Estate planning is a crucial aspect of personal finance that often gets overlooked. It is not merely about drafting a will—it is about creating a structured roadmap for the seamless transfer of assets to the next generation. By taking deliberate steps today, individuals can help their families avoid legal complications, financial hardship and emotional distress in the future.
A well-thought-out estate plan ensures that one’s wealth is distributed according to personal wishes, minimises family disputes, and offers clarity and peace of mind. Particularly for those with children, dependants or multiple financial holdings, laying out a comprehensive estate plan is essential.
The Will: Foundation of Estate Planning
At the heart of every estate plan lies the last will and testament. This legal document outlines how a person’s assets should be distributed upon their demise. It allows individuals to name beneficiaries, appoint an executor to carry out their wishes, and even nominate guardians for minor children.
For a will to be valid, it must be signed in the presence of two witnesses. While registration of the will is not mandatory, doing so adds an extra layer of authenticity and reduces the chances of disputes. Importantly, the will should only include self-acquired assets, and it must be updated regularly to reflect changes in circumstances—such as new property purchases, marriage or the birth of children.
Nominations: Appointing Custodians
Nominations play an instrumental role in estate planning by designating a person who can claim and manage specific financial assets after the account holder’s death. These assets include bank deposits, mutual funds, insurance policies and employee provident fund (EPF) accounts.
It is vital to understand that a nominee is not necessarily the rightful heir. The nominee acts as a custodian until the legal distribution of assets is carried out. Therefore, nominations should always be aligned with the will. Regularly reviewing and updating nominations ensures that the designated individuals can access assets quickly and efficiently in the event of a death.
Areas to double-check for updated nominations:
Bank accounts and fixed deposits
Demat accounts and mutual funds
Insurance policies
Provident fund and pension accounts
Gift Deeds: Transferring Assets During One’s Lifetime
For those who wish to pass on assets while still alive, a gift deed is an effective legal instrument. It allows for the transfer of movable or immovable property without any exchange of money. Such gifts are irrevocable and must be executed with precision, often requiring registration and stamp duty.
Gift deeds are particularly useful for simplifying ownership and avoiding future disputes, especially when transferring property to family members. However, because they are irreversible, it is advisable to make such transfers under legal guidance and after thorough consideration.
Power of Attorney: Managing Affairs When Absent
A Power of Attorney (PoA) is another essential component of estate planning. It allows a trusted individual to act on one’s behalf in legal, financial or property matters. This is especially relevant for elderly individuals, those facing health issues or non-resident Indians (NRIs) who may not be present to manage their affairs in India.
There are two primary types of PoA: general and specific. A general PoA grants broad authority, while a specific PoA limits the authority to a particular task or transaction. The document can be customised based on individual needs and should be executed with care to ensure that it aligns with long-term intentions.
Trusts: Structured Wealth Management
Establishing a trust is another powerful tool, particularly for individuals with significant assets or those wanting to provide for minors or dependants with special needs. A trust allows one to transfer assets to a trustee, who then manages them on behalf of the beneficiaries according to the terms laid out in the trust deed.
Trusts offer several benefits—they provide continuity in wealth management, protect assets from legal claims and ensure structured distribution. In more complex family or business scenarios, trusts can help avoid probate, manage taxes and offer greater control over how wealth is passed down.
Final Thoughts
Estate planning is not a task to be postponed. It is a proactive approach to ensuring that one’s life’s work—whether property, investments or savings—is transferred with dignity, efficiency and clarity. A comprehensive estate plan that includes a valid will, up-to-date nominations, considered gift deeds, a power of attorney and, where appropriate, trusts, can make a significant difference in the lives of one’s loved ones.
Most importantly, estate plans should be revisited every few years or after significant life events such as marriage, the birth of children or acquisition of new assets. Engaging legal and financial professionals ensures that documents are correctly drafted and aligned with personal goals.
Ultimately, a well-planned estate is a gift of security and peace to the next generation. It safeguards one’s legacy and offers a smooth transition of assets when it matters most.
(The writer, as Founder and Chief Financial Coach of PlantRich & Vama PlantRich, has coached 5000 plus corporate professionals in rewriting their money story)
