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Last Will

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 1/3rd 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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Your money matters – Simple steps to take charge of your money matters

1In today’s world, women are equal to men in most ways. Women have achieved high accolades and are doing very well in modern Indian, sometimes even better than their male counterparts!

However, when it comes to financial planning for their family, most times they take the back seat, leaving the details for the husband to handle. Financial planners are unanimous in saying that when it comes to making investment decisions, women rarely take an initiative. A study commissioned by DSP BlackRock Investment Managers Pvt. Ltd and conducted by global research agency Nielsen across 14 cities in India in July 2013, found that only 23% of working women make their own investment decisions.The reason often is that the complexity of products and the mathematics involved in financial planning makes it seem puzzling.

However, women should take control of their finances. Here’s what the empowered women should do when it comes to financial planning for herself and her family.

Create Self Awareness and Get Involved:The first step would be to involve oneself and start discussing these aspects actively with family. Women face different changes in life which affects their finances – be it marriage, child birth, divorce or death of spouse. If you are a single mother, the financial responsibility of raising a child needs to be planned. If you are just married, understanding the outlook of the spouse and jointly planning the future finances should be a top priority. Therefore, it is important to increase the financial awareness when all is well and to be prepared for adversities. Things to do:

  • Read articles / blogs / personal finance books
  • Discussing and take active interest along with spouse
  • Take the help of a financial planner or advisor
  • Attending personal finance sessions

Take advantage of various incentives provided for women:Both the private and public sector institutions provide financial incentives for women, most of which go under the radar. (1) Banks offer customized savings accounts with cash backs and rewards for women who spend using bank’s debit card on shopping, food, etc. Some banks also offer discounts on medical tests required by women like thyroid tests, etc. To save for their kid’s education, mothers can open a ‘Junior/Kid Account’ with the waiver of monthly account balance requirement if it is linked to a Recurring Deposit (RD) Account or a Systematic Investment Plan (SIP). (2) While buying an insurance policy, women receive a benefit on the premium paid as compared to their male counterparts. Traditionally, women pay less premium than men for the same sum insured when it comes to buying a life insurance policy. (3) Many banks offer lower interest rates on home loans if a woman is applying for it or if she is the first applicant for a joint loan. The same goes for car loans too. (4) Some state governments provide certain exemptions with respect to stamp duty and transfer duty in case of sale deeds, conveyance deeds and gift deeds if the property is in the name of a woman.

  • Learn and know the available benefits available for women when buying products / availing loans

Cover Risk and Contingency:All the planning you do could be ruined in case of any emergency. Therefore, contingency planning comes before any investment planning. Such contingencies could be risk to life, health, hospitalisation or any unforseen emergency which may require her to step in financially. If you are a working couple or a single earning member family with a loan, having adequate life insurance ensures that dependants will not have to compromise on their finances in the income earner’s In regards to health, various medical research reports say that women live longer and may have more health issues compared to men. Therefore the need for health cover for women.

  • Have a contingency fund for your family
  • Understand and create enough life cover and health coverfor spouse and you

 Plan for Retirement/ Sabbaticals: For you, retirement can either mean retiring at the end of your working age, usually 60; or when you have children and decide to not work anymore. Various studies show that as women usually live much longer than men, therefore they may outlive their spouses. So, in order to have a secure retirement, it is essential to plan for it well in advance. Factors such as inflation, lifestyle, providing for dependants need to be synced together efficiently.

  • Understand the funds that you may need in retirement (with spouse and without spouse) and invest towards it
  • In case of sabbatical / pause in work, understand the income loss you may face from such a decision and work towards providing a buffer for it

 Investing: While women are known to be great savers, saving in itself becomes futile if savings are not deployed to grow. Women need to get involved in such aspects and contribute actively. Working women should also understand these nuances rather than letting the husband or father decide about her money and investments.

  • Involve yourself in investment decisions, slowly and steadily, to grow confidence and understanding of the subject

 Legacy Planning:– In case of wills, the voice for women to register their own wills is growing louder. Now, more than ever, women have assets in their names which if left without proper will/nominations, can inadvertently end up in the hands of a person for whom the asset was not envisaged. Women may also inherit their parents’ assets. Even in the case of the husband’s will, the wife needs to be informed of the existence and details of such a w Dealing with the loss of a loved one is challenging but can become easy if there is awareness and the lady of the family is prepared and informed.

  • Understand and be part of the will making process

 

From the above, you would have gathered how important it is for women to get started on money awareness. Getting women to manage money requires a mindset shift and the above steps, we hope, will give you some pointers on how to start managing your money matters. After all it is your money and it matters.

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