Did You Know There is More than One Way to Plan Your Estate?

Published by Sharekhan Education | August 21, 2020

Did You Know There is More than One Way to Plan Your Estate?

Estate planning implies planning and organizing a smooth transfer of assets to the desired beneficiaries. It plays an integral part of your wealth plan and is generally considered as an intergenerational transfer tool, which gives you the flexibility to transfer your assets to whoever you want to bequeath them to. Estate planning thus is a way to ensure smooth transfer of your assets to your loved ones and prevent the disputes that may arise in its absence.

While a will is popular for bequeathing assets, you can utilize alternative methods to do so.

Let us take a quick glance at the different ways that can help you plan your estate.

Will:

A will is a legal declaration of your intentions with respect to the disbursal of your property as desired by you after your death. This is one of the most simple, easy and popular way to bequeath your assets.

Trust:

This is an arrangement whereby a person (a trustee) holds the property as its nominal owner for the benefit of one or more beneficiaries. You can create for your own family members or for a greater social cause.

Nomination:

This indicates the person/ persons who will get your money after you die. Nominations come into play only after death of the individual. It is a simple way to avoid tedious legal procedures that need to be done in case a person dies without nominating someone. It is a good practice to nominate and nowadays many investments have made this a mandatory requirement.

Power Of Attorney:

Power of Attorney means the authority to act on behalf of another person in specified or all legal and financial matters.  It comes handy when you are unable to personally execute important transactions on account of either ill health or some prior engagement. There are different types of power of attorneys.  It is important that you give this authority only to someone you trust like a close family member.

Life Insurance Policy:

Life insurance policy especially endorsed under section 6 of the Married Women’s Property Act (MWPA) 1874, in favour of your wife or children or any one of them, is a good way to ensure financial security of your family as the proceeds for such policies will always go the named beneficiaries. Neither you nor your creditors can stake a claim on the proceeds.

Annuity Policy:

Annuity policy from an insurance company can be used as an estate planning tool to ensure financial security of your spouse. Certain types of annuity plans have an option to continue the annuity/ pension payments to the surviving spouse after the death of the primary annuitant.

To summarize it is important to note that each of the above mentioned alternatives have their own importance and usefulness. As per your situation and requirement you need to select the best.

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