Estate planning Basics: Organizing property

Posted On Wednesday, Jan 07, 2015


Tarun's family seemed to be a closely knit one. A software engineer, he was settled well in his career and with his finances. When school closed for the summer holidays each year it was tradition for his two siblings and him to visit the ancestral house with their families and spend time together with their parents. The kids would have a merry time frolicking with cousins.

Unfortunately however his father passed away suddenly and with that the equation among his siblings seemed to have changed forever. His father was a farmer and owned much land. But he passed away leaving behind no will. Disagreements over distribution of their father’s estate led to bitter disputes and distancing from one another seemed to be the only way there could be peace.

Perhaps Tarun’s story might resonate with that of many a household that once lived amicably. Estate planning is important for the sake of our loved ones. And in some cases it might turn out to be in our own interest too. Here is a short guide on the why, what and how of estate planning.

If only Tarun's dad had created an inheritance plan

Within themselves Tarun and his siblings would have loved to put their past behind and get reconciled, but ego seemed to be standing tall in the way. They wished if only there were a will that could have been the arbitrator and the feud would have been avoided altogether.

In the absence of a clear inheritance plan, our estate may not be distributed the way we would have liked. Somebody who is less deserving or someone who needs it less may receive the assets. Not laying out a plan and leaving things to fate could leave the door open for unpleasant family feuds and court interventions. In rare cases we might even be leaving our cherished belongings and possessions to the government.

Estate planning is for all!

Your estate includes all assets that belong to you such as mutual funds, bank deposits, real estate property, shares and bonds, vehicles and jewelry. These may be held in your name alone or jointly with others. Your estate may also include retirement payouts, life insurance proceeds and payments that are due to you (such as a tax refund or inheritance).

Estate planning as a practice is not very developed in India as it is in the western countries. In the minds of most people, it begins and ends with writing a will. And again, a will is all about distribution of real estate property.

Another common attitude is that estate planning matters only for the ultra rich. However, regardless of the level of our personal wealth, each of us that have some financial assets to our name needs an estate plan!

Moreover, estate planning is not only for the elderly, those who have hung up their boots. It is an unfortunate reality that too many people pass away young or in their middle age leaving behind kids and family with little support. Estate planning must be viewed as an important component of your financial plan. It deserves as much weight as the planning for your child’s education, your retirement, home buying or any other aspect of financial planning.

Although the term “estate planning” may sound like a complicated process that only a lawyer can sort, actually for many of us it can be a Do-It-Yourself activity. Estate planning is all about having a concrete plan about who receives and controls your assets.

Estate planning includes

Estate planning can cover your investment management, tax dues, medical care and even business planning. It involves creating a will but it is far more than merely writing a will.

To begin with you could consider questions like: what is the approximate value of all your assets put together; who would receive those assets and when; if you become unable to manage those assets either during your lifetime or after death who should do it; who should pay your debts and taxes if pending; who should make decisions regarding your personal care & welfare if you become unable to do so?

Those of your assets that have designated beneficiaries, such as life insurance proceeds, would be passed on to them automatically. The assets where you may be a co-owner (possibly in mutual funds, bank deposit) would pass to the surviving co-owners regardless of any instructions otherwise in your will. Therefore it is important to choose who joint-owners are wisely! By the way, if you are a Quantum investor you click here to know more on how to manage your mode of holding in your mutual fund folio.

Coming to your will...

A will is simply a legal document which states your desire about who would receive your assets after your demise. It can be written down on a plain paper. No stamp paper or notary is required. Your will needs to mention who would be the executor your will. Two witnesses must there when you sign the will (they don’t need to see the contents of the will though) and they must not be the beneficiaries of your will.

The will then becomes valid. It can be registered to give it more weight. You can put it away safely. It needs to remain confidential; nobody needs to read it.

But like we discussed estate planning must not stop with the will. It will be immensely helpful to make a checklist of certain important documents and information about your investments and personal finances including –

the amount and source of your current principal income or other income such as interest and dividends;
the amount, source, and beneficiaries of your retirement benefits including pensions;
the amount, source, and beneficiaries of other financial assets such as mutual funds, shares, bank accounts, insurance policies and loans due you;
the amount of your debts, including mortgages and business debts, if any;
a list with approximate values of property you own, including real estate, jewelry, collections, and other assets;
a list and description of jointly-owned property and the names of co-owners;
any documents that might affect your estate plan, including, marriage certificates, prenuptial agreements (if any), recent tax returns, existing wills and property deeds;
the location of any safe deposit boxes and an inventory of the contents of each one.

This checklist should be updated and kept safely with you. You can inform the executor of your will about where it can be found.

For most of us estate planning could be one of those things we prefer to defer, yet it is very important to put the house in order. We hope this short write-up serves as a useful preliminary guide and motivates you to have in place your own estate plan. Do consult your financial adviser for more guidance on it.

If you have any queries about your mode of holding or nomination please feel free to write back to us at [email protected] ; we will be glad to assist you.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – to read scheme specific risk factors.

Above article is authored by Quantum.

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