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.
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