Estate Planning

Personal Wealth Management

Group 6
Shagun Gourisaria, 211133
Shantanu Mittal, 211134
Sonal Sharma, 211141
T N V M Ravindra Mohan, 211146

What is an Estate?

Real
Assets

Personal
Assets

Estate

What is Estate Planning?

Individual arranges the transfer of assets to the legal heirs

This is done to protect the needs of the loved ones in case of his/her death or
some disability
It includes the distribution of the real and personal property of an individual
to his/her heirs
Aim is to preserve the maximum amount of wealth possible for beneficiaries
and flexibility for the individual prior to his death

Objectives of Estate Planning

To develop a plan detailing of ones wishes as to how to use and

distribute the wealth

To prepare for future illnesses, disability or retirement

To transfer property to intended, rather than unintended,

beneficiaries both before and after death

To ensure tax deduction on such transfer of wealth

Business succession organized succession or winding up can be

defined in case of an individual handling business

Time of distribution can be pre decided : individuals having minor

children may wish to transfer the assets only after the children
attain a certain age , to avoid misuse that may happen due to
lack of maturity and discretion

Objectives Continued

Selection of trustee or guardian or executor : An individual needs

to be appointed to carry out functions like
To pay for funeral expenses
Paying all the expenses and outstanding debts
Arranging for filing tax returns
Ensuring all the benefits due to the deceased such as life
insurance, pension and other benefits are received
Applying for probate
Distribution of assets to the beneficiaries as per individuals
wish

To provide for the guardianship of minor children upon death or

incapacity

Estate Planning vs. Real Estate

Planning
Estate Planning = Real Estate Planning

Estate = Real Estate + Investments + Insurance Policies +

Savings + .

Parties to Estate Planning

Testator (Individual whose

asset has to be
transferred)

Lawyer

Beneficiary

Life insurance companies

Executor

Banks

Tax advisor

Courts

Witness

Tools of Estate Planning

During the Lifetime

Trust

Power of
Attorney

Testamentory

Living

Revocable

Irrevocable

Gift

Partition

Benefits of Trust

Trust is a non-probate and private instrument

Assets in an irrevocable trust are protected from the

settlors creditors

A trust can be structured to distribute assets to a

beneficiary periodically

A trust can ensure the right person benefits from the

assets

Gifts: Under Income Tax

In the Income Tax Act 1961 under section 56 (2),any gifts

received by any individual or Hindu Undivided Family (HUF) in
excess of Rs. 50,000 in a year would be taxable.

Exemption from Gift Tax:

The gift being given by a blood relative, irrespective of the gift
value
Immovable properties located outside the country
Gifts received from relatives on the occasion of marriage
(including gifts received by daughter-in-law from parents-inlaw; but excluding gifts received by son-in-law from parentsin-law)
Gifts received by way of a will and inheritance
NRIs gifting parents in India from their NRE account

Tools continued
Post- Death

Succession

Unpriviliged

Will

Joint

Mutual

Life insurance

Conditional

Priviliged

Differences
Will

Gift

Transfer of assets takes place after

Transfer of assets during the life

the death of the testator

time of the testator

Revocable

Irrevocable

Testator has the ownership of the

Ownership is transferred to the

assets
Not risky

beneficiary
Risky since a person gives all his
assets during his lifetime

Differences

Will

Nomination

The beneficiary is the sole owner of

The nominee is not the sole owner

the assets

of the assets

The other beneficiaries cannot make The other heirs can make a claim on
a claim in the assets not transferred

the assets transferred to the

to them.

nominee

Key Issues to be considered in

estate planning

Who do you wish to be the executor of your estate?

Who do you wish to be your Power of Attorney?

Who would you wish to be the Guardians of your minor children?

Do you expect there to be any challenges to your wills?

Are there any particular assets which you would like to leave to
specific family members?

The will prepared, hand written or typed, should be legible.

Do you need the help of a legal professional?

Is will overriding the natural succession of natural wealth?

Are assets being bequeathed to people other than natural heirs?

Are the witnesses chosen carefully?

How to bequeath your digital assets?

