ESTATE PLANNING ,SUCCESSION PLANNING AND WILLS

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ESTATE PLANNING

You work hard throughout your life building assets. And you probably do this to ensure financial safety and security to your loved ones.

But what would happen to these assets on your sudden demise? Have you given a thought to it?

That’s where estate planning comes into the picture.

Estate Planning is not only for the Rich and the Old. And it is not an exercise to be looked after post retirement.

Estate Planning simply refers to passing down of your residual assets from one generation to another.

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Why Estate Planning?


  • 1. It ensures that after your death, your Estate (Residual Assets) will be distributed your wishes. In the absence of any such arrangement, The Law of the Land (Courts) will decide, which may not be as per your expectation.

  • 2. It brings in required clarity and minimises the disputes within the family.

  • 3. At times, based on the laws prevailing, it may reduce taxes. Especially, when inheritance taxes are in force. (Currently India has abolished inheritance tax. But for a couple of years, there have been discussions and proposals to re-introduce it.)

  • 4. No one wants to die young. But, if we have small / special kids, then we need to prepare you for the unthinkable. Estate Planning takes care of small kids including special children in a manner you have approved off. If you have not appointed the Guardians- whom you trust the most, then your children will be raised by guardians appointed by the Court.

SUCCESSION PLANNING

Succession planning is a process by which individuals are scanned to pass on the leadership role within a company. The process ensures that business continues to operate efficiently without the presence of people who were holding key positions as they must have retired, resigned, etc.

Succession Planning, specifically termed as Management Succession Planning, involves coaching and development of prospective successors or people within a firm or from outside to take up key positions in an organisation through an organized process of assessment and training.

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KEY TAKEAWAYS


  • Succession planning is a strategy for passing on leadership roles—often the ownership of a company—to an employee or group of employees.

  • Succession planning ensures that businesses continue to run smoothly after a company's most important employees retire and leave the company.

  • Succession planning involves cross-training employees so that they develop skills, company knowledge, and a holistic understanding of the company.

What Is a Will?

A will, also known as a last will and testament, is a legally enforceable declaration of how a person wants their property and assets distributed after death. In a will, a person can also recommend a guardian for their minor children and make provisions for any surviving pets.

A will is an important component of estate planning. A will ensures that the person's wishes are carried out and can make things easier for their heirs. If an individual dies without a will, the distribution of their property is left up to the government, and may even end up becoming state property. The format of wills can vary, but most follow a fairly uniform layout.

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The document usually begins with a statement that the writer is of legal age and making the will freely and without duress. It also attests to the writer's mental soundness at the time the will was made. This section establishes the writer's identity and includes an explicit statement that this final will rescinds all previous documents.

In the will the writer names an executor, who oversees the liquidation and distribution of the decedent's assets according to the terms of the will. The executor must also pay off any outstanding debts and taxes on the estate. The executor may be an attorney or financial expert, or anyone the writer of the will trusts to act responsibly. The executor may be entitled to receive a reasonable fee for services rendered. Fee guidelines may be mandated by the state.