Passing Assets To Your Loved Ones



We are glad to have you with us for our 5th Session on Retirement Planning - 'Passing Assets To Your Loved Ones'.

Alright so let's get started...

Benjamin Franklin, a renowned polymath, who was a leading author, political theorist, civic activist, statesman and diplomat, once said, “...in this world nothing can be said to be certain, except death and taxes.” And interestingly many of us despite being aware of this inevitable fact, often avoid thinking about it, or defer estate planning to another day. But have you ever thought what would happen to the wealth you created over years of hard work after your demise? Have you ensured that your family is well-safeguarded?

You see, dying intestate (i.e. without preparing a will) can lead to various complications and disagreements among your heirs.

Hence, here is where estate planning comes into picture. Through years of experience we can say that there exists a wrong notion among people that estate planning is meant only for the wealthy or needs to be done after you've retired. But the fact is that it is essential for everybody in today's world.

In this session of money simplified, we will introduce you to the facets of estate planning and also the points you need to consider while writing a 'Will'.

Why Estate Planning?

  1. Estate planning refers to passing down assets / investments from one generation to another

  2. Many people become incapacitated in their old age or some-times even as young adults. An incapacitated person is an individual who is incapable of taking care of his own self and provide for his basic needs due to some mental or physical condition which he suffers from. Preparing for such contingencies is also a part of estate planning.

  3. And estate planning is essential for all regardless of the economic strata and size of the portfolio.

  4. You don't need to wait till you own plenty of assets / investments or till your retirement for estate planning. Life is quite unpredictable and hence you should begin at preferably in the mid-asset accumulation phase i.e. between 35 to 45 Years or latest in the protection phase of your life cycle when you are between 45 to 55 Years. 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 advisable to prepare your will early, once you have certainty about your asset and legal heirs to whom you would like to pass on your wealth.

  5. 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 the country. If required, you may even need to revise your will if there is substantial change in the circumstances that existed at the time of preparation of the earlier will.

Here are some...

Benefits of Estate Planning

  1. Estate planning ensures that your physical assets and investments, are inherited by the people to whom you want them to be transferred to after your demise. The law might not take into account your personal relationships or preferences while distributing your assets if you die intestate (i.e. dying without a Will). Without proper planning, it is possible that the law disposes your estate even among distant relatives who might not be your first choice of beneficiaries.

  2. Estate planning can also help pass accolades bestowed on you to a specific individual. Say, you are a defence personnel and wish to give your war medal, which has some sentimental value to your younger daughter who has interest in war history; this is possible through prudent estate planning. But in the absence of proper estate planning, it may or may not be granted to the person of your choice.

  3. Prevents financial, emotional and legal grief to your loved ones

  4. It also avoids complications, disagreement, bitterness and drift in the family

  5. Estate planning might also help the beneficiary reduce tax outgo on account of inheritance if done prudently. For instance, instead of passing on assets after your death, you might gift them to your loved ones while you are alive. If left to the prevailing intestacy rules, there is a chance that a higher amount of tax may be applicable on your property and other assets. You can also make separate arrangements for tax payments. For example, you can provide for tax liabilities separately from your residuary estate, if you don't want to reduce the inheritance value of assets by way of taxes.

    We believe that for all these reasons and in order to avoid being the reason of agony for your loved ones, you must start estate planning early and consider it as a part of your retirement planning exercise.

Few Myths About Estate Planning Debunked...

Myth#1: Estate planning is meant only for the wealthy
Fact: It is essential for everyone
irrespective of the quantum of wealth one owns.

Myth#2: Estate Planning should be thought of only after retirement
Fact: Life is quite unpredictable and hence the earlier you think through and plan, the better it is. As mentioned earlier, you need to begin preferably in the mid-asset accumulation phase, when you are between 35 to 45 Years or latest in the protection phase of your life cycle, when you are between 45 to 55 Years.

Myth#3: My legal heirs will handle it maturely
Fact: Well, we wish that they do. But unfortunately often many disputes happen over money in today's world.

Myth# 4: I have registered my nominee(s) in respect of my Mutual Fund units so they will automatically get ownership of these units.
Fact: The nominee(s) registered under the nomination facility provided by a Mutual Fund does not necessarily acquire any title or beneficial interest in the Units.
The nominee(s) receives the Units only as an agent/ trustee for the legal heirs or legatees. The Mutual Fund is not bound to transmit the Units in favour of the nominee in the event of any dispute in relation to the nominee's entitlement to the Units.

Myth#5: I don't need to seek legal opinion
Fact: While it is not necessary, it would be prudent to reach out to your lawyer to ensure that estate planning is done legitimately considering the nitty-gritties involved.


