Skip to main content

Trust structure is better in estate planning

 

ESTATE planning involves planning for the succession of one's assets to reduce taxes, to avoid probate, avoid post-death disputes and issues. The process also includes giving clear instructions in case of disability or ill health, where one can no longer make decisions. You work hard to build your assets, such as investments, home, personal property, and to provide a level of financial security for loved ones. Then, doesn't it make sense to work just as hard to protect them in the event something should happen to you?


That's the primary goal of estate planning ­ to protect, preserve and manage your estate/assets during your life and after death.


Significance :Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death or incapacitation. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.

The primary goal of estate planning is ensuring that the estate of the individual passes to the estate owner's intended beneficiaries, often including efficient tax and succession planning and avoiding or minimising court proceeding in probates (that is a "will" certified under the court with the grant of administration to the estate of person who has made the will). First introduced in 1953, going to courts on disputes arising out of wills either on the question of authenticity, mental soundness of the person making the will or alleged forgery, the trust route created during the lifetime of the individual is emerging as a more viable solution to estate planning.

The grounds on which a will may be challenged are numerous, the time taken in India to get a probate of the will, in case the will is contested, could be several years and it could be a very expensive affair, exactly what any family doesn't need. In addition, the necessity to obtain a probate of the will makes it public.

As a public document, a will is subject to scrutiny by anyone who wishes to know its contents.


Benefits of trust structures: By adopting the trust structure for planning your estate, you can achieve: Estate protection because a trust is a bankruptcy remote structure.

Self beneficiary: The person who creates the trust can himself be one during his lifetime. As a beneficiary, he can enjoy the benefit of his own estate during his life time.

Efficient succession planning by providing for children and grandchildren and great grandchildren.

Management of all types of assets through expert advisers.

Accumulation of the estate during the lifetime and after death through the hands of trustees.

Avoidance of family disputes leading to disintegration of family businesses.

Retaining confidentiality, as obtaining a probate is not necessary.

Efficient management of the estate as a trust can be operational during the lifetime and after the death of the client.

Providing for future administration of assets to protect against future incapacity and for incapable beneficiaries.

Making provision for religious or charitable purposes.

Lower contestability as compared to a will.


Conclusion: Although planning one's estate may feel uncomfortable, the cost of procrastination can be high. Though some people are put off by the belief that estate planning will be complicated, time-consuming and costly, set ting up an estate plan doesn't have to be a complex process.

You execute a trust deed where you appoint a trustee, name your beneficiaries and specify how and when the properties of the trust would be distributed to the beneficiaries.

In a trust, you transfer ownership of some or all of your assets (which can include investments, real estate and bank accounts, among others) and even personal property (jewellery, antiques or furniture) from your name to that of the trust.

Transfer of ownership of assets to the trust can be done at anytime after the creation of the trust either by the settler or any other person.

After you transfer the assets, you maintain the same access and control as you did before you put them in the trust in case of a revocable trust.

In case you create an irrevocable trust, then you can retain some control over the assets in the trust by either having the trustee consult you or by appointing an administrator/protector who will be consulted by the trustee.
 

Popular posts from this blog

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Stock Review: Havells

HAVELLS India's stock performance has been muted in the past three months, in line with the weak broader market. But, given the turnaround in its overseas subsidiary and the launch of new products in its consumer durable business, the company's stock may undergo a re-rating.    Havells is India's leading consumer electrical goods company, with consolidated sales of . 5,527 crore in the past four quarters. Its wholly-owned subsidiary Sylvania, which makes lighting and fixtures, has established brands in European, Latin American and Asian markets. Sylvania repre sented nearly half of the company's consolidated revenues in the first half of FY11.    Sylvania's poor financials hit Havells' consolidated performance in FY10. But, this has changed in the cur rent fiscal. Havells has reduced fixed costs of Sylvania by exiting from unprofitable businesses and outsourcing manufacturing to low-cost locations such as India and China. In the September 2010 quarter, Sylv...
Read more

Kisan Vikas Patra - KVP

  Kisan Vikas Patra (KVP) First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows- The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months). KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit. KVPs are available at all departmental post offices across India. These certificates can be prematurely encashed after 2 ½ years from the point of issue. KVPs can be transferred from one individual to another and from one post office to another. ----------------------------------------------------- Inve...
Read more

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...
Read more
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