Senior Citizens and Estate Planning -
Mistakes to Avoid!
-by Rajeev Pathak
Introduction
Before discussing mistakes in estate planning by senior citizens, let us understand what an estate is. The estate is not just a house or a building. Though estate is a legal term, in simple language, it includes all the assets and liabilities available to a person or organization on a particular date.
The estate, includes all movable and immovable assets, such as land and buildings, furniture, vehicles, jewelry, art, collectibles, shares, bank and investment accounts, intellectual property such as trademarks and digital property, as well as financial liabilities such as loans, and credit cards.
Common mistakes in estate planning:
The purpose of estate planning is to make an effective and practical plan for the distribution of assets and management of liabilities during your lifetime and after death, but some mistakes are often made, we will discuss them here.
1. Procrastination
It is a common practice to postpone the work from today to tomorrow. This attitude can prove to be costly. Proper arrangements should be made today about what will happen to your wealth and property during and after your lifetime.
2. Lack of updates
It has been seen many times that in case of any change in the family system like the death of a member, divorce or remarriage, or change in citizenship status, we forget to make necessary amendments in property-related documents. Keep in mind that it is very important to keep the property-related documents updated.
3. Ignoring liabilities
Many times we remember that we have property worth Rs. 50 lakhs, but we do not worry about the liability of Rs. 10 lakhs. Who and how will repay that liability in our absence, this arrangement should also be a part of our wealth planning.
4. Forgetting digital assets
Photo courtesy-Pexels Markus Winkler
While managing wealth and property, we do not pay attention to digital assets. Demat and trading accounts, cryptocurrency, passwords required to operate online bank accounts, etc. are some of the important information, in the absence of which one cannot access digital assets. Proper maintenance of such information is very important.
5. Ignoring tax implications
.jpg)
Photo courtesy: Pexels-pavel danilyuk
While planning our estate, we often do not pay attention to the tax implications on our heirs. Do not forget to consult a tax advisor so that our children do not face any financial burden.
6. Ignoring longevity
Due to improvements in health services, people are living longer these days. When you become old, it is important to have financial support for your living. For this, you can include banking products like Reverse Mortgage Loan in your estate planning.
7. Not thinking about physical disability
Unfortunately, if a person cannot make decisions regarding his treatment himself due to disability, so authorizing someone else to make such decisions should be a part of estate planning.
8. Ignoring Trust Benefits
If the value of the property is high or you do not have any heir, then you should consider forming a trust. It has many benefits, such as avoiding family disputes, proper use of property, and tax savings.
9. Lack of communication
In many cases, the elders do not discuss their wealth, will, debts, etc. in the family. There can be many reasons for this, but it is necessary to solve this problem so that in your absence, no outsider can take undue advantage of your family due to lack of information.
10. Transfer of property while alive
Photo courtesy: Pexels-Cottonbrow
In many incidents, it has been seen that parents, out of love, transfer the property to their children during their lifetime. Then the children sell it and go to another city or country and the parents are forced to wander here and there at the mercy of others. So do not shoot yourself in the foot by making such a mistake.
11. Not making a nomination
Everyone knows that nomination is necessary for our financial assets like bank accounts, shares, and mutual funds, yet we ignore it. If you have not made a nomination yet, do not put it off for tomorrow. Do it today. It is very important and easy.
एक से अधिक व्यक्तियों के पक्ष में कर सकेंगे नामांकन - सरकार करने जा रही है बैंकिंग कानून में संशोधन
12. Not making a will
The nominee also doesn't need to be your legal heir. It has been clarified in many court decisions that the nominee's role is that of a trustee and after receiving the wealth, it is his responsibility to hand over the same to the real owners. The problem arises when the nominee refuses to fulfill his responsibility. For this, you must make a will of your entire property and make a clear distribution of it among your real heirs.
13. Not availing the services of a professional
Many people have the misconception that what is there in it, I will do it myself. DIY (Do it Yourself) may be a free option, but may not be the best. For tasks like tax, wealth management, will, and estate planning, we should take advice from professionals.
Conclusion
Taken care of as above, one may ensure the proper distribution and use of his estate during our lifetime and beyond. We welcome your comments and feedback in the Comment Box, we will also eagerly wait for any suggestions for future topics to be discussed here in this blog.
Comments
Post a Comment