Isn't it the eternal complaint of all parents that their children don't listen to them? Well, here is your chance to make sure that your children follow your wishes at least when you're no longer around.

Estate planning or succession planning is essential, if you wish to avoid disputes over your assets when you are no more. It acquires special importance when you want to distribute the assets in an unequal manner.

It could be that you wish to leave the controls of the assets with your wife instead of your children or you may also want to make a bequest to your friend or a trusted old-age companion. All this can be done only by means of a clearly written Will. Though a Will is considered the best method of leaving your legacy according to your wishes, it is not the only way. You can also nominate the property or gift it before death. Each method has its pros and cons; so let's examine them.

Nomination is not enough:

Whenever one opens a bank account or buys an asset, one fills up a nomination form along with it. Most of us believe a nomination means that the asset will be transferred to the nominee after the death of the asset owner. Nomination, however, simply means a right to receive the asset and not own it.

For instance, if you nominate your daughter for your flat, then your other children or wife can contest it in a court of law and, if they win, the asset will be divided according to law. Says Gautami Gavankar of Kotak Mahindra Trusteeship Services Limited, "Nomination, as per a Supreme Court decision, only indicates the hand which is authorised to receive the amount/property on payment of which the person paying gets a valid discharge of his liability.

Nomination only provides for the convenience of transferring the property in question from the name of the deceased to the nominee. The asset, however, can only be claimed by the heirs/ legatees of the deceased in accordance with the law of succession governing them". A nomination can, however, be useful when there is no possibility of contest - if there is only one beneficiary or if all the beneficiaries are in agreement about the nominations.

A loving gift:
Another interesting way to leave a legacy is through a gift deed. The gift deed must be made during the lifetime of a person. It is required to be registered under the Indian Registration Act, in case of immoveable property. You have to pay stamp duty of 2 per cent on the value of the gift, i.e., the property in question, at the time of registration, if the gift is made to a family member.

This too can avoid any confusion and smoothen the process of transfer property. Choose to gift away your property after much thought. Gifts, once given, cannot be taken back easily. It has to be done with the consent of both the parties. This leaves a grey area where the person making the bequest may not feel comfortable losing control over the asset during his lifetime. .

The way of Wills:
One should make a Will soon after one has acquired some assets. Wills are not necessarily for old people. In fact, it is better to make a Will at a younger age. One advantage is that it avoids the possibility of the legality of the Will being contested on grounds of unsoundness of mind at the time the Will was made.

A Will becomes operative only after death. There is no restriction on the way a person can deal with his or her property even after writing the Will. To make a Will actually work, there should be an executor, who would be entrusted with the responsibility of ensuring that the assets are distributed according to the provisions of the Will.

Do make sure s/he is willing to take up the responsibility. A Will should be signed by the testator (the person whose Will is being made) in the presence of at least two witnesses. The full names and addresses of the witnesses should be clearly indicated in the Will.

Though not essential, it is better if one of the witnesses is a medical practitioner, who should certify that the testator is of sound mind, especially if the testator is at an advanced age. A witness should neither be a beneficiary nor an executor of the Will.

A Will must always be dated. If more than one Will is made, the one of the latest date will nullify all the previous ones. In fact, it would be better to make a statement nullifying all other Wills. The pages should be numbered to avoid fraud. A Will should be simple and, as far as possible, unconditional.

Says Gaurav Mashruwala, financial advisor, "The Will should be uncomplicated. Too many pre-conditions, before the beneficiary receives the property, create unnecessary problems and delays in the execution of the Will and gives added responsibilities to the executor of the Will".

A Will can be hand-written or typed. No stamp paper is necessary. It need not be registered. The value of assets often fluctuates, so it is better to expressly mention the value that each beneficiary will receive in percentage terms rather than absolute numbers, unless it is pure cash.

Whenever changes in the family circumstances or other reasons necessitate a change in the Will, the structure of the Will can be amended. Even if there are changes in the nature of the property or assets, an amendment may be needed. So take it out at regular intervals and read it.

Creating a trust:
A Will carries several disadvantageous in its execution. Obtaining a probate and distribution of assets is a time consuming and expensive process. Another increasingly popular way to manage your assets is to create a trust. A trust involves transferring of one's estate to a trustee for certain beneficiaries. A trust provides for management of the estate during one's lifetime and also provides for distribution and management of one's wealth after death.

