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7 Ways to Ensure That Inheritance Is A Hassle-free Process - Outside View by PersonalFN

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7 Ways to Ensure That Inheritance Is A Hassle-free Process
Sep 28, 2017

25-year-old Rita, a software professional, lost her father six months ago. They were on a family vacation and a sudden heart stroke was the cause of her father's demise. Sanjay was a 60-year-old businessman.

Rita being the only child had to soon stand strong through her grief. She took up the family's responsibilities from that very day. Sanjay was co-founder of his software service company. He had started this business with his best friend 30 years ago.

Being the sole bread winner her father was responsible for all the financial decisions of the family. Rita and her mother were, on the other hand, unaware and were not included in many of his financial decisions. Hence, his demise was not only emotionally and mentally disturbing, but was a financially distressing as well.

What can you do to avoid such situations?

Mortality is inevitable. Even though we always wish the best out of our lives and for our family, death is certain. And the best thing you can do for your loved ones, while you are still alive, is to have a succession plan in place.

Have you heard of writing a Will?

Yes, it is possible to write a Will for a common man.

We work most of our adult lives to build wealth that will sustain ourselves and our families. Have you ever wondered what would happen to all this wealth if you were not around to ensure that it goes to your loved ones?

This is where estate planning comes in.

Estate planning, in simple terms, refers to the passing down of your assets from one generation to another. Now, there exists a wrong notion among people that estate planning is meant only for the wealthy. But the fact is, it is essential for everyone, irrespective of how much wealth you have created. You see, estate planning prevents adding the financial and legal hassles to the emotional grief your loved ones face in your absence.

Let us look at the seven basics of succession planning...

  1. Discuss finances openly

    Parents (usually the bread winner) often protect their children from everything and do not discuss finances in front of them. They take the entire burden on themselves.

    If you follow this pattern too, it's necessary to change it now. As an earning member, your family should be fairly aware of your finances. You need to understand your family expectations, and at the same time be open to discuss your own expectations.

    Your family needs to be aware of all your debts, and a plan must be in place to repay the debt. If any unfortunate situation arises, they know a way out.

  2. Impart financial literacy

    Ensure that your kids are financially literate, especially if they are from a non-financial background. Teach your children to be moneywise and why it is important to value money.

  3. Prepare them for the SOS situation

    Although being optimistic is a good thing, you must anticipate the future and take necessary steps to secure it. As much as they need to be aware of your debts, they also should know how to deal with financially challenging situations.

    Always prepare your children and family mentally. They should know when to use the inheritance and when not to. At the same time, your family should not always follow the traditional ways of safeguarding inheritance. You need to equip them with sufficient financial literacy.

    Always have an emergency fund. Similarly, having an adequate insurance cover is equally important.

  4. Introduce your financial planner

    Introduce your children to your financial planner / financial guardian and make them familiar with investment nuances. This will help them to sort out the finances after you are gone. They will be better equipped and guided this way.

  5. Keep financial documents in one location

    Always keep all your account details in one location. You need to inform your heir(s) about this location (either a physical or digital locker). You should also keep all your login id and passwords at a secure location. So that they have a hassle-free access to these accounts and money in case an emergency arises.

  6. Appoint a legal authority

    Make sure you have a legal authority or a trusted advocate who will be the point of contact for the queries your heir(s) in case of your demise. This person can prudently guide on the legal path and help reduce the legal grief your inheritor(s) will be undergoing.

  7. Write a Will

    Most important of all, write your own Will. This can be prepared by anyone who is 21 years of age, of sound mind, and free from any coercion, fraud, and undue influence. With old-age comes several physical and mental illnesses. People become incapacitated or even lose their ability to comprehend. A Will created at such an age, when a person might not be in his or her right senses might create misunderstandings, doubts, and disputes in the family later. Hence, it is advisable to prepare your will at a relatively younger age, when you are healthy, to avoid conflicts later. You can always keep legitimately revising the Will with passage of time and account for the changes.

    For your convenience, PersonalFN here has listed down 10 points to remember while you prepare a Will. These are:

    1. A Will can be prepared by anyone who is 21 years of age
    2. You must use the title 'Last Will And Testament Of (state your name here)' to make it clear that the document is your Will and legal. Also, state your full name, current address, and the fact that you are of sound mental health and under no duress from any one to make the will.
    3. Name an executor, a person who will carry out the tenets of it.
    4. A Will can be hand written or typed out.
    5. If you have bequeathed your assets to any minor children, make sure you appoint a guardian for the assets
    6. It is extremely important for the Will to be simple, precise and clear.
    7. It is possible to make changes or minor alterations in a Will if you wish to do so.
    8. Each page of the Will should be serially numbered and signed by the Testator (i.e. the person making the Will) and the Witnesses.
    9. Keep your religion rules in mind as along with the laws of the country; one's religion also plays an important role.
    10. It is always better to take the advice of a trusted lawyer or advocate while writing a Will.

PersonalFN believes for all these reasons and to avoid any reason of agony for your loved ones, you must start planning succession well in advance. Estate planning is one of the most essential aspects of our lives and should not be put off until it's too late. It is a dynamic process, which needs to be reviewed at regular intervals to absorb any changes, which might happen in our lives or in the laws of our country.

Unless and until you appropriately document everything this in the form of a Will or other mediums of estate planning, there is no certainty that the assets created by your life-long efforts will be transferred to your beloved people.

Wish to have a guide on estate planning? Download PersonalFN's "Your Definitive Guide To Estate Planning" produced in association with CCC WillEffect Pvt. Ltd., which specializes in Wills and succession advisory. In this guide you'll find...

  • Why estate planning is a must for everyone
  • Should you consider writing a Will online
  • Wills vs. Trust - which is better of the two
  • Why a mere nomination is not enough
  • How to transfer of shares in a co-operative housing society
  • How to select the right estate planner
  • ...and much more!

Click here to get the Definitive Guide to Estate Planning in your inbox. We aim to take you through the nitty-gritties of sensible estate planning.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.


The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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