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.
