Being Truly there for your Sister!

Rakshabandhan is an auspicious day in India. The festival signifies love and affection between brothers and sisters. It is a time where brothers reaffirm their duty to protect and care for their sisters during their entire life.

Usually brothers gift cash and or gifts to their sisters as a sign of their love. But what if you could give them something that will truly be there in their life? A sound piece of contribution could end being a much more significant gesture in the long run, both personally as well as her financial future.

Sounds to good to be true? Well here are some options you can consider:

Systematic Investment Plan (SIP) Investments: An easy option, but not not many know it can be gifted or that it can be started with an amount as low as Rs 500 per month. Also, one can not only do SIPs into mutual funds (either equity or debt) but certain blue chip equity stocks as well. So forget those fancy gifts for once and gift your sister that will truly be there for her in the future

Systematic Withdrawal Plans (SWP): A rather new feature in the Indian Mutual Fund environment. Certain AMCs now allow you to initiate an SWP, which essentially is the opposite of SIP such that money flows from the mutual fund to your bank account at pre – specified periods and at specific amounts; but with the added benefit that you can chose your relatives to be the beneficiary of this inflow rather than yourself. Another benefit of such a SWP is that because this inflow would be considered a gift in the hands of your relative, there is no tax applicable to the receiver of this SWP. Perfect way to support your sister with cash flow needs!

Insurance Cover: Few things may convey that you truly care for your sister’s health than an adequate health insurance cover. Now more than ever, health insurance is the need of the hour with parallel rise in not only health costs but also increase in reports of lifestyle diseases and ailments. A health insurance cover will insure that your sister is never financially affected by these hurdles.

On the other hand, providing a term cover for your sister who may have her own financial dependants is a warm way of showing that you are there to share her responsibilities

Estate Planning: This almost always is a personal and complicated topic. But having a solid estate plan is as important as any other life decision. And as a brother you could be the trusted guide to helping her make this important decision.

Furthermore, you yourself can be a part of Estate Planning as a potential guardian to her underage children. Or possibly a trustee in case she needs to make a trust. Ensuring one’s hard earned assets are bequeathed as they intended to is a huge responsibility and who better than a brother to take this up

Gold: The yellow metal will protect her from any economic crisis and will act as hedge during volatile times.But not the cumbersome physical gold that comes with its own headaches and costs. Rather you should consider paper gold i.e. instruments that invest into gold themselves or track their prices. These instruments range from Gold ETFs to the Sovereign Gold Bonds

On this day brothers take a pledge to protect and take care of their sisters under all circumstances. We at Plan Ahead Wealth Advisors understand the enormity of this pledge. And through our experience of understanding the complexities of money and human emotions, we also pledge to help you ensure that your sister stays financially secure in her lifetime.

 

 

 

 

 

 

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How do you know if it is time to make a WILL or re-look at it?

Talking and thinking about your own death is never pleasant. Given an option we all would like to live up to the age of 100, see our children get married, watch our grand children and great grand children grow. In India, there is a belief that if you die after seeing your great grandchild then you get a direct passage to heaven, a sure shot ticket to paradise. In a country like India with such a belief system it was difficult to introduce the concept of Life Insurance. With education and awareness Indians have come to accept the importance of insurance and talking about death is no longer a taboo.

There is, however, one area of life and death where still a lot more education  and acceptance is required and that is Will preparation.

Will the mighty estate planning tool

A Will is a legal document that states your last wishes regarding the distribution of your assets. You can specify in the Will who your beneficiary will be and how each of them would receive a part of your estate.

The beneficiary is a person or persons who could be your legal heir like your wife, children, mother or simply your friend, a loyal employee, a Trust or even a charity.

In the absence of a Will, your assets will get distributed as per the succession law of your religion. Some of the common succession laws in India are the Hindu Succession Law, Shariah law and Indian Succession Act of 1925 for the Christians, Jews and Parsis.

The Hindu succession law governs the Hindus, Sikhs, Jains and Buddhists. Under this inheritance law the mother, wife and children are Class 1 heirs and have an equal right to a deceased man’s assets who dies intestate (without a Will). The father and siblings are considered Class II heirs and become a beneficiary only in the absence of a Class I heir.

Under the Sharia law of inheritance, a testator can choose to whom he or she can bequeath 1/3^rd of their entire estate and the rest is distributed as per the Shariah Law.

In some cases the distribution of assets is governed by the law of the state. In case you are a resident of Goa, then under the Goa Family law all Goans irrespective of their religion, ethnicity or linguistic affiliation are governed by the Portuguese Civil Code.

How do you know if it is the right time to prepare your Will?

People understand the importance of buying life, medical and home insurance to protect their families but few prepare a Will for the same reasons. A life insurance could provide financial support to your family but in case of a dispute, your loved ones could be left without a roof over their head and claims from other legal heirs could delay the access to your insurance money and bank accounts.

For many, the idea of preparing their Will is triggered by an event. The event could be a premature death of a close family member, friend or a neighbour. In some cases, the person has witnessed the bitter legal battle between heirs. Some triggers come in the form of diagnosis of a terminal illness, accident or poor health. The idea of eminent death in most cases provides the much needed push for individuals to start considering and working towards preparing their own Will.

Where do you start?

A Will has to be well thought through. When prepared on an impulse without much consideration, a Will could have loop holes and some long forgotten assets could be missed out. When writing a Will, the testator should consider all legal aspects and state his wishes clearly to avoid it being contested or considered invalid.

A good way to start would be by listing down all your assets be it physical like your house, land, art collection, jewellery, or intangible assets like your trademark, patents or even goodwill. You could also take the help of your financial planner to ensure all the future financial goals of your loved ones also stay intact through the Will. Since it could take some time to get the Will authenticated, it is prudent to make provisions for your spouse and young children to receive instant access to some money in the interim. Again your financial planner will be able to strategize such a contingency plan.

