Wealth distribution and estate planning play a critical role in the journeys of wealth creators. In the last 20 years of managing the wealth of India’s wealthiest individuals and families, we’ve heard the experiences of the challenges that families face in the absence of a well-defined and executed Will. The lack of adequate estate planning can deeply impact the wealth-creation journeys of families, often leading to unnecessary stress and financial instability.
The amount of wealth lost to non-communication, ignorance, or negligence is shocking. In fact, in March 2024, the unclaimed deposits with public and private sector banks were INR 78,213 crore, rising 26% over the previous year.
Imagine the untapped potential of this wealth if it were properly planned and distributed. Not only could it secure the financial future of the next generation, but it could also honour the legacy and hard work of the wealth creators. Therefore, at Dezerv, we emphasize that Wills are not just legal documents; they are instruments of peace, security, and legacy preservation.
Why Do You Need a Will?
- Efficient Estate Planning: A well-drafted Will ensures an organised distribution of a diverse portfolio of assets. It facilitates clarity and precision, leaving no room for ambiguity about the testator’s intentions.
- Protection of Assets: By having a Will, you safeguard your assets. It ensures that a comprehensive record is kept, preventing any asset from being overlooked or misappropriated.
- Minimises Legal Complications: Family disputes over asset distribution are common in the absence of a clear Will. A Will reduces these legal complications by providing a clear directive on how assets should be divided.
- Management of Digital Assets: In today’s digital age, managing online presence posthumously is crucial. A Will allows for the proper handling of social media accounts, digital currencies, online storage, and other digital assets.
Terms You Need to Know
- Testator: The person who creates the Will to specify the distribution of their assets. The testator’s clear directives form the backbone of the Will.
- Executor: The person chosen by the testator to execute the instructions in the Will. Executors play a pivotal role in ensuring that the Will is followed to the letter.
- Witnesses: Individuals who see or acknowledge the testator’s signature on the Will.
- Beneficiaries: The persons among whom the assets are to be distributed as per the Will. Beneficiaries are central to the Will as they are the recipients of the testator’s assets.
Step-by-Step Process of Making a Will
- Listing of Assets:
- Action: Begin by compiling a comprehensive list of all investments and assets held in the name of the testator.
- Details: This list should include real estate (primary home, vacation home, rental properties), personal property (vehicles, furniture, jewellery, heirlooms), financial investments (stocks, bonds, mutual funds, savings accounts, digital currencies), and digital assets (online storage accounts, social media accounts, websites, photos, videos).
- Division of Assets:
- Action: Clearly specify how assets are to be distributed among the beneficiaries.
- Details: Carefully consider and document the distribution plan to ensure fairness and adherence to the testator’s wishes. Specify any conditions or stipulations for the distribution of certain assets.
- Appointment of Executors:
- Action: Appoint executors who will ensure the Will is followed.
- Details: Choose individuals who are trustworthy and capable of managing the responsibilities involved. Consider discussing the role with the potential executors to confirm their willingness and ability to serve.
- Guardians for Minors:
- Action: If applicable, appoint guardians for minors to ensure their care and welfare are taken care of according to the testator’s wishes.
- Details: Discuss the guardianship with the chosen individuals to ensure they are willing and able to take on this responsibility. Consider the financial implications for the guardians and allocate additional funds if necessary.
- Signatures and Witnesses:
- Action: The testator and at least two witnesses must sign the Will.
- Details: Ensure that the signing process adheres to legal requirements to validate the document. The witnesses should see the testator sign the Will and then sign it themselves to confirm its authenticity.
Understanding the importance of different investor categories, such as Accredited Investors, can also be beneficial when planning for the future.
Assets to Include in a Will
- Real Estate: Primary home, vacation home, rental properties. These tangible assets often form the bulk of an estate and require clear directives for distribution.
- Personal Property: Vehicles, furniture, jewellery, heirlooms. Personal property can have both monetary and sentimental value, making its distribution significant.
- Investments: Equities, bonds, mutual funds, savings accounts, digital currencies, etc. Investments require precise handling to ensure their value is maximized for beneficiaries.
- Digital Assets: Online storage accounts, social media accounts, websites, photos, and videos. Digital assets are increasingly important in modern estate planning, ensuring that the testator’s digital legacy is managed appropriately.
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A Will is essential for efficient and effective estate planning, particularly in wealthy families with substantial assets and multiple parties involved. It is crucial to consult with your lawyer, investment expert, and Chartered Accountant to understand the nuances of your estate planning. A Will should be made (or updated) as soon as significant assets are accumulated or major life changes occur, such as marriage, the birth of a child, or starting a business.
At Dezerv, we believe that a Will is more than just a document; it’s a testament to your life’s work and your love for your family. It is a powerful tool that ensures your wealth is passed on according to your wishes, minimising potential conflicts and maximising the value of your legacy.
Disclaimer: The information contained herein is for informational purposes and should not be interpreted as soliciting, advertising, or providing any advice.