It’s crucial to think about the future of your assets after you are gone. What would happen to the assets you have accumulated during your lifetime? What are the rights of inheritance in the event of death? To ensure that your assets are placed in the right hands after your death, it is important to understand the concept of estate planning.
An estate comprises everything you own, including your home, car, land, life insurance, furniture, bank accounts, investments, or other property. An estate plan puts you in a position to manage the assets and the rights to inherit them. It gives a written record of your intentions. It makes the process of transition of assets seamless, helps you avoid disputes on inheritance, deters complexities, provides assets to the right beneficiary and reduces the burden on family.
But what would happen in the absence of an estate plan?
In case the person dies without an estate plan in place, he is said to be intestate.
In such a case, the state machinery and courts would plan the distribution of their assets. Three laws govern the estate distribution in India- the Hindu Succession Act, 1956 (applies to the Hindus, Sikhs, Jains and Buddhists), Indian Succession Act, 1952 (Christians, Jews, Parsis), and the Muslim Personal Law (Muslims only).
The Hindu Succession Act has separate laws governing the estate for males and females. Within the male and female segment, there are classifications – Class 1, 2 and 3 Legal Heirs which include close family members. Indian Succession Act has separate provisions for Indian Christians, Jews and Parsis for different scenarios. A fair amount of documentation is required to prove the title of property under all these laws. This can lead to delay, complexity, uncertainty, expenses, disputes and confusion. Hence having an estate plan aligned with your wishes helps avoid devastating consequences on your family.
Some common estate planning tools are Will, Power of Attorney and Family Trust. Will is a legal document that lays down in well-defined terms, who would have control over your assets after your life, who will be the guardian of your children and so on. A family trust helps in protecting the property and in transferring the benefits of the same to the family. This way it will save a lot of time, energy and efforts for your beneficiaries. A Power of Attorney gives you the authority to appoint a person or an organization to manage your assets in the event of incapacity.
Let’s look into the importance of estate planning:
1. An Estate Plan Protects Beneficiaries
The main component of estate planning is deciding who the heirs are to your assets. An estate plan organizes your family’s finances to ensure their wellbeing after you are gone. It lets you avoid taking your family through lengthy and complicated legal processes, avoid disputes and secure their future.
You can avail estate planning services at EldersWealth, a leader in financial services in Bangalore. A name to reckon with among estate planning consultants in Bangalore, EldersWealth ensures that the crucial step of passing on your assets to your beneficiaries is made hassle-free.
2. Estate planning Protects Children
How to deal with the unthinkable circumstance of dying without a surviving spouse to take care of your children? The estate plan should carry the names of your children’s guardians, to ensure that your children are cared for in the manner you wish for after your death.
In the absence of an estate plan, the court appoints a legal guardian for them – usually, a family member. A third party, such as a family friend, can also petition the court to be appointed as the guardian. In case the minor child has no surviving family members and if a third party doesn’t step in, the child could enter the foster care system.
3. Estate Planning helps avoid taxes
Creating the least possible tax burden for your heirs is another key aspect of estate planning. Estate planning helps in reducing the state estate taxes and state inheritance taxes partly or completely. Strategic planning using a combination of trusts, tactical account creation, maintenance and more helps decrease overall tax burden on your loved ones.
4. An Estate Plan Eliminates Family Messes
Very often, lack of estate planning leads to dirty quarrels among family members. Families get pitted against each other and end up in court to settle disputes that sprouted due to lack of an estate plan or a will. An estate plan becomes even more urgent if you have more than one spouse or have children from more than one family. You would be doing yourself and your family a favour by having an estate plan in place. There are several estate planning service providers in Bangalore that offer easy ways to pass your assets to your beloved after your death.You may take expert advice for avoiding family feuds from them. To conclude, an estate plan lets you offer a protective shield to your assets as well as your loved ones after you are gone. Without a plan, your heirs could be weighed down by tax burdens and the courts could designate how your assets are divided or even who gets to raise your children. Reach out to EldersWealth for securing your assets and protecting your heirs!