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How women can make a solid estate plan

Mumbai, Mar 29, 2023

A Will is a must if you want to pass on your assets as per your wishes, but that comes into effect only after the testator passes on. A trust and a power of attorney takes care of people when they are alive. A solid estate plan includes all three.

SNEHA MAKHIJA, Head of Wealth Planning, Products & Solutions, Sanctum Wealth

In our last column, we discussed the role and importance of an estate plan for women. It is essential that women do not surrender the responsibility of managing their financial affairs and devising their estate plan to their family but take complete charge of this important duty. Usually, women are forced by life circumstances such as demise of their spouse or a loved one, incapacitation of breadwinner of the family, divorce, or terminal illness to look into their financial matters. However, managing these affairs in a timely manner safeguards not only your assets but your wishes and choices too.

Lets us discuss the important aspects you should consider when designing your estate plan:

1. Last Will and Testament

A Will is a document that enables you to capture your wishes in terms of how you would like your wealth to be distributed after your lifetime. In the event you choose to not create this document intestate succession laws will prevail whereby your assets may get inherited by individuals and in the manner not necessarily aligned to your wishes. Hence, putting a Will in place should be one of your first steps to safeguard your wishes as well the interest of your intended beneficiaries.

As a mother with minor children – whether married, divorced or widowed- there is greater responsibility to ensure you appoint a guardian in your Will who would manage the financial affairs for your children until they attain 18 years of age. Also, you need to ensure you have put a plan in place to ensure the child is brought up under the right supervision, guidance, caregiving and set of value system by entrusting the responsibility to the right set of individuals.

Further, as a married woman it may be worthwhile to consider coordinating your estate plan with your spouse so that you both can be on the same page in terms of safeguarding each other’s interest as well as deciding the subsequent manner of your inheritance.

As a single woman, you may not have dependents such as children and therefore may not feel a compelling need to have a Will. However, do understand in the absence of legal heirs, your hard-earned wealth may ultimately be taken over by the government. Hence, by writing your Will you hold a chance to decide whomsoever you wish to pass on your wealth to such as confidantes, friends, staff members or perhaps even a charitable institute that supports the causes dear to you.

2. Power of Attorney

While a Will takes care of your affairs post your lifetime, a power of attorney is a document that can ensure your financial affairs are taken care of during your lifetime, for instance, in case of your incapacitation. In the event due to any medical condition, you are unable to manage your financial affairs, you may consider appointing an individual, of course someone who is trustworthy, to ensure your finances are not left in abeyance.

3. Private Family Trust

A Will may not suffice for large families where a complex mechanism of succession planning is warranted. A Trust is a structure that can be created during one’s lifetime whereby the beneficiaries are defined and the do’s and don’ts on the manner in which the Trust should be operated are mentioned by the creator/settlor of the Trust in the document known as the Trust Deed.

Typically, more often than not the men folk in the family set up the Trust for the benefit of their spouse, children and lineal descendants. A Trust is generally set-up for a long tenure that may outlive the lifetime of the settlor, in which case the Trust is to be managed by the Trustees for the surviving beneficiaries. There is a certain struggle for the family members who outlive the creator of the Trust as they may not understand the exact mechanics and thought process for the Trust creation if not involved in the process of its creation. Hence, it is essential that women who are beneficiaries/ Trustees of the Trust actively participate in the conception and structuring stage so that they can comfortably manage the affairs thereafter.

As you can understand each document has an important role to play as part of your estate plan and you can choose one or a combination depending upon your objectives. However, keep in mind that you do keep reviewing these documents on an ongoing basis to capture the changes in your life as well as laws. Further, ensure the individuals who are going to be responsible to be carry your wishes as per your estate plan have quick and easy accessibility to the requisite paperwork to your estate.

Therefore, as a woman do not overlook this important aspect of your lives and wait for a life changing event to take charge of your financial affairs in which case it might be too late. The right time is now as goes the saying, ‘Someone’s sitting in the shade today because someone planted a tree a long time ago’, so ensure your loved ones enjoy the benefits of your hard earnings by planning today!

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