The trust route can be used for distribution of assets not only for the present generation but also for future generations. The money can be held and managed by trustees for minor children until they reach maturity. The trust, as a route, is just about catching up in India, although it is a very popular concept in the West.

There are some companies which provide professional services for creation and management of trusts. "The trust avoids family disputes leading to disintegration of family businesses. It retains confidentiality, as one is not required to obtain a probate," says Gavankar of Kotak.

A trust is usually created with a small amount, say Rs10,000/-, since the trust deed needs to be stamped depending on this amount. Assets can be added later into the trust. But the trust laws are more than a century old and very cumbersome; sweeping powers are vested with the Charity Commissioner to regulate trusts.

What successors must know:
As per the Indian law, the assets received by the successors are not taxable at the time of receipt, as there are no estate duties. In case of nominations, the nominee will have to apply for the transfer of asset along with the nomination papers and the death certificate.

After the claim is verified, the asset will be transferred to the nominee. In case of a Will, the executor has to file a probate petition in the court of law. If all goes well, the probate takes six months to a year. A probate is identified as the copy of the Will certified under the seal of the court of competent jurisdiction.

No right as executor or legatee can be established unless a court has granted the probate of the Will. Probate can be granted only to the executor appointed by the Will. The cost of getting a probate includes legal fees as well as stamp duty on the value of the property being willed. The stamp duty varies from state to state.

6 factors to keep in mind while planning your estate

Assets:
The nature of the estate. Are there any assets which are family assets which should always remain with the family and never sold to third parties?

Beneficiaries:
Who would be the beneficiaries of your estate? Whether the beneficiaries would only be the first generation or one wants to provide for future generations also? Are there any mentally or physically disabled beneficiaries or old or dependant people or minor children in the family who need to be taken care of financially over a period of time and, if so, who will take care of these beneficiaries?

Distribution vs growth:
How is the distribution of the estate to be done amongst the beneficiaries, i.e., is it to be disposed off immediately or it is to be kept for the beneficiaries to be distributed over a period of time? Do you want your estate to be managed by a professional to effectively grow it over a period of time?

Chance of disputes:
Is there even a remote possibility of disputes in the family and, if so, which mode of estate planning would mitigate the disputes? By what mode can you achieve a harmonious and planned succession?

Risks:
What mode of estate planning would take care of unforeseen eventualities, the smooth management of your business affairs thereafter and transfer of your assets to your future generations.

Linkages:
Is your business risky when the planning is being done and may run into huge losses? If this happens, are your family assets protected?

4 myths about estate planning
Myth 1: "My assets are so small that a Will is not necessary."

Fact
Think again. Few people are worth so little any more that a Will is not necessary. Add together the value of your home, car, furniture, jewellery, savings account and investment portfolio. Subtract your personal debts from this total. The bottom line is that you are generally worth far more than you think, especially since the resale value of a flat is anywhere between Rs 50 lakh-Rs 1 crore (Rs 5 million - Rs 10 million) in many urban areas.

Even if some items do not hold great monetary value, they could hold an enormous amount of sentimental value. Failing to indicate who receives these treasures can cause friction between family members that lasts for decades. Few families recover.

Myth 2: "When I die, my spouse will get all of my assets."

Fact:
If you and your spouse own assets jointly, on your death. your share of the assets will automatically go to the surviving spouse. But, what happens when your surviving spouse dies? What will your children receive? Does your spouse have the financial know-how to manage the family wealth?

Myth 3: "I can create a Will on my own and save the legal costs."

Fact:
'Do- it-yourself' Wills often do not contain all the necessary components as required by law and are frequently ruled as invalid by courts. A vaguely-worded clause can result in lengthy legal battles. Anyone who might benefit from the invalidation of your Will can contest it, and if the courts decide in his/her favour, your estate may be required to cover all legal costs.

Myth 4: "I am too young to create a Will. I'll create a Will later in my life."

Fact:
A Will is an extremely flexible document whose terms can be changed as often as needed. In fact, any legal expert will tell you that a Will should be re-examined periodically to make sure it is up-to-date. A Will should be reexamined whenever there is a substantial change in your life.

Remember, the terms of a Will become effective only at death.

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