Shyam Kapoor then just 40 years old, inherited a flourishing business in textiles. His father RAM KAPOOR had painstakingly built the business from scratch. It was valued at 200 crores when he passed the mantle to his son. As fate would have it Shyam died in an aircraft just one year after his father’s death and is survived by his wife and one son.
His wife, Lalita 35 years, remarried one year after his death. She had one more child from her second marriage. Mr.RAM KAPOOR’s business and personal assets now are divided between his grandson, his ex-daughter-in-law, and her second son.
How many of us will be happy to see our wealth transferred in the above fashion.? I am sure nobody.
The above is just one of the numerous instances to show why ESTATE PLANNING is not just important but a must if we leave a legacy of PEACEFUL PROSPERITY and HARMONIOUS RELATIONSHIPS. Yet with all good intentions at heart, what we leave along with the valuable assets are messy/undefined ownerships leading to broken relationships in the family and costly time consuming unproductive litigations.
1. A nomination is enough. The fact is the nominee is just the carrier of the assets post the owner’s death. He or she is not the inheritor of the assets. The nominee is simply the person, that the deceased person instructs the bank, mutual fund, or any other entity to transfer the asset for safekeeping for onward transmission to the real inheritors.
2. My children will never quarrel with my wealth. Have you seen them quarreling over toys as kids? Chances are they will be equally possessive and vociferous about your wealth.
3. Estate Planning is a costly affair. The fact is that it is one of the cheapest documents you will do. Consider the cost of litigation and courtroom years if it is not done.
4. My wealth will last a few generations. Historically evidence suggests that if the legacy is not properly defined and transferred the wealth does not last after the third generation. Properly defined documentation, setting up a trust can help it last.
Estate planning is the process of transferring your wealth to the person(s), in the manner you want, at the time you want, in the proportion/amount you want, defined by the conditions of your choice.
Estate Planning covers not only what you owned at the time of death, but also what one may own after death.
1.Physical assets—-land, building, machinery, equipment, precious metals etc..
2.Financial assets—Shares, mutual funds, fixed deposits, bonds, insurance policies, etc
3.Intangible Assets— Goodwill, trademarks, patents etc..
4.Your email id — yes your email id is an invaluable asset now.
What you may own after death is best explained by an example of the compensation announced by an airline for those deceased in the crash, or a govt. compensation for a martyred soldier who showed exemplary courage. Who is the real heir to receive this award?
The impression created from the talk so far is that Estate Planning is about wealth only. No think again, Estate Planning is about the peaceful and harmonious existence of your loved ones after you. It will be worthwhile to presume for a moment that you died. Now visualize what is happening around you. Fifteen days later your family gets down to sort out the documentation and finances. What they encounter is a well sorted out path to transfer your wealth. They get down to their normal practical life and remember you for thinking about them. All throughout this process, you were thinking about your family’s well being—not counting the wealth you left behind. This goes to prove that EP is not about just wealth, but an integral part of FINANCIAL PLANNING and your family’s well being.
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