Why you should write a will and how to do it4 min read . Updated: 30 Apr 2018, 03:27 PM IST
We accept life's uncertainties and yet tend to postpone decisions relating to possibilities surrounding death or incapacitation
Most people ignore estate planning and do not add it to their priority to-do list. They fail to understand that life is packaged with risks, which can catch you unawares. Changing time and technology have facilitated wealth creation. In India, there has been an interesting shift from inheritors to entrepreneurs and professionals in the past two decades, which has implications on planned succession.
We accept life’s uncertainties and related risk and yet tend to procrastinate and postpone decisions relating to possibilities and scenarios surrounding death or incapacitation. Here’s a list of some common excuses that people have to avoid estate or succession planning.
I am not that old: Many people put off their planning for a later stage as they feel they are not that old. Sometimes, they never get the chance. If you own movable or immovable assets, then you need to have a succession plan, irrespective of how old you are. Age has nothing to do with succession planning.
My family is nuclear: Some life aspects that nuclear families ignore but which they need to consider are sudden death, incapacitation, separation and legal issues and formalities. Everyone is not particular about documenting and listing their dealings and updating the same on a regular basis, but it is important to do it.
My family members won’t fight: Everyone is emotional about their family, and everybody hopes that nothing bad will happen to them, and that there will be peace and harmony. But there is a possibility that there will be disagreements between family members. So, it is best to plan succession so that such an eventuality is avoided.
I have already gifted all my assets: Many people are in a hurry to pass on their assets to their children during their lifetime. This can lead to increased dependency, which you may regret. Therefore, it is advisable to write a Will and let the devolution happen when you are not around anymore.
I won’t be able to change my Will: You can change your Will as many times as you want. If you want to make small changes in it, then you can do a codicil, but if you want to make significant changes—like changing the beneficiaries—then it is better to redraft the Will.
I have made nominations: One needs to understand that nomination is important, but a nominee is a mere custodian and may not be the ultimate beneficial owner. A Will supersedes nomination in all assets classes, except equity shares and company bonds.
My assets are jointly held: Most people hold assets jointly with their spouse. For instance, you may hold your residential asset in joint name with your wife. Most of us assume that if the husband dies then the wife automatically becomes the owner. But that’s not true. If, say, a husband dies intestate (without writing a Will) then his share will devolve to his surviving class 1 legal heirs. His wife, children, and mother will have equal right on his share in that asset.
I am not that rich: The assets that you have created and built are of a certain value—which can be high or low—and these assets should devolve to your loved ones.
Once you have decided to go for estate planning, there are a few points you should take care of when making a Will. Here are some of them.
Beneficiary can’t be the witness: Don’t make the mistake of making the beneficiary the witness. If the beneficiary and the witness are the same, then that beneficiary’s share may be termed void. Sign the Will in the presence of a witness. Do not send a signed Will via courier to your witness to sign as it can be termed void. You don’t have to disclose the contents of the Will to the witness.
A handwritten Will is valid, but it is advisable to have it printed. It is also advisable to select an executor who is younger in age than the testator.
Consider registering your will: Though this is not mandatory, it is advisable to register your Will. A registered Will might help your family members at the time of execution.
Power of attorney: Execute a power of attorney in favour of a trust worthy person. This will be helpful in case of incapacitation.
Let your loved ones know that you have made a Will: You don’t need to declare the contents of the Will to your family members, but you can inform them that you have made a Will. Don’t forget to tell your loved ones that you’ve taken the time to plan. An estate plan is only effective if your loved ones know that it exists.
Review your Will: Review your plan every 3 to 5 years, or sooner, if life changes occur. This also includes updating beneficiaries and their beneficial interest.
Trustworthy advisers and professional help: Choose responsible and trustworthy advisers and helpers. This includes possible guardians, executors, trustees, and power of attorney agents. You want to make sure that your affairs are handled appropriately and with care. Ask your estate planner questions about your plan as it is important that you understand all aspects and details. If you want to make any changes to your estate plan, it may be better to seek professional advice so that you can understand the implications of the changes. Taking professional help in planning your estate can help in avoiding serious errors.
Don’t rewrite on your Will: Don’t ever write on your original documents. If you have already executed the Will (i.e., signed it) and then want to make changes in that, it can be treated as tampered and hence void. It is better to avoid rewriting or scribbling on the original Will. If you want to make changes, get a codicil made.
Apart from all this, include funeral planning in your estate planning. This can ensure that your funeral wishes are followed and help minimize family disagreements.
Sandeep Nerlekar is founder and managing director, Terentia, an estate planning firm