Are you making your Death even more difficult for your loved ones?

The thought of losing your life is macabre enough but pause a second and imagine this.  You have left for heavenly abode after Covid, or rash driving or just eating too many pastries from Theobroma. Now before you died , you thought you were invincible and would have preferred dying at 75 years. But boom,  destiny had other plans. 

Now there are two ways this could have panned out, one way where you did estate planning and your family had to grieve only for a few days. The other way is to put them through thick and thin where they have beg to bank officials for releasing even basic funds from your bank accounts as you were too cool to add a nominee. The best thing you can plan for is to have a plan after you are gone. Most of us take this portion of financial planning very casually and would not even want to approach it systematically. 

Today's article is written to help you understand that just like change "Death is the only Constant in Life". Everyone will recommend how to plan for your retirement but seldom will you hear financial advisors speak to you regading your inevitable end. That is one risk that will happen without fail, only the point of occurence is unknown. Have you ever thought how things will churn once you are not around? Usually these discussions are either avoided or only discussed sentimentally. The biggest advice anyone can give you is to have a clear Estate Planning set in place. If you are a 25 year old young professional just starting your career or a 60 year old about to exit into to retirement plan, in all cases Estate Planning is essential.

Let me start with explaining "What is Estate Planning?".  Estate Planning simply put is a detailed blue print designed by a person to dictate what will happen after he/she dies. A good estate plan would not only include details of which asset is to go to which individual, it will include details of all liabilities, your facebook, email, phone passwords and many more such details. What you need to realise is  that there is no legal template required for the same, you do not need an expensive lawyer or pay any stamp duty to make such a document. What you need is simply a pen, paper , two witnesses who are not beneficiaries in the estate planning document and a doctor certificate showing that you were mentally and phsyically fit at the time of making the document. Estate planning document can be made in simple language without any legal jargons. It does not need any mandatory clauses or declaration or format. It can simply be a letter addressed to your loved ones having compenents that will help it be considered as your "Last Will".

"Why do we need to do this?". Covid has made me realise that death is unpredictable and inevitable. I have lost my 30 year old friend who had the best laid retirement plans. I have heard my friend loose his dad and uncle on the same day. No matter how much I want to help them as a Finance Professional, our hands are tied. If there is no Will, the process of unlocking the assets of lost loved ones becomes cumbersome. Most of us keep our personal assets and investment planning very secretive. I have heard of cases where even spouses were unaware of the investments made by their departed partners. Estate Planning forces you to write down all your assets, investments and small recoverable loans you may have given your friends. Imagine you have invested in Cryptocurrency on a whim and in 5 years its value has shot up but you are not around to enjoy those gains. Unless your legal heir knows your crypto locker password that value is lost foreever. The flipside is there are many of us who may have taken small hand loans from our friends and acquaintances. It may be for a business idea or a stop gap arrangement. These people will come to collect if you are not around. Estate Planning forces you to write these down, you may further specify the rate of interest etc. to ensure that your loved ones are not taken for a ride after you are gone. When such a document does not exists, your loved ones end up spending a lot of additional time and money on resolving the issue surrounding an untimely death.

Let us understand types Estate Planning. One way of doing this is by preparing a Will. Will is a document that can be legally enforced which usually sets the distribution of your property and care of minor children or aged parents etc. The most effective way of doing this is by a will made in writing.  these documents usually cover all your wishes pertaining to all the assets you own and liabilities you may leave behind. One key point to note is Death does not absolve you of your liabilities. If you write down assets to your loved ones without declaring the attached liabilities to those assets, it falls on the person who is recieving the asset to clear the same. Eg you may write down your residential house in favour of your spouse but it would go along with the housing loan liability attached to the house.

You may also create a Trust. This is an exceptional vehicle and it has better chances of being executed as per your wishes than a will. A trust has three parties, Settlor, Beneficiary and Trustee. Settlor can be you who may define the assets you would want to pass on for the benefit of the beneficiaries. These assets can pass on to your loved one based on certain rules you may set in your trust deed. Eg. You can say that the residential house may be passed on to the benefit of your sons subject to the house always being available to your spouse after your death. Only after the death of the surviving spouse can the children sell the house. These kind of special instructions can be mandated and a Trustee can be made responsible and authorised to execute the same. A trust is also not mandatorily required to be registered. A trustee on accepting the responsibility under the trust deed is required to execute the will of the settlor and a Trust can be brought into effect even when the person (Settlor) is alive.

There is enough and more data available on the web to teach you to do this yourself. This blog is written only with the objective of making you take that leap today.

The things to remember while you make this document today:

1) Write down all your assets and whom you want those to go to? include things like your mobile phone, laptop, gold jewellery, websites and dns server codes, email id and related passwords, bank account details, term insurance details, your sips and mutual funds, shares and stock, demat login ids and passwords.

2) Write down all your liabilities and from which part of your assets would you want these to be repaid. Include your credit cards, personal loan, vehicle loan and housing loan details

3) Try to be very specific on distribution. Better to distribute asset wise rather than using general terms like "I distribute all my assets equally to my family". A better way to write it is I give my House to X, My jewellery to Y.

4) Have it witnessed with two independent people who you know your family can reach out to when you are not around to verify the Will. Have your self checked by a doctor who can further be produced in front of authorities if needed to verify your state of mind at the time of making the same.

5) Be transparent and clear with atleast two members of your family stating that you have made a will and where have you kept the same. This will ensure that they read it when things turn bad

6) Revise your will atleast once annually.

This was a macabre blog. But rest assured it is needed. I hope some of you write down your Will TODAY. This writer will always be happy to help if it reduces the burden on your friends and family after you are gone. First step in financial planning is to always plan for your last step.

Do let me know your thoughts on this. you can reach me at saransh.s.dey@gmail.com or Instagram me @ saransh dey/

-Saransh Dey

CA, LL.B, MBA (IIM-K), B.com.