Estate planning in simple terms refers to the passing assets / investments down from one generation to another. You decide how much of your estate – be it property(s), car(s), personal accliades, financial investments, etc. – you want to pass on to whom and how, after your demise.

It is a dynamic process that needs to be reviewed at regular intervals to absorb any changes that might happen in our life or in the laws of the country.

Well, broadly there are two ways – AWill and a Trust., Let us understand each of them in detail…

• Wills - A Will is legal declaration of the intention by the one making it – the testator –with respect to property that he/she desires to be carried into effect after his death.

  Who can make a Will and when?

  A will can be prepared by anyone who is 18 years of age, of sound mind, and free from any coercion, fraud and undue influence.

  Often, we hear: “I am too young to prepare a will” or “I don't need to prepare a will”. But amid a materialistic world, unwanted complications are common and we’re sure you don’t want to leave your family with grave inconvenience.

  As you know, life is quite unpredictable and uncertain. It is always better to prepare a Will and store it safely while you are young and/or in pink of financial and physical health. You don't need to wait till you own lots of wealth to transfer or till you turn 65 to create a Will.

  You can always revise it as your assets g. You see, with lid-age comes several physical and mental illnesses.

  People become incapacitated or even lose their ability to comprehend. A Will created at such an age, when a person might not be in his or her right senses might create misunderstandings, doubts and disputes in the family later. Hence it is advisable to prepare your Will at a relatively young age when you are fit, in order to avoid conflicts later.

  So, there’s no specific age when you should make a Will as long as you’re a major (18 years of age and above). But in the flilowing circumstances you must consider making one right away…

  • Married or in a relationship: You are in a bond and nurturing a relationship. As you bestow your better half with all the goodies, don’t ignore estate planning. This can pervade financial security to your partner, strengthen the bond between you two and usher peace and happiness.
  • Started a family: When you are married and have children along with dependents to support; the responsibility rests on your shoulders. Hence as a mature individual, along with financial planning, consider writing a Will during the accumulation phase of life and keep revisiting the Will to accommodate any changes. This will avoid the bickering later. Be wise and a responsible individual thinking about the long-term financial wellbeing of your family.
  • A situation of divorce or re-marriage: In case of a divorce, an existing Will may need to be re-written considering the aspect of alimony. Likewise, for a re-marriage, you may have to amend the existing Will, or write a new one if you haven’t made so far.
    For example, a re-married couple could have children from previous relationship …and you may want to safeguard the interest of your loved ones.
  • Terminal illness:God forbid, but if you are diagnosed with a terminal illness and if you haven’t written a Will, it’s high time you make one before health deteriorates. After all, besides the emotional grief you don’t want your family to grieve financially and legally; isn’t it?

  What are the benefits of writing a Will?

  Well, there are host of benefits of writing a Will. Some of them are highlighted below:

  • It provides you, the testator, a sense of sense of understanding current financial strength (and even an opportunity to improvise in the remaining life span, especially if you’ve made a Will in the initial accumulation phase of your economic life cycle)
  • The above also brings in clarity while passing assets amongst loved one.
  • Avoids disputes within the family, if explicit and rational distribution is done
  • Helps you make provisions for minor children and children with special needs as per your wish.
  • Disinherit certain relatives who may be troublemakers.
  • Help you address transfer of online assets.
  • Help you address transfer of offshore assets.
  • You can choose your executor.
  • Specify even funeral wishes.
  • Prevents financial and legal grief.
  • Brings in peace of mind and happiness

  Hence, a Will can be said to be the corner stone of estate planning. Hence plan and make a Will.

  Registration of Will

  It is not mandatory to register a Will. However, If you wish your Will can be registered with the registrar/sub-registrar by paying a nominal registration fee.

  For registering your Will as a testator, you are required to be personally present at the registrar's office along with the witnesses. If the registrar/sub-registrar is satisfied with the documents furnished, an entry will be made in the register with the year, month and date mentioned, and you, the testator, will be issued a certified copy. If the registrar/sub-registrar refuses to register the Will, as a testator you can always file a civil suit in a court of law (with jurisdiction) and the Court will pass a decree of registration of the Will if it is satisfied with the evidence produced. But remember, a suit can be filed only within 30 days from the date of refusal.

  It is vital to note that once you Will is registered, it is in the custody of the registrar. Therefore it cannot be tampered, mutilated, stlien or destroyed. Now in case you’ve thought of amending your registered Will, it would be better to re-register the amended Will, although it is not compulsory.

