What do Dhirubhai Ambani, Parveen Baubi, Abraham Lincoln and Howard Hughes have in common? Well they all died INTESTATE, which means without making a valid will or trust. The fact that individuals who spare no effort to accumulate wealth are often unable to predict the consequences of what would happen to their diligently-built fortunes after they are dead and gone. Surprising as it sounds, but the rich and famous can fail to plan ahead about what will happen to their assets after their death.
Some people may see no need for estate planning until they reach a certain age, or they might believe that it’s only for the wealthy. But it is wise for everyone to begin the estate planning process as early as possible. In fact looking at the various disputes in families in the public domain, Estate Planning is becoming increasingly necessary for every individual to ensure a planned succession, avoid family feuds leading to disintegration of businesses and lengthy court battles.
What is Estate Planning?
In simple terms, Estate Planning is the preparation of plan for the administration, preservation and distribution of an individual’s assets, in the event of his/her incapacitation or death. Estate Planning is the process of arranging and planning for an individual’s succession and financial affairs ensuring that the estate of the individual passes to the estate owner’s intended beneficiaries. All the property that an individual owns is part of his or her estate. An estate can include clothes, jewelry, tools, cars, musical instruments, house, cash, bank accounts, stocks, bonds, life insurance policies, provident fund, recurring and fixed deposits and other items.
Estate planning is a continuous process done to alleviate the financial impact of one’s death on those who are left behind. Lack of adequate estate planning can cause undue financial burdens to loved ones. An estate plan makes one’s wishes clear and helps avoid family disputes. Proper estate planning can preserve assets and provide for loved ones.
One of the live example in our real world is the dispute between the Ambani siblings Mukesh and Anil broke out for the control of Dhirubhai Ambani financial and corporate legacy. This happened because Dhirubhai Ambani had not prepared a will.
In my talks with people about making a Will, a lot of them laugh it off for any number of reasons- I don’t have anything to give away; I’m still young; I have nominations; it’s too complicated to make a Will and I have to make a choice amongst loved ones etc.
In fact making a Will really is simple. It is the least legal of legal documents and if you follow a few simple rules, you can prepare it yourself and it can even be hand written. Contrary to what is the general belief, a Will does NOT have to be Registered, does NOT need to be on a Stamp Paper or even the green legal paper and does NOT need to be Notarized. And you don’t have to be rich or old to make a Will. Every adult should make a Will. It is best to create a will so that your wishes will be carried out instead of leaving it up to the laws of intestacy to divide your property.
Hence, Estate planning is the foremost judicious step in securing your family’s future and fulfilling your desires during your life and after you depart from the world. Estate planning sounds complex, costly and difficult, but in reality you can take really easy steps to generate an estate plan. The easiest action to take would be to consult a Certified Financial Planner to execute an estate plan for you.
This blog is written by students of Post Graduate Diploma in Financial Planning(PGDFP), International College of Financial Planning(ICFP)
(Shalini Bhatoya, Shubham Maheshwari, Anurag Hurria, Adeeba Fareed and Ashish Sharma)
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