Necessity of Estate & Succession Planning In Today’s Fast-paced & Dynamic Economy

In today's rapidly growing and fast-evolving environment, estate and succession planning is the need of the hour, for each and every individual irrespective of their net worth. This is because one's hard-earned assets need to be managed during lifetime in an efficient manner so that it is readily available at one's disposal during incapacitation and ill-health, the assets need to be well-kept-up and passed on to loved ones in a hassle-free manner.

It is about time to realize that "Estate and Succession planning is just for the affluent" is nothing but a taboo. A moderate Indian middle-class family is financially stable and having a simple estate plan is a sine qua non. Succession laws in India are intricate and not having a succession plan by way of a simple Will may complicate life of those you leave behind.

Estate defined

What is Estate? If you own anything, you have an estate! which includes your bank accounts, mutual funds, savings for retirement in EPF, PPF, NPS, business holdings, residential home, rental income from your property, jewellery, personal belongings like expensive watches, paintings, art and artifacts, other investments, and life insurance, etc.

Estate planning starts with listing down your assets, aligning nominations and making a simple Will that allows control over the distribution of your estate to your loved ones.

When do I plan for my Estate?

Estate planning should begin early as no one can predict the future or how long one will live. The best time to start is NOW! People assume that you need to write a will only if you are sick or old, however, you should create a will early in your life. If you have made your Will then revisit the bequest plan periodically to make changes as your lives change.

The risks of delaying estate planning are that in the absence of a simple Will, the law determines asset distribution, which is time-consuming and a stressful process.

What does Estate Planning Offer?

Estate planning is almost always individually tailored to accommodate unique family needs and circumstances, it fulfills your wishes, protects families from legal nuisances, helps avoid expensive probate and secures beneficiaries and assets.

Succession planning tools include joint holdings in assets and aligning nominations or by writing a Will or setting up a trust. Joint holding and nomination are generally not planned and are for convenience, so may not always work as per our intentions hence having a simple Will that comes into effect after one's lifetime or a Trust set up during one's lifetime, more efficient ways employed universally.

Writing a Will

On the death of a person, his/her property is distributed amongst the persons as specified in the Will, in case one was written during the lifetime. However, in India, when an individual dies without making a Will, the community-specific law that applies to him/her will define the way his/her Estate will be distributed.

As per Section 59 of Indian Succession Act, 1925 (ISA) every person who is of sound mind and is not a minor can make a Will. So, while a minor cannot make a Will, the law prescribes that when you turn 18 years of age and have remained in a sound state of mind (pun intended), you should write a Will, provided further you meet any of the situations below-

• You have accumulated some money or other assets like buying a home, etc.
• On marriage and when you have children
• When you meet a lawyer or private banker or a wealth planning firm who warns regarding the necessity of a Will!

How law differentiates between your successors especially - Mother from Mother-IN-LAW!

Do you know who will be the owner of the flat that a husband and wife own jointly, post the demise of one of the two? The obvious answer - the surviving spouse. Check the ownership document of the flat to see if it has a survivorship clause to state that on the demise of one owner the surviving owner will be the sole owner of the flat.

To your surprise, the answer to the question that the flat jointly held by the spouse will be owned solely by the surviving spouse post demise of one is in NEGATIVE.

In the case of Hindus, if a male dies without making a Will, then his estate will be bequeathed to his wife, mother and children in equal proportion and if a female dies without making a Will her estate devolves upon her husband and children in equal proportion.

While the husband may wish to transfer everything to his wife post his demise, the applicability of Hindu law in the absence of a Will may result in unwanted consequences with respect to each beneficiary's share in the deceased's property.

With respect to financial assets, whether nomination will suffice? A nominee is the owner of your asset is not the general rule but an exception to the rule, as a nominee is only a trustee and not the owner of the assets. The nominee will only hold your asset as a trustee/custodian and will be legally bound to transfer it to the legal heirs. For most investments, a legal heir is entitled to the assets of the deceased. However, if a Will is not made, then the legal heir of the estate is decided according to personal succession laws.

Benefits of a Simple Will

One of the key reasons for making a Will is to ensure that there is no dispute about who inherits the wealth after death. More commonly, your close family may not even be aware of some of the assets because they may be held singly by you.

The hardship that the legal heirs may have to go through in the absence of a Will which may include court intervention, significant commitment of funds and time and above all properties might be locked-up for several months or years if the distribution is not as desired.

After writing a will one needs to make appropriate arrangements for its execution and safekeeping. A handwritten signed Will along with the signatures of 2 witnesses are the requirements of law, however, registering your Will is one way of ensuring the safety of your will while making it easy to establish it as your last and final genuine testament. For getting a will registered, you will have to visit the registrar's office along with your witnesses and there is no stamp duty for registration of a will.

"Death is not the end. There remains the litigation over the estate."- Ambrose Bierce

And hence to ensure there is peace and harmony after demise - write a simple Will!

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