Why Estate Planning should be mandatory ?

Why Estate Planning should be mandatory ?

Do you know about Investing Expenses ?

The expenses that can generate (or) produce an income, so that we can save / invest a part of money, would be deducted from our Regular Salary or Business income like as other expenses.

We daily saving / investing for our Goal based information. We regularly seeing what about our yield to date (YTD) on Returns. Our Dream goals are better and far more, it may be 20 years or 30 years or more than that. We depositing in a bank, mutual funds, stocks, realty, gold, etc. We are telling these investment instruments  will for the future of our Children. But, would you know, it's exactly fit for our kids or will settle as 100 percent for our kids ? We can't know. That's why we are talking about, ' The Estate Planning'. It's not just like a simple as we are thinking a Real Estate Property.

The Estate Planning:

“What makes greatness is starting something that lives after you.”

So, we should mandate ourselves to do for our Children (or) After us.

Estate Planning… refers to the Organized approach to managing the accumulated assets of a person in the interest of the intended beneficiaries.

We can have Enough Money...

We can have Big Goals...

We can have Better Wealth...

But, we should direct that above to whom you wish. Unfortunately, Nomination and Heirs are creating trouble after our absence. So, we most concentrate and plan of our Estate Planning. 

• During the Life time:

1. Joint Holding
2. Family Settlement
3. Trust
4. Gift
5. Power of Attorney

• After Death:

1. Will
2. Nomination

Will:

Will is defined as, the legal declaration of the intention of the testator with respect to his property, which he desires to be carried into effect after his death. 

The person who making the Will is the testator. His rights extend to what are legally his own and this Will comes into effect only after the death of the testator.

The person who is named in a Will to receive a portion of the deceased person's estate is known as a legatee.

The person named in the Will to administer the estate of the deceased person is termed as an Executor.

Nomination:

It is the right conferred upon the holder of an investment product to appoint the person entitled to receive the monies in case of the death.

A Nomination is seen as formal bequest authorized by the holder of the asset, though in the event of a dispute the nominee's position is reduced to being the trustee of the bequest, the final owners being decided according to the applicable laws of succession.

Note that: Only an individual can nominate. Nominee can be an individual, company or trust, depending on the terms of the investment or asset. Nomination can be appoint either at the time of starting an investment or any time, and it can be modified any number of times. 

The Purpose of the Nomination is simplification of payment process in the event of the death of the holder and not the equitable distribution of estate.

Joint Holding:

It will ease to enable specific family numbers, such as the spouse / partner or children, easily access assets through the simple method of Joint Holding. It means that the property is held by more than one person and can be accessed by the Joint holders subject to the mode of operations.

Usually Demat Accounts, Mutual Funds, Stocks, and Bank accounts can be held as Jointly. We should remember that if there is any legal contest among the heirs, joint holders right to the asset can be superseded by laws of succession as they may apply.

Family Settlement:

This is an instrument used to achieve peace and harmony in the family when there is a dispute or claims to the property that can lead to a long drawn out litigation. 

The main advantages of a family settlement are, Family arrangements are not treated as transfer and so there is no worry about Capital gains tax. It's also not treated as Gift. (Gifts are taxable sometimes as income from other source, subject to exemptions provided u/s 56(2)(vii) of the IT Act.)

Power of Attorney (POA):

POA is an instrument method by which a person may formally authorize another person to act on his behalf or as his agent on all matters or for a particular type of transactions. POA can have Donor and the Donee. Both the parties should have attained the majority, be competent to contract.

Usually, it helps on managing the sale of assets and related on Court dealings.

Mutuation:

When a property or asset acquired by a person from another one, on becoming the rightful owner of the asset should ensure that all the titles of the asset are correctly transferred to his name. 

It helps in updating the Revenue records to ensure proper revenue collection from the person who owned the asset or property.

So, we needed it as Mandatory ourselves for the Estate Planning same like Aadhaar (Unique Identification), PAN, Voter Id and GST (Goods and Service Tax). May be the Government will put mandate this in future.

There are so many legal counters in the court regarding this Estate Planning, due to non-appointed of Nomination, heirs, proper Will and other settlements.

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Estate Planning on Rich Investing !