The best time to do it is now. Will is most common part of such planning but it is important that besides asset distribution, a will should also include liability settlement
TO HAVE children who stay bonded and united as the Pandavas in Mahabharata could be the dream of every parent. But, it is a Utopian idea in days like these, when money is the universal religion and consumerism is a celebrated virtue.
Planning the way one's wealth would be divided among the children is as important as the earning wealth, if not more.
When a great business tycoon and visionary like Dhirubhai Ambani died, without leaving a will, the succession drama between his sons played out in the open. The incident was an eye-opener on what could possibly happen if a person does not decide during his lifetime on how his assets would be divided between his children.
When to start Inheritance planning is a I continuous process and the right time to begin is today, according to financial experts. Wealth keeps evolving as year pass. Since, circumstances and our priorities also change as time passes by, inheritance planning is a continuous process.
Once someone starts a family, there are two things he should do, according to the financial experts; one, take a life insurance policy and two, clearly mention in writing on who would inherit the assets after one's demise.
Nominations: Nomination is the most A basic form of inheritance planning. Since, financial assets like life insurance policies, bank fixed deposits or demat accounts for shareholdings require a person to mention a nominee who could claim the asset after the account holder's death, there is no room for confusion.
One should, however, revisit the nominations mentioned as the priorities may also change with change in circum stances like marriage, divorce or death of a family member.
It is advisable for all possible financial accounts to be held jointly, say by the husband and wife in addition to having a nominee for the assets, in case the both the asset holders succumb to any mishap.
Writing a will: This is the most common part of inheritance planning. A will should not only reflect the assets and how they would be shared but also the liabilities and how they would be settled.
On passing every major landmark in life, such as retirement, children starting to work or getting married, it is important to refresh the will to ensure that it reflects the present priorities of the individual.
Apart from mentioning the inheritor of assets such as houses, land and bank deposits, a will should also clearly mention how other assets like the family jewellery, expensive antiques and paintings would be divided among the members of the family.
Also, if there is a conflict between the nominee of a bank deposit as mentioned in the account and the inheritor of the money as mentioned in the will and the interested parties are not able to arrive at a mutual agreement, then the case could be contested in the court.
Family business: In family-run businesses I there are many members of the family, like brothers, uncles, cousins who work together. "In an active family business, it has to be clearly mentioned as to who would assume which role in the business and who would inherit which part of the business," says Rajesh Bhojani, a certified financial planner.
In Marwari families the usual practice is that all the sons get an equal share in the family business but it is the elder son who gets to head the business.
Liability planning: It is as important to mention about the liabilities in a will as it is to mention the way the assets would be distributed among the family members.
In cases where the liabilities are not mentioned in the will, they will have to be settled by the executor of the will from the corpus of the deceased. The remaining wealth would be distributed as mentioned in the will. Who to consult will, even if written in an ordinary sheet of paper, would be valid. But, to avoid disputes and ensure a smooth transfer of assets, experts advice taking the assistance of a lawyer and doing the whole process legally. Banks and private wealth managers also offer advice on wealth distribution. In cases where there are two or more wills written by a person, the last written one would be the one that is valid, experts say.
Family trust: In cases of division of wealth between members of a very large family, probably running a family business together, usually a family trust is set up. In such cases, all the assets are transferred to the family trust through a will and then the asset holder appoints a trustee to oversee the process of wealth transfer. The persons who set up the family trust to pass on their wealth, also called settlors, would have to clearly define the beneficiaries of the trust and the person who would act as the trustee and execute the process.
Why a trustee?
Trustee or executor is imA portant not just to handle a large family trust but also to execute a will. A trustee cannot be a beneficiary of the assets and should be a third party with an arms-length distance to the whole wealth sharing process. For a will, written by the husband, the wife could be the trustee. A friend or a family member or even a lawyer could be a trustee for a will.
Intestate death: If someone dies intestate, I the rightful inheritors of the assets would be decided, based on the Hindu Succession Act in the case of Hindus, Buddhists, Jains, Sikhs, the Indian Succession Act, in the case of Christians and the Shia Law of Succession and Hanafi law of Succession, in case of Muslims.
The amendment, to the Hindu Succession Act in 2005, allowed daughters an equal right as the sons in the inheritance of assets as well as liabilities.
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