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Tata Capital > Blog > Wealth Services > Estate Planning Essentials: How to Secure Your Financial Legacy

Wealth Services

Estate Planning Essentials: How to Secure Your Financial Legacy

Estate Planning Essentials: How to Secure Your Financial Legacy

Estate planning is a meticulous process that involves organising how one's assets will be managed, preserved, and distributed after their demise. 

It is crucial for everyone, irrespective of their financial status, as it ensures that their final wishes are honored, their loved ones are provided for, and legal and financial concerns are addressed. By creating a strategic plan, individuals can secure their financial legacy and provide peace of mind for their families.

This article explores the essentials of estate planning and guides you on how to secure your financial legacy.

1. Draft a will

The most critical document in an estate plan is a will - a legal document dictating asset distribution after one’s passing. Without one, assets will be distributed per the Indian Succession Act, which may not align with your preferences. 

Creating a will gives you control over who gets what, allowing you to provide for specific individuals or charitable organisations. Make sure your will is properly executed and witnessed to be legally valid.

2. Power of attorney

A power of attorney is an integral component of putting one's affairs in order for the future. This legal document puts someone (typically a family member) in charge of handling your financial and legal decisions if you are unable to make them on your own. 

Appointing someone you trust to serve as your attorney-in-fact through the power of attorney ensures continuity of decision-making if you are unable to. This allows for ongoing management of financial matters without interruption. 

However, it's important to choose a reliable person, as the power of attorney can be vulnerable to misuse if entrusted to the wrong individual.

3. Consider a trust

A trust is a fiduciary agreement where the Settlor or Grantor grants authority to the Trustee to hold assets for the benefit of the Beneficiary. In estate planning, the two main type of trusts are revocable and irrevocable.

A revocable trust can be modified or canceled at any time during the grantor's life. The control of the trust is then passed to the beneficiary after the grantor's passing, turning it into an irrevocable trust.

An irrevocable trust, on the other hand, cannot be altered during the grantor's lifetime without the beneficiary's consent. Once ownership is transferred into the trust, the grantor no longer has control over those assets.

4. Advance healthcare directives

While estate planning primarily involves the transfer of assets after one's death, it also prepares for situations where you become unable to make your own financial or medical decisions. 

For instance, if you were to suffer injury that left you unable to direct your healthcare choices, a medical power of attorney allows you to select someone in advance to make those decisions on your behalf. This covers all areas of healthcare, including end-of-life care. 

To fully account for your medical needs, advance healthcare directives should be included as part of your estate planning arrangements.

5. Gift deed

A gift deed transfers ownership of property voluntarily while you are still alive, without any consideration. Unlike a will, which transfers assets after death, a gift deed transfers ownership immediately. 

While this can avoid disputes or delays in inheritance, be aware that you lose control over the gifted assets, impacting your financial independence. Therefore, consult legal and financial experts before proceeding.

Final words

The peace of mind of having your financial affairs in order is invaluable. Following these estate planning essentials helps ensure your loved ones are provided for and your wishes carried out when you pass away. 

For expert guidance in estate planning, connect with experienced financial professionals at Tata Capital Wealth. Visit our website today!

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