The creditors of the deceased also have a legal claim over his estate. Ensure your Will has provisions for the same to avoid lengthy probate procedures which could delay the transfer of financial assets to your dependents. Also clear specify the distribution of assets among beneficiaries to avoid future conflicts.

For individuals with minor children, appointing a guardian who will be responsible for your young child through the Letter of Guardianship would be a good idea. As per the law, in the absence of a testamentary guardian (the one appointed by parents legally) the child can become the ward of the state and end up in an orphanage until the court decides on the guardianship. This will protect your children in case both the parents pass away.

Some individuals who could be terminally ill or suffering from a condition that could leave them incapacitated in the future, creating a Springing Power of Attorney could give their family access to financial assets to pay for various expenses. In the absence of a POA, even your spouse might not be able to access of your money.

When to re-look at your old Will?

These are some young and old individuals who would have already prepared their Will. Just as with your financial plan which you review on a regular basis, you should review your Will from time to time to keep up with the changes in your life. Here are a few scenarios under which you should re-look at your old Will:

• Major life event like birth or death in a family.
• If you have bought or sold a property.
• If you have taken on a debt or you are a guarantor to someone else’s debts.
• If you have minor children and have not named a guardian in your old Will.
• If you wish to create a Trust that comes into action on the event of your death.
• An unborn child can also be named as a beneficiary.
• Separation from a spouse might want you to change your Will
• If you are recently diagnosed with or have contracted a incurable disease then you might want to consider a living will that considers your life and death wishes as legal.
• In case of an inter-religion marriage the succession law of your spouse upon their death would decide how your assets passed on to them reach your other heirs including children.

You could also consider creating an Education Trust, Minor Beneficiary Trust to meet your child’s educational and future needs. If you are responsible for a family member with special needs then you could provide for them through a Special Needs Trust or pass on your inheritance directly to your grandchildren by skipping a generation through a Dynasty Trust.

As we have seen that the Will can be a very powerful tool in the execution of your last wishes and to protect your loved one’s from despair and legal battles, we shouldn’t delay in preparing one since life is

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What is a Living Will

 

 

In a landmark judgement, the Supreme Court on Friday recognized that a terminally-ill patient or a person in persistent vegetative state can execute an “advance medical directive” or a “living will” to refuse medical treatment, saying the right to live with dignity also includes “smoothening” the process of dying.

What is a Living Will?

It is essentially a document that sets out a patient’s wishes regarding how they want to be treated if they are seriously ill or in a permanently vegetative state. With this judgment, the right to die with dignity has been recognized as a fundamental right.

As regards personal finances, perhaps a big critical function that a living will performs is that it allows the maker of the will to prevent their family from financially overburdening themselves, sometimes to the extent of bankruptcy. Usually family members are spurred on out of love, guilt or a sense of duty to keep the patient alive, often at any cost. This results in the family’s financials going into disarray and jeopardizing their financial future and important life goals.

Who qualifies to write down a Living Will?

• An adult who is of a sound and healthy mind and in a position to communicate, relate and comprehend the purpose and consequences of executing the document.
• An adult must make such a will voluntarily 

What are the important items to cover in the document?

The judiciary has laid down guidelines on how such a document can be formed. They are as follows:

• It should clearly indicate the decision relating to the circumstances in which medical treatment can be withdrawn.
• Instructions must be absolutely clear and unambiguous.
• It should mention whether the patient would like torevoke the instructions/authority at any time.
• It should specifythat the patient has understood the consequences of executing such a document.
• It should specify the name of a guardian or close relative who, in the event of the patient becoming incapable of taking decision at the relevant time, will be authorized to give consent to refuse or withdraw medical treatment
• It should be in writing and should clearly state as to when medical treatment may be withdrawn or if specific medical treatment that will have the effect of delaying the process of death should be given.
• If there is more than one valid Advance Directive, the most recently signed Advance Directive will be considered as the last expression of the patient‘s wishes and will be implemented.

How should this document be stored? 

The Supreme court has further laid down a road map on how the Living Will needs to be stored safely:

• The living will should be signed by the maker in the presence of two witnesses. It should be countersigned by the judicial magistrate of first class (JMFC), confirming that the will has been drawn up voluntarily.
• The JMFC will maintain a copy of the will and forward a copy to the registry of the district court of that jurisdiction.

Implementation of a Living Will 

The Supreme Court has described various checks on how a living will may be implemented:

• Execution of the will can only be done if the medical board approves it. The medical board will consist of the head of the treating department and at least three experts from various specialized medical fields with at least 20 years of experience. The board can only give their certification (or not) in presence of the closest relatives. Furthermore, the board’s certification is only preliminary.
• Once the board approves, the hospital has to inform the jurisdictional collector of the same. The collector will then appoint a separate board consisting of the Chief District Medical Office and three other experts from specialized medical fields. If this board approves the same, the chief medical officer will relay the decision to the jurisdictional magistrate who will then have to visit the patient at the earliest and authorize the implementation.

Any advantages of a Living Will?

• Providesrespect towards a human being’s fundamental right to live and die smoothly
• Doctors are likely to suggest appropriate procedures and medication knowing what the patient wantsas per his living will
• A living willspares both the doctor and immediate relatives from taking difficult decisions
• A living will could also spare the immediate family from the financial burden that comes up in cases of unnecessarilyprolonged medical procedures for a terminally ill family member

While Living Wills are common in the west, it is a very new concept in India. Although the general verdict, by and large is that this is a positive step in the right direction the complexity is still something that needs to be addressed.

 

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