Skip to main content

Creation and preservation of wealth

Similarly, papers of his investments in stocks, mutual funds and gold existed in the bank lockers. But the family was not aware of it. Importantly, Sharma has not created a will that would have specifically identified the heirs to his property.

All the family got to know in the initial months was that Sharma had taken bank loans to expand his business.

Soon the family found itself in a severe fund crunch. Loans were paid back from the proceeds of the life insurance policy. But two of his properties went into litigation – a serious money guzzler for a family strapped for cash.

Finally, Sharma's wife decided to let go of two flats to his extended family and sold the plot of land. To her relief, the chartered accountant was able to locate the missing investment papers. And after over one year, the family was able to settle down.

Sharma's case is not is isolated, especially in small business families, and even among professionals. While people like Sharma create wealth, their families are unable to take advantage of this. This is simply because of lack of proper planning, more importantly, lack of a proper will.

Creation and preservation of wealth are important but it must follow proper distribution among people for whom it is meant. That's why an overall financial plan must consider distribution of wealth as a key objective for smooth transition of your wealth and to avoid conflicts within the family.

ASK THESE THREE QUESTIONS:

If I die, what would happen to my wealth?

Does my spouse know about all the insurance, investments, debtors and creditors that I have?

Will my wealth be distributed as per my wishes? If you don't have satisfactory answers to the above questions, it's time you met a lawyer for estate planning. The cost to make a will can range from few thousands to much higher amounts, depending on the complexity of the document and the reputation of the lawyer.

LET'S LOOK AT WHAT GOES INTO DISTRIBUTION OF WEALTH:

Estate: The sum of all the assets of aperson, less his liabilities becomes his estate. In short, all properties, bank accounts, investments, insurance and collectibles, less the liabilities of aperson, are collectively called a person's estate.

Will: It is a document that ensures that your wishes, with respect to your estate, (assets less liabilities) are followed after your death. In legal language, a will is defined as "the legal declaration of the intention of the testator, with respect to his property, which he desires to be carried into effect after his death". In other words, a will or a testament means a document made by person whereby he disposes of his property, but such disposal comes into effect only after the death of the testator.

Testator: A person who makes his will is a testator.

Executor: A person, who executes the contents of the will after the demise of the testator, is called the executor. The executor is the legal representative for all purposes of the deceased person.

Legatee/Beneficiary: son who inherits the estate under aWill.

Intestate: without executing (making) a valid last will is known as dying intestate. In such a case, the heirs would be governed by the Succession Act or Personal Law of the deceased. The Succession Act or Personal Law of the deceased gives order of succession.

Probate: This is the legal process of settling the estate of a deceased person, specifically resolving all claims and dissitate a major change in the will. Instances such as a divorce or a family dispute too will require changes. Make sure the will actually reflects your wishes at aparticular point in time.

 

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now