Introduction to Estate Planning

Introduction to Estate Planning is a section on our BankandFinance.com site which refers to the process that an individual has to undertake while deciding how his/her assets will be handled when they are not able to make decisions for themselves or they die. This is a complicated process and it is best to consult a lawyer or financial advisor when one is ready to draw up a plan.

The estate refers to all of a person’s movable and immovable assets such as house, cars, accounts such as retirement accounts, savings accounts, insurance plans, possessions in a home, furniture and the like. If an individual has insurance policies through financial services companies which provides survivors death benefits, this comes under estate as well.

Why Estate Planning important?

It is very important for every individual to think about estate planning, regardless of their net worth. Having a plan in place helps the executor to distribute assets and wealth to beneficiaries. Wishes stated in such plans are legally binding on all parties. Planning in advance also helps in minimizing taxes that an estate or beneficiaries have to pay. This process gives a person the satisfaction of leaving one’s affairs in order.

Who can help with Estate Planning process?

It is not difficult to find a good Estate attorney or lawyer help set up a good trust to distribute all of one’s wealth to beneficiaries. Generally, beneficiaries would include your spouse, children’s and any other close relatives. Estate planning involves several elements like:

• making a will
• assigning power of attorney to a particular person to manage financial and medical affairs in the event of incapacitation
• a living will which covers issues such as medical care in case of a terminal illness
• a proxy with regard to health care which authorizes a trusted person to make medical decisions on a person’s behalf

As far as financials are concerned, money which is in any investment plan and/or retirement plan, mutual funds and other financial services in India can be consolidated and distributed to beneficiaries with the help of a certified financial planner (CFP). A living will helps to ensure that funds are transferred directly from different financial services accounts to beneficiaries seamlessly.

A CFP can help with creating good goals in estate planning and distribution of wealth. While trying to make a will, take a good look at available options before making decisions. Having a good investment plan in place for saving your funds is very important for every individual to clear any outstanding dues that helps to transfer the properties in easy ways. Accessing funds in the investment plan and the process of creating a life will is bound to help a person figure out the entire amount that will be available from financial services accounts.

How does Estate Planning impact a family?

Basic understanding of estate planning is very important to every individual in order to lead a good life. In every family there is one person who is the main breadwinner and the rest are dependents. This person shoulders the burden of ensuring that dependent have the same quality of life or better when he/she is no longer alive. This is where financial planning to invest funds in the best available investment plan becomes a key factor.

A certified financial planner is eminently suited to the job of figuring out where to invest and what to invest for best results. After the trust is set up, it can be managed by an individual or an institution, which could be a law firm. The choice rests with the person whose estate plan and trust is being set up. The responsibility of managing a trust fund is quite a serious one and creating estate trusts and a life will ensures that financial information is kept confidential. It is imperative to get this process done as soon as possible as it can create serious issues in case of death. Financial services companies are bound by rules and regulations as well, which don’t allow them to distribute funds in cases where there are no estate trusts in place.

A trust or estate plan usually lays out the order in which property has to be distributed. A good investment plan and choice of financial services companies and their products help to reduce the total amount of taxable income to reach the beneficiaries. A properly drafted life will address the issue of beneficiaries and benefits. It is the job of the estate attorney to evaluate finances and other issues before creating a life will that adhere to estate planning needs of an individual. A life will is truly the only way to determine who can and will enjoy all the benefits and advantage of the property after the death of key person in the family.

It is a smart idea for anyone to start an investment plan right at the beginning of one’s career. With no liabilities, it is easier to find information on financial services and tools to start investing. It becomes more difficult to invest later in life especially if there are liabilities like mortgages, children’s education, medical bills etc. Estate planning is a way to ensure that surviving family members have adequate funds to survive and carry on with other responsibilities. Financial services advisors and investment plans will ensure that funds are clearly identified and if these are listed in a life will, it is helpful for the trust executor.

Hence, it is always advisable to clear all the liabilities before thinking about estate planning and drafting a life will. These days, every one plans for life after retirement by investing and saving some part of their earning through a good retirement plan and accessing retirement benefits upon retirement. Financial planning has to be the priority of every individual in order to live a comfortable life. Estate planning also involves lot of patience and it is a smart move to evaluate an investment plan using different financial services companies to decide how much money one can eventually save.