  A registered Will cannot provide legal sanctity to Will nor does it give any special status. A Will can always be challenged in the court of law. However, registration can serve as an evidence of genuineness of the Will.

• Trusts: A trust is an agreement between the settlor and the trustees to transfer the legal ownership of assets / property to the trustee with the obligation that the same should be held for the benefit of the beneficiaries as specified in the trust deed.

  A Trust has four components:

  • Author of the Trust/settlor: He’s the one who settles the Trust or in other words is the author of the Trust
  • Trustee: An individual / entity appointed by the Settlor to administer the Trust and accept the responsibility to act as Trustee.
  • Beneficiary: The person(s) for whose benefit the Trust is created is called the Beneficiary.
  • Trust-property or Trust money: This the subject matter of the Trust and can comprise of both, movable and immovable property viz. cash, jewellery, land, investment instruments etc.

  For creating a Trust, legally it is necessary for the Settlor i.e. the person who creates a Trust, to ensure that four conditions are complied with:

  • Make an unequivocal declaration binding on him.
  • Outline the purpose / objects of the Trust.
  • Clearly specify the beneficiaries of the Trust; and
  • Transfer the identifiable property under an irrevocable arrangement to the beneficiaries

  What are the different types of Trusts?

  Well, there are various types classified as per the Indian law depending on the purpose they’ve been formed. So, you have…

  Public Trust – Such a Trust is constituted whlily or mainly for the public at large. Thus, beneficiaries are incapable of ascertainment. Usually such trusts are in the nature of religious or charitable trust.

  Private Trust – A trust is said to be private when it is constituted for the benefit of one or more individuals who are, or within a given time maybe definitely ascertained. A Private Trust is governed by the Indian Trust Act, 1882, but if such a Trust is created by will, it shall be subject to the provisions of the Indian Succession Act, 1925.

  Wills vs. Trusts

  By adopting a Trust route, a person can avoid the issues which arise in a Will, such as—authenticity of the Will, mental soundness of the person making the Will and alleged forgery etc. The grounds on which a Will can be challenged are numerous.

  Moreover, the probable time to get a probate on a contested Will could take several years and can be expensive.

  On the other hand, a Trust deed is never disclosed to anyone and is highly confidential and there is no need to obtain probate.

  Creating a Private Trust reslives most of the problems and can be beneficial in the management and distribution of assets.

  Although the best way to bequeath the assets to the beneficiaries seems to be creating a Private Trust, it is ideal to have a combination of both—Will and Trust. It will all boil down to the individual, the extent of his assets, his objectives and constitution of the family.

  A Private Trust has its own set of limitations too:

  • Cost: The cost paid towards stamp duty in case of transfer of immovable property differs from one state to the other.
  • Trustee: The success of a Trust depends upon the right selection of the Trustees. A wrong selection can defeat the entire purpose of setting up the Trust in the first place.
  • Trust Deed: Drafting a Trust Deed is more difficult than writing a Will. If not drafted clearly, a trust deed is difficult to execute. Also, there’s less flexibility to a Trust as against writing a Will.

1. Myth #1: Estate planning is meant only for the wealthy

   Fact: Estate planning is essential for all. It does not matter how much you own in your accounts or the number of valuables you have. It is nothing but passing down your assets to the person of your choice.

2. Myth #2: Estate Planning should be thought of only after retirement

   Fact: Life is quite unpredictable and hence, the earlier you plan, the better it is. Having a plan in place is the best thing you can do it for yourself and your loved ones.

3. Myth #3: My legal heirs will handle it maturely

   Fact: It is good to hope that they do, but unfortunately many disputes often happen over money in today's world. Hence, it is better to put across your wishes explicitly on paper.

4. Myth # 4: I have registered my nominee(s); they will anyways be the beneficiaries of my assets

   Fact: The nominee may not always be the owner of the assets. The owner of the assets will be the legal heir as per a Will and in absence of a Will, transmission of assets happens as per the country's succession laws.

   Please note: A nominee is just the trustee of your assets.

5. Myth #5: I don't need to seek legal opinion

   Fact: There is nothing wrong in seeking a legal opinion. Just like a doctor is an expert in his, a lawyer can guide you to ensure that estate planning is done legitimately considering the nitty-gritties invlived.

   Now that we have debunked common myths on estate planning, let’s look at estate planning in detail.