Estate Planning is planning for your ‘legacy’.

The entire journey of managing personal finance involves wealth accumulation, wealth conservation and wealth distribution.

Wealth created through productive endeavors results into savings, which are then channelised into various investment opportunities available, and as per one’s risk profile and returns expectations. A disciplined approach in implementing a simple-to-understand plan over sufficiently long period of time, can work wonders to one’s portfolio, thanks to the magic of compounding. So far so good!

While pursuing this virtuous cycle of wealth creation, bulk of an individual’s focus is on accumulation and conservation of wealth so generated, not realizing that not planning for wealth distribution renders the process incomplete.

Huge amounts lying ‘unclaimed’ across banks and with other custodians bears testimony to the fact that a whole host of investors, while adept as saving and investing, ultimately fail to pass on the wealth/ assets to the intended beneficiaries. In fact, as per an article published in the Economic Times in June 2021, an amount worth Rs.82,000 crores is lying ‘unclaimed’ across fixed deposits, savings bank accounts, provident fund, insurance, mutual funds, demat accounts, etc.

One of the most critical but ignored obligations on the part of an investor is planning for a smooth and seamless transfer of assets to ensure wealth distribution to the next generation as per one’s wishes, generally referred to as Estate Planning.

An estate could be defined as “anything one owns or anything which one will own after one’s death” and it could include physical, financial, digital, and intangible assets. Its various aspects are listed below:  

What is Estate Planning?

A systematic plan to distribute one’s estate, according to one’s wishes in the future. The ultimate goal for an estate planner is to fulfill the estate owner’s wishes as closely as possible.

What makes up one’s Estate?

Anything which one owns or will get to own after death. Estate could include 4 kinds of assets: physical (real estate, gold), financial (shares, mutual funds, bonds), intangible (IPRs, brand), and digital (email ID, URL).

Concerns addressable

1. Do I want to have full control over my property (Estate) while I am alive?

2. How to take care of myself and my loved ones if I become disabled?

3. Do I want to give what I want, to whom I want, the way I want, and when I want?

4. Do I want to save professional fees, transfer costs, and court costs related to the transfer of my wealth?

Rationale

1. To give one’s property as per one’s wishes.

2. To avoid the application of Succession Laws causing complications.

3. To minimise disputes in the family, subsequently.

Estate Planning – final thoughts

1. It is about you and your loved ones.

2. Stakeholders involved are the family, assets, the plan, and the law – all are dynamic/ evolving in nature – hence estate planning should also be dynamic.

There is no designated time or stage in life for anyone to initiate Estate planning and also the key takeaway for someone who does is ‘peace of mind’.