- Date : 24/11/2020
- Read: 5 mins
To ensure your kids can continue to live the life you worked hard to give them, even in your absence, there are some steps you can take to shape the legacy you leave behind.
Your PF balance, FDs, assets, insurance policies, pension plans, credit card debt, personal loans, home loan, other liabilities—all this forms a part of your estate, your inheritance, your legacy. You don’t have to be old or ill to plan your estate. If you own assets or have liabilities, you ought to take a look at these 10 things that will make your estate planning a hassle-free exercise.
1. Compile Details Of Assets And Liabilities
The first step is to compile a list detailing all your assets and liabilities. As you can read here, there are many tasks that your family members will have to focus on after your demise. In such a scenario, don’t make them run around identifying your assets and ascertaining your liabilities. Preparing a detailed list of all your belongings will help your survivors take steps to safeguard the family assets from misuse or misappropriation after your death.
Related: What to do after the death of your next of kin (Part 1)
2. Plan For Digital Assets
In the past, one just had to prepare a list of physical and tangible assets. Today, you may have digital assets such as creative works stored on your computer, websites and blog accounts, and even bit coins. Your firm’s Facebook page too can be a valuable asset that should be covered in your estate planning exercise.
3. Update Insurance Policies, Bank Accounts, Lockers Etc
Something as minor as a bank account address mismatch can become a serious problem if you, the account holder, are no longer alive. Use the list of assets to update all legal and financial contracts. From bank accounts and insurance policies to lockers and gold bonds—make sure all records are up to date. You can even opt for new policies to ensure your survivors are financially secure at all times.
4. Assign Nominees
It is a misconception that the nominee of a bank account automatically becomes the beneficiary. It is the will that will detail the inheritance of your assets. The nominee merely acquires the right to access and operate your account after your death. If you want certain accounts to pass on to specific individuals, then convert single accounts into joint accounts. In any case, make sure all your assets and deposits have nominees who shall take over after your demise.
5. Prepare A Last Will
The will is a legal document containing instructions of distribution of your assets and belongings among your survivors. It is advisable to consult an advocate when preparing the will. If you have multiple wills, then make sure there is no doubt or uncertainty as to which document is the operative will.
6. Prepare A Living Will
This is a new concept that is beginning to gain ground in India. A living will contains instructions about your treatment if you are unable to convey your wishes to your family members. Some people hate the idea of being kept alive in a vegetative state. Or, others may want to die at home among family members instead of the hospital. You can specify instructions that will be binding on your family members provided it does not violate any legal provision such as the prohibition on euthanasia.
Related: What to do after the death of your next of kin (Part 2)
7. Detail Charitable Contributions
If your family is well provided for, then you may want to consider donating a part of your belongings towards charity. You can specify instructions related to the manner in which the contribution should be made. You can setup scholarships in your memory to choose to allocate interest income from long-term investments to certain institutions to ensure you help others even when you are no longer around.
8. Appoint An Executor
The will is just a document detailing your last wishes. How to make sure it gets implemented properly? This responsibility falls upon the executor. Appoint a trusted person as the executor of your will. He or she will take care of these steps including getting the will verified by the court i.e. probate and maintaining the estate pending the execution of the will.
9. Cover Funeral Expenses
You can even allocate funds for your funeral and provide instructions on the procedures and ceremonies to be followed. Setting this up in legally binding manner and providing funds for the same will ensure your beliefs are honored even after your death.
10. Plan For Taxes
India does not have an inheritance tax. However, there may be instances where the person inheriting the asset may have to pay taxes on the same. If the beneficiary does not liquidate an inherited fixed deposit, then he or she will have to pay tax on the interest income generated by the FD. Similarly, one may have to shoulder the burden of property taxes on inherited land or properties. Your estate planning process can include a provision for the tax liability as well.
Related: Living in home versus living in a retirement home in India
As you can see, these must-do tasks are not restricted to old or very ill individuals. In fact, smart estate planning offers maximum benefits in the event of a sudden death. Sensible estate planning will ensure your family can grieve your loss in peace instead of being forced to focus on administrative tasks and legal formalities in case of unfortunately eventualities.