Ways to Carry Out Estate Planning...

Broadly there are two ways...
  1. You can transfer your assets to your beneficiaries by creating a Trust: This might enable you to decide how and when your beneficiaries must receive their inheritance. Creating a Trust is largely useful in the case where your spouse and minor children are unable to manage their finances on their own. But overseeing the Trust well is also a critical aspect.

  2. By Drafting a Will: Ideally a Trust should be complimented by a Will as it is the cornerstone of all estate plans. Writing a Will appropriately will benefit you as a testator making a valid Will and will provide an enhanced understanding of your current financial strength and an opportunity to improve upon it in your remaining life span.

  3. Here are...

    Points to Note While Writing a Will


    • A Will should be free from coercion, fraud and undue influence.

    • Do use the title 'Last Will And Testament Of (state your name here)' to make it clear that the document is your Will.

    • 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. It is necessary to bring in clarity that the Will is prepared in complete sense.

    • Even though it is not necessary, it is advisable to state the name of the executor i.e. the person who will carry through the principles of the Will. You can name your spouse or the main beneficiary. If you are nominating an outside person to be the executor of your Will, you must ask their permission first. If you have minor children, you must also indicate a guardian for them in your absence.

    • A Will should be Simple, Precise and Clear, otherwise there may be problems for the legal heirs. It is always better to take the advice of a trusted advocate when writing your Will.

    • A Will must always be dated. A Will without date is not maintainable. If more than one Will is made then the one having the latest date will nullify all other Wills.

    • Each page of the Will should be serially numbered and signed by the Testator that is you and the Witnesses. This is to prevent the Will being substituted, replaced, or pages being inserted by people intending to commit fraud. At the end of the Will you (the Testator) should indicate the total number of pages in the Will. Corrections if any should be countersigned.

    • It is possible to make changes or minor alterations in a Will before it is registered. After the registration of the will, if at all there are any changes re-registration would be required. In case there are too many or major changes, it will be better to make an entirely new Will and register the same.

    • It is not compulsory for one to register a Will with the Registering Authority, but in case any property or asset is given to any charitable organization; then registration should be done. In order to avoid frauds and tampering, it is always preferable to get it registered. If you wish to register your Will then it can be done with the registrar/sub-registrar by paying a nominal registration fee. This also requires you to be personally present at the registrar's office along with the witnesses. Also, it is better if the witnesses signing your Will are not the immediate beneficiaries of your estate or wealth. They could be 2 people who are trustworthy and reliable. Also, it would be wise to inform the executor and your family members about the whereabouts of your Will in order to avoid confusion later.

    • A Will should be kept at a secure location in order to avoid any misuse or fraud.

    • Will can be typed or handwritten. A stamp paper is not necessary to prepare a Will. You can write a Will on a simple plain paper.

    Lastly, before we end this session here are some...

    Points to Remember

    • Dying intestate can lead to various complications and disagreements among your heirs, hence estate planning is critical while you retire.

    • Estate planning is essential for everyone irrespective of the amount of wealth one owns and not only for those who are wealthy and retired.

    • Estate planning is a dynamic process, so it needs to be reviewed.

    • It potentially ensures that your assets are passed on to your loved ones and they are protected.

    • But you need to carry out estate planning prudently by creating a Trust and / or drafting a Will.
    • Will should -
      • Be dated and kept simple, precise and clear

      • Be free from coercion, fraud and undue influence

      • Ideally state the name of the executor

      • Use the title 'Last Will And Testament Of (state your name here)'

    • And last but not the least, your mutual fund investments should have proper nominations and ensure that requisite documents are timely furnished to the AMC for transmission.

[The content in this video transcript is for general information purpose only. The financial institution/intermediary processing the transmission claim basis the Will of the deceased investor may have different policies and procedures to ensure that the claim is processed to the actual legal heir(s) of the deceased investor and may ask for additional documents from the legal heirs in this regard.]

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The Information contained in this video transcript is not a complete representation of every material fact and is for information purposes. All details are provided on a best effort basis. It is not to be used or considered to be an offer to sell or buy units of Franklin Templeton Mutual Fund schemes. This video transcript is for information purposes only, provided on an ‘as is’ basis. Nothing in it should be construed as personal financial advice. You are responsible for your own investment decisions and the recipient is advised to consult a professional financial advisor prior to arriving at any investment decision. The video transcript is for personal non-commercial use only and may not be copied, stored, redistributed or broadcast in any way. We recommend you read the complete Terms of Use of the website.

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