Estate planning is all about anticipating and arranging for the administration and disposition of one’s assets during one’s lifetime. While wills and trusts are the most commonly used tools of estate planning, there are several other tools one can use for the seamless transition of one’s assets to the next generation after one’s demise. This can go a long way in avoiding potential conflict and uncertainty.
Nomination
One of the immediate challenges faced by the survivors of the deceased is the liquidity to meet near-term expenses. Nomination makes it easier for the family to have access to the funds of the deceased. Though the nominee may or may not be the ultimate beneficiary of the assets, on providing the death certificate and completing certain paperwork, like indemnity bond, KYC of the nominee etc., the banks will release the funds to the nominee. In the absence of nomination, the legal heirs will have to establish their right to inherit the funds by obtaining documents like a legal heir certificate, probate order, succession certificate, letter of administration, etc. The entire procedure may be time consuming and open to legal delays and family disputes.
Also read | Will or Trust? Here’s how you must choose the best way to transfer assets to your loved ones
Power of Attorney (POA)
The POA is a legal authority granted through a written instrument whereby one person, termed principal or donor, authorises another, termed agent or donee, to act on his/her behalf. The POA can be very useful for people who are not in a position to personally conduct their affairs due various reasons like illness, foreign residence, old age, etc. Through a POA, they can appoint someone to conduct their affairs on their behalf.
Gift deed
Gift is defined as the transfer of certain existing moveable and immoveable property made voluntarily and without consideration. While one’s will gets implemented after one’s demise, you can transfer the ownership of your assets in your lifetime through a gift deed.
In certain cases, it may be advisable to gift assets during one’s lifetime as it saves the family potential disputes and delays related to inheritance.
But there is a flip side – with the transfer of ownership, the donor may also lose their financial security and be forced to depend on their children for their living expenses. Hence, the decision to gift assets during one’s lifetime should be taken only after evaluating all the options and consequences.
Living will
Living wills or advance medical directives allow individuals to specify their preferences for medical treatment in the event that they are incapacitated and are unable to communicate their wishes. The hon’ble SC, in its landmark judgment in 2018, recognised the “right to die with dignity” as part of the fundamental “Right to Life” under article 21 of the constitution.
Hence, every mentally sound adult has the right to refuse medical treatment, including withdrawal of life support, by executing a living will. Though certain guidelines have been issued by the judiciary on the validity and execution of the living will, we need specific laws giving more clarity on the applicability and implementation of living wills executed in India.
The law on living will, if passed, is expected to give detailed directions on the medical conditions when living will can be implemented, clarity on rights of relatives of the patients and penal provisions in case of delays or mismanagement by hospitals or doctors.
Also read | How a ‘Living Will’ can help you die with dignity
Paperwork
One of the most important aspects of estate planning is keeping your documents in order. Preparing a detailed asset-liability register, procuring pending/missing property papers, digitising important documents, consolidating your estate by liquidating/closing unnecessary accounts and investments are some of the key steps towards planning for a smooth inheritance for your loved ones.
This is critical to ensure that your loved ones inherit only your wealth and not a messy estate with legal complications and family disputes.
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