Estate planning: HNI's way of bequeathing wealth - blog*spot

Estate planning is replacing a written ?will? the earlier method adopted to bequeath hard-earned assets while a person is still alive and after he is no more.

Estate planning: It includes the management of a person?s estate during and beyond his lifetime to ensure the estate?s longevity.

For this, the head of the family, along with the other family members, set up a trust with the help of an estate planner, who also appoints a corporate trustee for smooth and continuous functioning of the trust during the life of the family head, as well as after his life.

Through estate planning, the family head can plan, protect, preserve and manage both his movable and immovable assets.

Estate planning enables smooth succession and disposition of one?s estate, protection of the estate with the family members? needs in mind, effective management of an estate during and beyond the family head?s lifetime and prepares the estate for unforeseen eventualities.

Rajmohan Krishnan, head of north and south India, Kotak Wealth Management, says, ?Today, estate planning is becoming complicated. There are intricacies. Although families are nuclear, the nature of relationships is getting complicated due to growing incidence of divorce.?

Advantages: Estate planning has certain advantages over writing a will.

?A simple will takes effect after death, but in estate planning, the trust route adds substantial value to the estate because the estate is planned in the living memory of the family head. Wills are often contested as some members are not happy with how the will disposes assets among family members,? said Krishnan.

Vinay Kumar, family office advise -IL&FS Trust Company, says, ?In the context of an increasing number of conflicts around the succession of family wealth and changes in social and family structure, proactive estate planning has become a necessity for wealthy families and owners of substantial wealth.? In India, estate planning is catching up. Major players, who offer estate planning services, include Kotak Wealth Management, IL & FS Trust Company, a subsidiary of IL& FS and ICICI Securities. In addition, some foreign banks like Barclays and Merrill Lynch too offer estate planning. There are some boutique family office firms too that provide a professional platform for estate planning services in India.

The levels of estate planning services depends on asset size and can include: estate plan advisory, preparation of wills, trust formation, trust management and management of complex structures like holding companies.

Charges: The charges for estate planning are in form of setup fees for setting up the trust.

In addition, there is an annual management fee, which is a fixed percentage of the asset value of the estate. Estate planning is a continuous exercise. The company advising the estate owner, keeps writing books of accounts of the estate year after year.

Estate planning is essential for all. Anybody who has Rs 10-15 crore worth of movable and immovable assets, should think about it, say personal finance experts.

For people with $5 million or Rs 25 crore worth of assets, there is a definite requirement for a trust for estate planning. There is no downside to estate planning.

The trust is formed with the head of the family, brothers, wives, sons and daughters and a corporate trustee. In case an individual member dies, the corporate trustee continues to be in the trust.

?Today, professionals, business people and industrialists are the ones who are approaching estate planners,? says Krisnan of Kotak Wealth Management.

raviranjan@mydigitalfc.com

Source:?wrd.mydigitalfc.com

Source: http://propertygarh.blogspot.com/2012/08/estate-planning-hnis-way-of-bequeathing.html

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