Where there is a will, there is usually someone ready to challenge it. Where there are none, someone is ready to fight for the inheritance anyway. This may be true when you consider that in 2015-16, nearly 66% of civil cases that were brought in 170 district courts across the country were for land and property matters, and up to 52.7% of the cases were only between families.
Life is unpredictable and the current situation has given us a very dark reminder of this fact. When designing a financial plan, we try to cover all possible scenarios and contingencies. However, most of us tend to ignore the need and importance of a will.
It is a common misconception that a will is only for the elderly and the wealthy. Not only does a will or estate plan outline the contours of an inheritance, but it also protects your personal interests and those of your family in the event you are seriously ill or disabled. The well-being of a minor child, the selection of a guardian, and the security of his financial future are also strong reasons for developing a concrete estate plan.
Tips while writing a will to ensure your assets are passed onto your heirs
What is a will?
A will is a legally binding document that lists your assets and liabilities, as well as the people who would receive your property and possessions. A standard will, also known as an “unprivileged will,” must be written on paper, signed by the testator or the person making the will, along with the signature of two witnesses. All signatory parties must do so in the presence of the others.
A registered will is a strong legal document and, in the event of a dispute, assumes paramount importance. Putting a succession plan in place is not complicated and you can get started with it. Here’s a simple checklist of things to keep in mind.
Hire a qualified attorney or use a registered digital will service
Although you can write a will on your own, a legal professional will be able to guide you on the nuances of the will. You can structure the document based on provisions within the legal framework and the income tax. This can help avoid unexpected tax liabilities, loopholes, or unresolved issues that can later become talking points among beneficiaries.
More importantly, the attorney will be able to see the execution of your wishes. He / she can oversee the fulfillment of your will and testament and even enforce it in court of law, if necessary. Alternatively, you can also make a digital will, which would contain the digital details of all assets and all specific instructions, without the hassle of hiring a lawyer. Some entities that provide this service are National Securities Depository Limited (NSDL), Federal Bank and ICICI Bank.
Don’t make a joint will with your spouse
When creating a joint will, you will most likely forget to itemize the benefits and privileges available to the surviving spouse. If neither of you is a direct beneficiary and you don’t have a source of income, then you can become financially dependent on the heirs.
To avoid such a situation, you can make two separate wills in consultation with your partner, so that they complement each other while provisioning for the financial security of both partners. Encourage your spouse to create a will. Take this opportunity to discuss the various hypothetical situations. If you need to recruit your extended family members to take care of dependents, in the event of an unfavorable eventuality, you can use this time to discuss the details.
Prepare an inventory of financial matters
Many people do not produce a detailed account of all assets and liabilities. Lack of information could lead your heirs into potential financial trouble or rob them of the opportunity to make a valid claim on your estate.
If you have outstanding debts / credit card fees, make a separate list for each debtor with details on the terms of the loan, the amount to be paid, and relevant contact information for closing the account. The same should be done even if you have debts receivable from someone else. In case you have been the guarantor of someone else’s loan, have the details of the loan handy.
You may want to discuss dissolution of collateral and alternate guarantors if you are no longer present. If you have physical investments, such as certificates of deposit, unlisted company stocks, and angel investments, redirect your executioner to where they can be found. Also remember to specify the contact information and claims process for any life insurance plans, such as temporary plans or ULIP, for a smoother and faster claims process.
Avoid creating alternate copies of your will
Having multiple versions of the document with multiple “if-then-if no” scenarios can create confusion about the legitimacy of the will and could make it invalid and no longer legally binding. If you have alternate copies, you can voluntarily revoke the ones that are no longer relevant.
Consider emergency and end-of-life care
Known as a “living will” or advance directive, this should definitely be included in your will. In the event that you are unable to communicate your wishes, the advance directive provides instructions on what treatment and care should or should not be performed if you are unconscious or terminally ill. On the other hand, you can also endorse a durable power of attorney (DPOA) in favor of a trusted family member / assistant, who can make decisions on your behalf in the event you become incapacitated.
Update your will when necessary
The will is not set in stone. You can make as many modifications as you want. Generally, major life events, such as births, deaths, marriages, divorces, acquisitions, or asset sales, can justify a change in the will. You are free to express your wishes and include / exclude whoever you want, at any time in your life. Those who are young can review the succession plan once every three to five years, while older people can set an annual reminder.
Don’t rush into it when you’re emotionally charged
Take enough time to think rationally before making permanent changes to your wealth. Unless necessary, keep your thoughts and plans between you and your executor. Giving information can damage relationships. At the same time, feel free to write down your thoughts and feelings for your loved ones, reconcile problems, clear up misconceptions, or just say “I’m sorry” and “thank you.”
Assign a trusted person to execute your estate
This person will be responsible for taking an inventory of your assets, paying off debts and taxes, informing banks, creditors, and other agencies of your death, and handing over your assets to legal heirs or caring for minors. You need a person who can legitimately perform the duties for you.