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Importance of Estate Planning



You must have heard the famous saying “Death ends a life. Not a relationship”. You may leave this world, but the wealth you have collected in your lifetime remains behind. This money needs to be distributed among your loved ones.This shows the importance of estate planning. Imagine your loved ones fighting among each other, for the wealth you have left behind. Worse…There is nothing you can do about it.

What is estate planning?

You accumulate wealth by working hard across your lifetime. This wealth called an estate has to be passed on to your loved ones after your death. Estate planning is a method of passing on wealth to your loved ones or heirs, in a hassle free manner.
Your estate may include:
o Your home
o Plot of land.
It also includes movable assets life gold jewellery, car and also costly furniture and antiquities.
Remember:
• You have hardly any wealth to transfer to your loved ones? Do you still need to make an estate plan? No problem… Estate planning is for everyone. If you have a few thousands or a few crores, you still have to transfer this money to your heirs.
• You can will, only what you legally own. Your will is enforced only after your death.
• You also transfer your liabilities (loans you have not repaid in your lifetime), to your loved ones. Your loved ones may hate you for it…But yes, this is also estate planning.

When should you make an estate plan?

You are never too young to make an estate plan. If you have wealth to transfer to your spouse or children when you are in your 30’s or 40’s, then you must make an estate plan. Life is full of uncertainty. You never know when your time comes.
The most common tool of estate planning:
o Will

What is a will?

In a will you state how you would like to distribute your assets such as your land or home, your car, gold jewellery, or even costly paintings and antiquities after your death. This is simple…Who gets how much. You want to give your Mercedes car to your son. Your collection of paintings goes to your daughter. You write this in your will and your wish is honored.

How do you make a will?

If you are of sound mind and not a minor you can make a will.
You can type your will or even write it down on a plain sheet of paper. You do not require stamp paper or any other legal paper to make a will.
You must write your will in plain simple English, Hindi or any other language and avoid jargon (words difficult to interpret).You must avoid using nicknames in your will.
If you make a will you are known as a Testator (Person making the will).You can divide your property and other assets as per your wish. You can also set proportions (who gets how much).The person you bequeath your wealth (Loved ones or heirs who enjoy your wealth), are known as beneficiaries in the will. You need to appoint someone trusted by you (say your lawyer), to execute the will. This person is called an executor of the will. The executor of the will makes sure, your loved ones, get the wealth bequeathed to them. It is better not to appoint a beneficiary as the executor of the will.
You must mention the number of pages in the will and sign on each page of the will. Your will needs to be signed by at least 2 witnesses.
You can make changes in your will any number of times called codicil. The true will is the last will you make. All earlier wills are automatically revoked.
If there are any new additions to your family (birth of a grandson or a granddaughter), then you must upgrade your will. This shows the importance of estate planning and why you must not neglect it.

What happens if you die without making a will?

If you die without making a will you are said to die intestate. Your estate will be distributed according to the succession laws of the country based on your religion. If you are a Hindu, Jain, Buddhist or a Sikh your property is divided according to the Hindu Succession Act 1956.If you are a Christian, your property is divided according to the Indian Succession Act 1925.If you are a Muslim your property is divided according to Muslim Personal Law.

What is a probate?

You need to prove that your will is legal in a court of law called a probate. After you make the probate, your will cannot be challenged by those left out of it. This means those left out of the will, cannot say you were of unsound mind when you made the will. There is a famous saying “By failing to prepare, you are preparing to fail”. If you procrastinate and leave an important job such as making an estate plan for the last minute , you might never get a chance to make it.You now know the importance of estate planning.So don't ignore it.

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