It takes a lifetime to build your assets, now your dreams have turned into reality. However, ensuring a smooth transition of this legacy requires careful consideration. Surprisingly, in India, few people prioritise making a will. A stark contrast between India (<10%) and the US (46%) highlights the vast gap in estate planning awareness and practices. This can have unintended, even stressful, consequences for surviving family members.

Estate planning goes beyond a simple Will. It is a calculated process that guarantees your hard-earned money is allocated as per your wishes, protecting the things you have worked so hard to achieve. Let’s delve into the critical elements from a personal finance standpoint:

1. The Cornerstone: Your Will

Many Indians traditionally rely on handwritten notes or paper records to track their investments. A staggering ₹42,272 crore in unclaimed deposits currently sits in Indian banks, representing a concerning 28% increase from the previous year. This highlights the widespread lack of estate planning awareness and its financial consequences.

A Will serves as your voice after your passing. This legal document maps out what you possess and how you want your possessions, investments, and financial accounts handled after your passing. Establishing beneficiaries and appointing a reliable executor to supervise the process reduces the likelihood of disputes, making it a fundamental component of clarity. Without a Will in India, assets may be divided according to the Hindu Succession Act, potentially going against your desired distribution.

2. Explore the Potential of Trusts

Using a trust, you can assign certain assets to a designated trustee, who will then manage them on behalf of designated beneficiaries. Trusts are very effective tools. Benefits of trusts include:
Smart Tax Planning: Strategic use of trusts can reduce tax burdens on your estate.
Protecting Your Wealth: Assets placed in a trust are shielded from future claims made by creditors against the beneficiaries.
Managed Inheritance: Trusts let you set conditions for the release of assets, like a beneficiary attaining a certain age or educational milestone.

3. Family Businesses: Planning for the Future

India thrives on the strength of family businesses. However, the weak point is frequently succession, who takes over and how it is run.

Why Succession Planning Matters?
Safeguarding Your Vision: This ensures the business continues, reflecting your values and traditions.
Ease of Transition: Minimises confusion during leadership changes with a clear roadmap.
Preparing the Next Generation: Provides training and mentoring opportunities for potential successors within the family.

The First Steps

• To begin the estate planning process, take stock of your financial situation. List all your assets, which include property, investments, and bank accounts, but also detail any outstanding debts or loans.
• Estate planning isn’t just about your possessions; it reflects your values, priorities, and how you’d like to be remembered. Consider how you want your wealth to continue contributing to your family’s well-being or even to causes important to you.
• Estate planning details can be difficult to navigate. To help you develop a plan that meets your specific needs and to make sure it complies with all legal requirements, speak with a financial advisor or an estate planning specialist.

Estate planning grants you a voice in the future, even when you can no longer speak for yourself. It’s a testament to your care and foresight, ensuring your legacy will be carried out with minimal stress for your loved ones. Remember, a good estate plan isn’t static – adapt it over time as your goals or assets shift.