Where crorepatis go wrong: Delay succession planning due to fear of losing control

Having nominations for your investments and writing a Will are typically the two most popular ways to bequeath wealth with most of the middle class or the mass affluent. But there are other ways in which you can pass on your wealth, such as by creating a trust. Vishal Dhawan, a certified financial planner and founder-CEO of Plan Ahead Wealth Advisors, says that many crorepatis form a trust. A trust is monitored by a set of people called trustees. You could set aside money for charity – to fund deserving poor students’ education or sponsor sick patients for their medical expenses.

Also read: Will or Trust? What works better?

Dhawan says that one more tool that crorepatis use is to have a provision for a power of attorney. This gives the power to a person- usually to those closest to him or her- to sign official documents and take important money-related decisions if the person becomes incapacitated, either physical or mentally. “Many think that estate planning is to done to take care of the money after they’re dead. But they forget that even when they are alive, they could become bed-ridden or crippled, which could make them incapable of doing the simplest of things. Your money needs to be taken care even then…while you are still alive,” says Dhawan.

Pune-based financial intermediary Sujata Kabraji tells the tale of a lady client who passed away a few years go. This lady wanted to give away all her wealth to charity as she was single. But in her later years, she had dementia and didn't have a chance to write a formal will before she passed away. Luckily for her, the executor, who was a close family member, honoured her verbal wishes and distributed her wealth to the causes she believed in. This, despite the fact that the lady hadn’t put it down in her Will. Kabraji says it ended well for this lady, but if you wish to give away your wealth – in full or a portion – it’s always better to write it somewhere.

Hesitant to write a Will

Most of the financial planner that Moneycontrol spoke to said that the crorepati also procrastinates. Kabraji tells the tale of one of her clients who she persuaded for close to seven years before he finally wrote his Will. Reason: the client had too many assets and documenting each one of them was cumbersome. “Others don’t want to confront that fact that someday they will pass on, so they avoid the subject completely,” says Kabraji.

Making a Will means that you have to make a list of your assets as well as your liabilities. Your assets also include immovable properties.

Mrin Agarwal, Financial Educator & Founder, Finsafe India says that “too many assets, investment instruments and the need to consolidate also adds to the hindrance of making a Will.”

Sense of invincibility

That’s a bad habit you mustn’t pick up. Dhawan says that a typical crorepati also delays making succession plans because she feels invincible. He notices this trait in many first generation entrepreneurs who have built successful businesses. “They are smart, and have worked hard to build their firm. But they also become over-confident. They feel nothing can happen to them and that need to spend their time on other areas, mostly their careers,” he adds.

The sense of invisibility can also take the form of hesitancy in losing control in some. A wealth advisor of a boutique wealth advisory firm says that many rich people equate writing a Will to losing control. “They feel that by writing a Will, their children or family would know too much.” Financial planners say it’s unwise to think in this way, as “that could leave family members in a chaotic situation for lack of knowledge on the estate,” he adds.