There have been a lot of queries on my article “What happens if you die without a Will” written a few days back. Most of the queries were on the type of Will required to be written by individuals, couples, business owners, etc, and other tools available for estate planning.
Let’s first understand the different types of Wills available for different categories of people.
Different types of Will
It is a legal declaration of a person’s wishes regarding the disposal of his or her assets including digital assets after death. It is a written document that allows individuals to direct the way their inheritance would be maintained and divided after their death. It is most suited for people having assets in their own names without joint ownership.
A joint will is a single legal document that is created and signed by two or more people, usually a married couple having similar wishes.
- It contains their final wishes regarding how they want their assets to be distributed after they die.
- A joint will is different from individual wills because it combines the wishes and assets of both parties into one document.
- Unlike individual wills, which are created and signed by one person, joint wills are created and signed by multiple people. This means that the document covers the assets of both parties, rather than each person having their own separate will.
- One of the biggest drawbacks of joint wills is that they become irrevocable after one of the parties passes away. This means that the surviving party cannot change the terms of the will, even if their circumstances change or they change their mind about how they want to distribute their assets
These are two separate wills that contain nearly identical provisions.
- One spouse’s will “mirrors” the contents of the other spouse’s will. This means that either spouse can independently alter their own will without consulting the other.
- The main advantage of mirror wills is that they offer more flexibility than joint wills. If one spouse wishes to make changes to their will after the death of the other spouse, they are free to do so.
Customized Will is designed for people who may need personalised services due to the complex nature of their family, matrimonial issues, a special child in the family, a large number of assets, and peculiar distribution requirements. A dedicated lawyer makes this Will on the specific requirements of an individual.
Writing a Will is the first and most important aspect of Estate planning which every individual must write on acquiring the first asset.
After having understood the requirement and importance of writing the Will, let’s try and understand the overall concept of Estate planning(here estate does not mean real estate).
Estate planning determines how your estate(everything you own or would own after your death) will be handled in the future or in the event of you becoming incapacitated. It is a systematic plan to distribute your estate as per your wishes in the future time frame. Estate planning is important because it can
- Protect Assets.
- Secure Beneficiaries
- Avoid family disputes
- Reduces tax
- Save time and money
Legal documents which can form part of estate planning are
- Wills and Trusts.
- Trusts are legal arrangements that provide for the administration and distribution of an individual’s assets both before and after death
- Creating a trust assigns a third party, a trustee, who will manage your assets on behalf of your beneficiaries. While you are still living, you can act as the trustee of your own trust. Afterwards, you can appoint a replacement trustee to administer the trust in your place
- In contrast, a will prepares you for what happens after your death.
- Power of Attorney. A Durable Power of Attorney grants your chosen person the authority to make business, financial, and legal decisions on your behalf, especially in the event of physical or mental incapacity.
- Healthcare Power of Attorney. A healthcare power of attorney gives your chosen person the authority to make healthcare decisions on your behalf if you cannot do so.
- Typically, these healthcare decisions pertain to end-of-life care, such as whether you wish to be kept alive through artificial means or whether you wish to die peacefully.
- This is most applicable if you are terminally ill and unable to communicate your wishes to your loved ones.
- Letter of Guardianship. If both parents were to die together, the law will decide who will be the custodian of your minor child and he or she may land up in an orphanage much against your wishes. A letter of guardianship will help you nominate the guardian/custodian for your minor child. This aspect can also be covered in a Will.
Estate planning has three stages
- Stage I – You are alive and well.
- Stage II -You are no longer in control, mentally unsound, medically incapacitated(comma, paralysis, etc)
- Stage III – You pass away
Create your plan at stage I only. Don’t wait for possible stage II and definite stage III. Estate planning is all about your family and assets which are changing with time and accordingly, your estate plan needs to be a dynamic process and should change with assets and family.
“ Risk that your assets after your death may not fully pass on to your spouse, because if you die without a Will, other people apart from your spouse, are your legal heir too.” Write Will
“ Risk of loss of control over your assets in the event of your disability(coma, mentally incapacitated)” Write Financial Durable Power of Attorney
“ Risk of unwanted efforts made to save your life without much chance of survival (brain dead, on a ventilator, etc). Your wealth goes to the doctor/hospital to keep you alive artificially. You want peaceful death without pain” Write a Living Will or advanced healthcare Power of Attorney
“ Risk that your incapacitated child or special child may not be looked after the death of both the parents” Create Special Child Trust
“ Risk of your beneficiaries losing their inheritance to creditors, lawsuits, divorcing spouse, mismanagement of assets or your assets not reaching your grandchildren” Create a Private Family Trust
Estate planning is the process of organizing, managing, and assigning your assets in preparation for your death or possible incapacitation. Every individual must have these four documents as part of estate planning
- Letter of Guardianship(in case of a minor child)
- Financial Durable Power of Attorney
- Living Will – Advanced health care Power of Attorney
We at, Lets Invest Wisely, a leading financial services firm, managing investments of a large number of fauji fraternities, offer you to do your estate planning with us. We have a collaboration with country’s one of the most renowned law firms, NexGen Estate Planners Pvt Ltd, promoted by the American Academy of Financial Management, a worldwide Board of Standards and Financial Professional organization.
We are offering you to make your Will both online from the comfort of your home with complete confidentiality and security of your data and customised Will in offline mode with the help of a dedicated lawyer.
If you need to discuss more on this or any issue related to personal finance, book a no-charge consultation with me at this link. (https://calendly.com/rakeshgoyal). Confidentiality is assured.
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