Meet Rakesh, retired COO of an IT firm enjoying his retirement at his farmhouse built on the outskirts of the city. He dedicated his whole life to building and growing the company. However, with the dedication he possessed for his work, he had an extreme fear of death; we all have, right? Rakesh, a high net-worth family man, always wondered what would happen to his family in case of his sudden demise? Therefore, he did what many people are not even aware of “Estate Planning”.
Estate planning is a process of arranging all the holdings (digital assets, properties, money in the bank etc.) for the transfer to the beneficiaries after the incapacitation or death of the person to whom all the holdings belonged. Legally what happens to your estate after you die is: first, authorities collate all your assets. Then, these assets are used to pay your debts (if any) and then lastly, distribute it between your descendants as per the law.
Life is uncertain & it is impossible to predict whether you will live as long as Rakesh lived. In the situation of your untimely demise, is your family ready to withstand all the finances by themselves? Most of you will answer that question with a big shake of your head.
Also Read: Creating a Solid Financial Plan For Yourself
Here is how you can plan your estate and help your family be financially secure even after your sudden demise.
Before you begin planning your estate, reveal all your debts to your family members. It is crucial to make your family aware of your current financial situation. Telling them during an untimely loss that they need to pay off the loan or the money you have borrowed could become a burden for your family. Also, prioritize, repaying all your debts as soon as possible or keeping it minimal, so that your near and dear ones don’t suffer after you are gone.
Once you’ve decided to plan your estate, start with prioritizing your wishes. Doing this will give direction to your estate planning. Some of the common yearnings or priorities of any layman include leaving the holdings for the spouse or the family, donating it for a good cause, special giveaways or inheritance for the grandkids, etc.
Banks have now made it mandatory to add beneficiaries while investing or opening new bank accounts. It helps in cases where there is no estate planning. Do regular reviews and checks of the beneficiaries on all your accounts and investments to later avoid confusion.
A Will or Testament is a legal document expressing your wish to how you want all your holdings, after your death, distributed to your close ones. It also defines who will be managing all your holdings until their complete disbursement. Any individual more than 18 years of age is legally allowed to make a will.
There are a lot of advantages of having a Will and here are few of the highlighted ones:
One should remember that a Will can always write off beneficiaries.
In other words, do some charity. There are many orphanages, old age homes and special schools for the disabled; who seek these charities, and a good deed is what the world wants today.
Your income changes with every passing year, and so does your estate. Therefore, keep reviewing and changing your estate planning. Also, many financial experts suggest avoiding planning your estate only once. Make a habit of doing it once or twice every year & it will help your family achieve financial security.
Death is something you can never be ready for, but you should always prepare for any uncertain loss. Today, you need to think beyond your life & help your family survive financially, and estate planning is the only way possible. So, start implementing all the steps mentioned and soon, your family will be nearing financial independence.