Estate Planning Process

A financial planner performs the following steps:

Relationship establishment

Information gathering

Determining the clients financial status

Draw out a plan of transfer

Implementing the plan

Regular reviewing of the plan

Risk Involved in Estate Planning

Huge costs of transfer and taxes might be incurred if planning is not

properly

Inadequate information while planning might result in intended

beneficiaries to take up legal process in order to possess the assets of the
individual

Absence of smooth transition and functioning of assets after the individual

expires might result in depreciation of value of assets

An individuals wishes on how his/her assets are to be distributed may not

be fulfilled

There may be insufficient liquidity to meet the individuals debt

obligations and taxes

An individuals family may be in financial distress if the process is not

planned properly

Risk Mitigation Strategies

Identifying various scenarios/ events which could require Estate planning

such as divorce, disability, death etc.

Identifying specific goals and determining them

Making a checklist of assets and liabilities, beneficiaries, executor and

other aspects of Estate planning

Consulting to aging parents and other beneficiaries about Estate planning

Reviewing the plan periodically while updating to new tax laws and
legislations

Establishing benchmarks to evaluate the plans success

What is a Will?

The legal instrument expressing a persons wishes and directions

as to the disposition and distribution of his/her property after
death.

We can make the will on plain paper in India. Its not legally
necessary to make the will on stamp paperious

Previous will can be edited as many times a person wants

through a codicil or making a new one

Who is Eligible to Make a Will?

Major

Sound mind

Willing to write a Will

A Will can be made by the deaf and dumb person by showing

consent through writing or gestures in sign language.

A prisoner or alien in India can also draw a Will.

When to Make a Will?

First step in our financial life

Now

Why to make a Will?

Make a provision for a
close friend or a
faithful servant

Estate is not
automatically passed
on to the spouse

Inconvenience caused
to our family members

Choosing the executor

of our estate.

Appointing a guardian
for our minor children
or other individual who
requires guardianship.

Allowing us to choose
in advance how we
want our property to
be distributed.

Designating a
successor custodian in
cases where we are
serving in a custodial
capacity for a minor or
special-needs adult.

Providing for
individuals who would
otherwise not have
been eligible to
receive property we
leave behind.

A will can also allow us

to donate property to
charities of our choice
and choose the assets
that would be used in
the donation

Sample Will: 4 Parts

1. Declarations
1. I, the undersigned ____________________ aged about ___ years,
_________________ by profession, residing at __________________.I
hereby revoke___________________________________________,
hereby make my Will, any other Will or Wills of earlier dates
that may beclaimedto be in existence, I state that I am in
soundinmind and I am making this will because I do not wish
to cause difficulties to my beneficiaries by dying intestate. I
make this will on my own and without pressure or influence
from anyone. I ammarriedto
______________________________________; I have ____ children, one
son __________________________ and
onedaughter_______________________, hereinafter referred to as
my children.

Sample Will: Cont.

2. Assets and properties
owned
By thisWill and TestamentI bequeath to my son
___________________ anddaughter_______________________, my plot
of land situated at __________________________________ and other
contents therein all of which they may divide into two equal parts,
as near as may be as per their mutual agreement. They shall have
absolute ownership and possession of this property, where I at
present reside, and may dispose of it in whatever manner they
desire, during their lifetime, and thereafterthe propertyor
whatever is left of it shall pass to their heirs or designated
inheritors

Sample Will: Cont.

3. Distribution of the
properties
The remainder of my assets moveable and immovable shall be
divided into two equal parts, as near as may be. One part I
bequeath to my son __________________________ and the other to
mydaughter_____________________________. These properties may
be utilised as may be deemed fit by my children
____________________ and _______________________ and by their
inheritors or heirs after them. In the event of premature demise
of any of the legatees, the properties allotted to them shall pass
to their children and if there are no surviving children, these
properties shall pass in equal measure to their heirs or
designated inheritors.

Sample Will: Cont.

4. Signatures
I appoint _____________________________ who has accepted the
responsibility, as the executor of this will. He may /may notrelegate
thisfunctionto any other person of his choice, ifrequiredor desired.

Signatureof _______________________ (Testator)

(Name of Testator)________________________, in our presence, signed
thisinstrumentafter declaring to us that it is her/his Will and we
now sign in her/his presence and of each other as witnesses on this
above written day and year.

Signatureof witness: 1.
Name: _________________________ Address _______________________
Signatureof witness: 2
Name: _________________________ Address _______________________