7 easy steps to draw your estate plan

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You often tend to procrastinate on the need to put an estate plan in place because it can be quite overwhelming to deal with complex topics and difficult decisions. However, an estate plan is a very crucial component of your wealth management plan. It involves establishing a comprehensive strategy to safeguard your wealth and most importantly the relationship with your loved ones.

The following checklist may help you think through and approach this exercise in a simple and productive way:

List your objectives

The cornerstone of any plan should be your objectives, which will enable you to choose the right set of estate planning tools and solutions to meet your goals.

Hence, it is essential to list your objectives both at an individual and family level. Here is a list of common objectives of most families:

• Seamless transfer of wealth to loved ones with minimal administrative formalities
• Conditional transfer of wealth to intended recipients
• Protection of wealth from undesired claimants
• Preservation of wealth for minor and/or spendthrift beneficiaries as there are high chances of the wealth being squandered away in the absence of a plan
• Consolidation of family wealth
• Disability/incapacitation exigency planning
• Maintenance of confidentiality of family wealth

Create a list of all your assets and liabilities.

You may also include whether the assets have been self-acquired, inherited and/or ancestral. This information comes in handy not only when you are undertaking the pen to paper exercise of devising your estate plan but also is useful to your inheritors as they gain an understanding of your entire estate.

Identify your inheritors

Make a list of the individuals to whom you would like to leave a bequest as well identify causes/matters dear to you for which you would like to provide financial support. Further, decide as to how would like your bequest to be made to your inheritors – whether in a one-time lumpsum amount or perhaps a staggered distribution of your wealth over a period of time (for instance 1/3^rd once the beneficiary attains 30 years of age, 1/3^rd at 40 years and the balance at 45 years).

Besides you may also make provisions for your pets and social causes of concern to you. It will be essential to set aside funds for matters like these in your estate plan.

Identify your fiduciaries

An area where most individuals struggle is to identify the right set of individuals/ entities to entrust the responsibility of execution of their estate plan. An effective fiduciary must be diligent, detail-oriented and someone whose temperament matches that of your loved ones to avoid conflicts. It is very essential to choose persons who are trustworthy and well-wishers for your family to act as:

Executor(s): They will be responsible to carry out your wishes as you would have mentioned in your last Will and Testament and complete the requisite legal and administrative formalities for distribution of your estate.

Trustee(s): In the event you set-up a Private Family Trust for your family and/or a charitable foundation to support social causes, you will have to entrust the responsibility to a board of persons- whether individuals and/or corporate Trustees to manage the day-to-day affairs of the Trust as you may have enumerated in the Trust deed.

Guardian(s): In the event of the demise of parents of minor children, your estate plan should include as to how and by whom the children will be raised.

While it is important to identify a person for the above roles it is equally essential to ensure you have identified successors for the said persons to ensure continuity of your requisite estate affairs.

Choose your estate planner

It may be prudent to seek expert assistance to draw up your estate plan. While you may feel inclined to use a template available online and simply fill in the blanks, taking a DIY approach may do more harm than good.

An estate plan should be reflective of your personal situation and using one of many “one-size-fits-all” templates may lead to unnecessary hassles in transmission of your wealth to your loved ones.

Further, it is important to understand that creating an estate plan helps to address your concerns not only in reference to how your assets will be distributed after your lifetime, for instance through a will, but also helps you to meet certain objectives during your lifetime too, such as how your financial affairs will be managed in the event of your incapacitation, for instance through a power of attorney. An estate planner enables you to adopt a holistic approach to your estate plan by taking into account your objectives both during and after your lifetime.

Communicate your plan

A step often missed is to communicate your plan to your fiduciaries and your loved ones. If you expect them to be responsible to undertake formalities to transfer your assets as well inherit them, it is very critical to keep them informed.

Review your plan

Do not consider creating your estate plan as a one-time exercise. At least review it every two years or basis trigger events in your life such as birth in the family, marriage, demise, acquisition of new assets and change of citizenship, among others.

An estate plan devised with the careful attention to detail, collaborative expertise of professionals and subject to regular reviews can provide a great deal of comfort to you and your loved ones by ensuring your estate is applied as per your chosen objectives.