effects
Home furnishings, jewellery, hobby equipment, automobiles, and other articles of personal use are usually left outright to particular members of the family, or to friends. If you don’t say who is to get such items, they become part of your residuary estate / Networth.

Cash gifts
Wills often contain bequests of stated amounts of money to specified individuals or charities. However, there’s a risk that the overall results of a Will could be distorted if the Will contains a high volume of cash bequests and the estate proves smaller than anticipated. As already mentioned, bequests that are large in proportion to the value of what you now own might better be made as shares of your residuary estate.

Gifts of income
You may wish to leave a relative or friend a life income rather than a lump sum of money. Your Will can accomplish this by placing money, securities or other income-producing property in trust for that person’s life benefit. Your Will also may say who is to receive the trust fund at the death of the income beneficiary; his or her children, perhaps. In the event an income beneficiary leaves no children, you may wish to name a charity to receive the fund.

Home & Other Real Estate
Real estate may be left to one or more beneficiaries outright or placed in trust for their benefit. Or you may direct your executor to sell real estate and add the proceeds to your residuary estate.

Your Business
If you own all or part of a business, do you wish your interest sold, or do you wish to leave it to a son, daughter or other relative? As you note your preference, be forewarned that special planning may be needed to carry out your intentions. If the business interest is to be sold at a fair price, you may want to establish a formal agreement with other partners or stockholders, or with key employees. If the business interest is to stay in the family, you should make plans for adequate successor management and examine the impact that taxes could have upon your estate.

Your Residuary Estate
As earlier mentioned, your residuary estate will consist of everything not otherwise disposed of. You may name one or more beneficiaries to share in your residuary estate. Their shares may be left outright or in trust, and may be equal or unequal. For example, a hypothetical Will might divide the residuary estate into twelve shares, leaving four to a sister, two to a niece, two to a nephew, one share to an old friend, and the three remaining shares to one or more charities. As you make note of your intentions, also consider to whom each individual beneficiary’s shares should go if that beneficiary should fail to survive you.

Gifts to Young Children
When a Will leaves sizable sums outright to minor children, a guardian must be appointed to manage the child’s inheritance until he or she comes of age. Such complications can be eliminated by leaving a minor’s share of your estate in trust and instructing the trustee to administer the inheritance and use it for the child’s education and support. Funds not needed can be turned over to the beneficiary at 21, or at a later age specified in your Will.

One final fact about Wills
You can change your Will whenever you wish. Indeed, you should resolve to review the Will from time to time and have it updated as necessary. Major changes in either your family circumstances or the size and nature of your estate may make revisions advisable.
Some people put off making a Will because they’re waiting for life to settle down. It never does! They look forward to a time free of unresolved family concerns, pending business decisions, and so on. Unfortunately, such a time rarely arrives, and the Will is never made.
As a practical matter, the best possible time to take care of your Will is now. Do the best job you can, secure in the knowledge that additions or revisions can be made in years to come.

The testator should keep the will at a place where it can be easily found, such as in the cupboard as well as a copy of the Will should be left with the legal advisors. Another solution for married couples is to keep the wife’s Will in the husband’s safe deposit box, and his Will in hers. It may be a good idea to have two to three copies of the Will.

Next, the Will maker needs to identify two individuals who are not receiving any part of the assets under the Will but who are willing to testify that they saw the testator execute the will in front of them. They may also have to confirm that the person was of a sound mind and wrote the will out of his/her own free will. These persons are called attesting witnesses and typically, lawyers, doctors, CAs are chosen to do the same. It is important to include the name, address and telephone number of the person in the Will itself so that the heirs have no difficulty in tracing the attesting witnesses. If the testator is of an advanced age, a fitness certificate from a registered doctor can also be included and attached to the Will.

While it is not mandatory to register a Will, in case the testator expects that the heirs are likely to challenge the Will, it may be a good idea to do so. The testator may also video-graph the Will where the testator himself reads out the Will before a camera. All these acts add towards reducing the challenge to the Will and making it stronger.

Another important issue would be to identify person(s) who is/are close confidante(s), who would be willing to act as executor(s) of the Will. An executor of a Will is entrusted with the task of collecting the assets of a person, discharging the liabilities from such assets and thereafter distributing the same as per the Will. This process is called administration of the Will. Ideally, the executor chosen should be a trusted person and also younger than the testator to reduce the chances of the executor dying before the testator. The executor dying before the testator would increase complexities by making it necessary for the heirs to appoint another administrator. Another important point is that the administration may become complex process if the size of Estate is large. If you have named a family member or friend, be sure to give them authorization to seek professional help in settling the estate. Be sure to name a successor executor in case your first choice dies or declines to serve for personal reasons.

Example: In the last years of his life a person bought 10,000 shares of a company that he believed had great potential. He strongly advised his executors not to sell the shares, so they didn’t. As it turned out, the company failed a few years after his death, the shares became worthless, and his would-be heirs were left holding an empty bag. Conclusion: It is a mistake to bind your executor’s hands too tightly. There is no way to predict today what will happen tomorrow or the next year, especially in the world of finances and the stock market.