Making provisions for your property and assets, is the best gift you can give to your loved ones
Termed as Estate planning, in a nutshell, it takes account of the property that is owned or inherited by an individual and to prepare a plan for transferring the property to the rightful heirs through a legal process. Although the process seems to be simple, it involves thorough planning, the involvement of financial and legal advisers, and several documents and paperwork.
The Scenario of estate planning in India
In most of the cases, individuals, particularly senior citizens in India do not have a properly organized estate plan or continue postponing the same during their lifetime. There may be a variety of reasons behind this, starting from commitments towards work and other responsibilities, lack of time, stress, or plain reluctance to look at estate planning as an important activity.
As a result, in the event of sudden demise or disability of a senior citizen, the heirs or beneficiaries of the estate have to go through a harrowing experience to inherit the estate/property.
In both cases of a single beneficiary or more than one beneficiary, the lack of a proper estate plan leads to long drawn legal disputes and wastage of time and financial resources on the beneficiaries’ ends. In the case of more than one beneficiary, there may be an additional problem of conflicts between the beneficiaries, resulting in strained relations.
Importance of a properly organized estate plan
Estate planning should be undertaken by a mature adult in advance, as it would be beneficial and hassle-free for the heirs under any situation of unfortunate demise or disability. This is important because an individual, having proper mental health, can plan more efficiently and with sufficient time rather than in haste and under a disturbed frame of mind. Estate planning involves a proper draft, taking into account the factors like – the planner’s choice of transfer of the estate, tax benefits, identification of any disputed asset, associated risks involved, and implementation of the plan post finalization.
A will is an integral part of estate planning as it is implemented post demise of an individual. The absence of a meticulous plan often results in the rightful heirs being cheated by people with wrong motives or ending up paying up huge amounts of tax.
The current COVID-19 pandemic situation has given rise to many uncertainties besides sustenance of life in case of contracting the disease. An effort to design an estate plan in the current period, particularly by senior citizens in India has become difficult as there have been on and off lockdowns throughout the country, closure of courts, shops, and establishments for long periods, and lack of access to legal practitioners and associated people. Although most of the activities have gone digital, face-to-face interaction with certain individuals, particularly lawyers, become indispensable during estate planning. It has become extremely difficult for senior citizens who have been already affected by the disease or are recuperating, besides the cases of unfortunate deaths.
Customization of estate plans
Most of the time, it would not be possible to cover all the assets under a senior citizen’s possession through a will. There may be some jointly held assets related to profits, business houses, trusts, or agreements. For these cases, customization becomes necessary to chalk out a well-organized estate plan. There is no specific format for an estate plan and they are designed to suit individual preferences.
An estate plan may consist of the following features:
- A will, involving an executor for implementation of the will and distribution of the assets, post demise of an individual.
- An optional engagement of a power of attorney to manage an individual’s legal and financial activities if the individual wishes to or is unable to manage the responsibilities on his/her own.
- Engagement of an individual to look after the owner/senior citizen’s health, and act as a caregiver if the senior citizen is not in a position to take care of his/her own.
- There may be a documented plan for medical treatment to be prepared in advance
- The jointly held assets should be in line with the overall design of the estate plan. This is required for a smooth transfer of power in case of death or disability.
- Consideration of certain aspects involving the current owner of the estate/property and the beneficiaries like – physical or mental disability, bankruptcy, family disputes, etc. and the changes to be carried out in the estate plan concerning these aspects.
- Consideration of flexibility in terms of legal changes or changes in circumstances, during, or post demise.
- The estate plan should be changed or updated according to current legal or changes in circumstances during every two to three years.
- There should be a facility for safekeeping of the estate plan including the original documents and the individuals involved in its implementation and execution should be well informed about them and their specific responsibilities.
Considering all the above facts, senior citizens of India should think of clear and meticulous estate planning as a priority, besides several other aspects of life, in view of saving their loved ones from the perilous troubles of property disputes.