Another new year is here and like everyone else, we make resolutions for the year. Foremost in resolutions is generally better health followed by better financial planning. While most of us find reasons for procrastinating on improving our health, a lot of us are diligent about financial planning and stability. Most of us focus on protecting our existing wealth and accumulating it. Focus on distributing wealth is usually left for a later time in life, albeit it is the most critical step in completing a financial plan. No financial plan is complete without these 3 key steps – protect existing assets, accumulate new assets and how to distribute the assets.
One of the key aspects of succession planning is making a legally tenable Will. Most of us believe that we have a long life and many more years to plan succession. This is far from truth and what is recommended is that it is never too early to plan your succession. So, why do most of us do not make a Will? The answer to this is multifold – assumption of a long life, time taken to make a Will, Costs associated with making a Will with a lawyer, assuming that nominees on all assets will take care of asset distribution.
Why is making a legally tenable Will important? Consider the 3 steps to financial planning – Protect, Accumulate and distribute. If we protect and accumulate only and do not have a Will, the family more than likely will end up in a dispute over the assets. There may be someone in the family who gains assets not as per our wish, due to inheritance laws coming into fray without a Will. To add to that, the family will end up paying fees to lawyers and government to the tune of hundreds of thousands just to get the documentation done as per the inheritance laws. Lack of a Will presents a serious issue of the family/heirs not knowing the complete information on assets, liabilities and other investments. In a typical scenario, men in India are tasked with protecting, accumulating assets. They may have number of bank accounts, insurances, investments with multiple financial planners and multiple immovable properties like flats, houses, agriculture and commercial properties. The women are either not interested or kept in the dark regarding financial dealings. When the individual dies suddenly, the family is clueless about the asset and liability information leading to added trauma along with the emotional stress. Statistics indicate that there are 64,000 Crore of unclaimed monies with financial institutions since families have no information on the accounts. Would we want to be in a situation where our accumulated wealth does not go to the intended person?
What are the requirements of a Will? While the perception is that making a Will is a time consuming, expensive affair, the truth is far from it. Understand that the key to making a valid Will is the list of all your assets and liabilities and your wishes on their distribution! There are some legal aspects to a Will – like assigning an executor to the Will (preferably not a legal heir) who will ensure the proper distribution of the assets as listed in the Will and ensuring you have two independent Witnesses (again, not legal heirs). There are many formats available on the internet to create a Will and while almost all of them work, it is recommended you use a legally approved format like the one with www.giftmylegacy.com . For most of us these formats are sufficient to get started. If there are any complications in the assets like ancestral property shares, it is recommended to work with a legal advisor (giftmylegacy.com has a panel of legal advisors to help with this as well).
While making a Will is a start on the distribution plan of assets, it is not the end. The executor is tasked with the actual distribution as per your wishes and ensuring all the necessary documentation is completed like probate of a Will in some cities. Lack of a Will entails with the family spending time, effort and money to obtain legal documents like succession certificate from the court of law at a high cost and this can usually take up to 12 months during which time the assets cannot be distributed.
In conclusion, asset protection and accumulation must always be followed by a succession plan for proper distribution. www.giftmylegacy.com helps you create a legally tenable Will at the convenience of your home that is easy to use and completely safe with your data. The service uses bank level encryption of all your data to ensure it does not fall privy to anyone else other than you! As you continue to accumulate wealth, you can continue to amend the Will on a periodic basis to ensure the Will is updated as per your wishes. This year make the most necessary resolution of making that Will to help protect your family’s future! The only certainty in life is Death! All we can do is prepare for the worst and hope for the best!