Thursday Trivia ~ 7 Stepping Stones towards Estate Planning

Thursday Trivia ~ 5 Things to do during Lockdown
April 9, 2020
Thursday Trivia ~ Who is a Wealth Manager?
June 11, 2020

Thursday Trivia ~ 7 Stepping Stones towards Estate Planning

We tend to have an inbuilt strength that some of us have never realized. One often makes use of that strength completely unaware of it. That strength is the power of giving a life related advise. And the best part is we tend to give a right advice when it comes to someone else but don’t follow it in our own lives. The reason is best known to each individual but that’s not the point of today’s article.

Today’s article is based on Estate Planning. It relates to handing over one’s asset to the next generation. So my dear reader, now you know why I started with ‘power of giving advice’ as an inbuilt strength. Whenever we hear about some property dispute, the very first thing we say, it Mr. X had written everything in his will or planned how to distribute his wealth then his children won’t be fighting in the court. It’s true but have we done it for ourselves? The answer is always No – because most parents are over-confident that their children won’t fight in the court for property. There is love and bond between them. So did Mr. X think before passing away.

We constantly hear about its importance but never quite practically do it. One particular reason that pops up in our interactions with investors is that Estate Planning is long and tedious. So here are 7 ways to make the process less tedious.


  • Keep paperwork in order

When we go for a long drive, the most important part is to check whether our vehicle is in good shape. Right from fuel to oil to tire pressure, every tiny detail is of significant importance. Other way to look at it is, a sum of these tiny details tend to provide a pleasure filled long drive.

Imagine, going for a long drive from Mumbai to Ahmedabad with tire problems, low oil and fuel issues. That constant worry won’t provide a peaceful journey.

In a similar light, when we speak about wealth creation or achieving our financial goals, these tiny details hidden inside our paperwork is of utmost importance. The reason one is constantly worried is because they don’t know how their money is spread out. Worst is when one person dies and the second generation has absolutely no clue.

Hence, it’s important to vet the paperwork. Make sure the investments are in joint names (preferred), nomination is appropriate, they are filed properly, so on and so forth. Infact, in our last Thursday Trivia ~ 5 Things to do during Lockdown, we have given 1st priority to reorganise paperwork. If you’ve not done it so far, then we request you to get it done.

  • Check for any Unpaid Premiums or Discontinued Policies

One thing that always stands out while organizing paperwork is lapsed or discontinued policies for which premiums weren’t paid. Along with some discontinued SIPs of a mutual fund of which we don’t remember the name.

Yes, it’s a disappointing feeling of missing that due date of payment. Reason for which cannot be ascertained now. Yet, it makes a very important case for us so that we set reminders in our smart phones next time.

  • Check for Investments that are Matured but no Redeemed

Sometimes going through investment paperwork might bring out a bunch of surprises. My personal experience was a mutual fund that my father bought back in 2000s and I got to redeem it in 2018 at a clear 8 times return. We didn’t even know these mutual fund existed before. There were some physical share certificates too. Upon demat of these shares, we found that bonuses were given by a few companies which meant our investment value was much more than we had anticipated.

Also, there were a few physical share certificates which were good for nothing. One often finds light and dark while going through previous investment certificates.

A friend of mine had an interesting case. He found an old PPF account of his father, which hadn’t been redeemed or closed even after the active contributions were stopped and lock-in period of 15 years was over. Uncle told me that he completely forgot about it as my friend was able to take care of household expenses. However, the family was in need of funds to purchase a new home and this PPF money came in handy. His loan amount reduced by half and after 2 years, he repaid the loan fully.

Hence, its prudent to check for any PPF account, fixed deposits, recurring deposits, mutual funds, etc.

  • Pool all the Investments under a single umbrella

So while going through these shocks and surprises, it’s important to create a single umbrella for these investments. If there are multiple broking accounts, it’s worthwhile to bring them under a single broking account. Similar is the case with insurance and mutual funds.

This activity should be done with the help of a financial advisor. You should ask him to create a single window to view your financial investments. When you have that single window, then thinking about estate planning becomes a lot simpler. Because now you know where all the eggs are and how to distribute them becomes an easier decision to make.

  • Create 1 page Wealth Report

Estate planning is not just about financial investments alone. It also two major asset classes in physical investment space – Gold and Real Estate / Property.

1 page report offers a single window to look at your complete wealth. This enhances the ability to make decisions on passing on wealth to the next generation.

In Indian households, real estate is where most of the money is parked. It constitutes around 40% to 60% or in some cases even 80% of their total wealth. Hence, distribution amongst children becomes a problem. 

An uncle of mine had 4 daughters and a 2BHK house in South Bombay was his only property with some pension coming from his years in Government service. After he passed away, 4 daughters have been fighting for possession of the house. They have thought about selling it but expectation of money is different. So nobody in his right mind is even coming to see that property. So now the property is there but none of these daughters can enjoy that wealth. 

So what should have been a solution to this? Of course, uncle should have written a will stating the terms and conditions on how to sell and who will get what. That’s exactly the next point in this article.

  • Write a Will

1-page wealth report allows a person to then decide how to pass it on to the next generation. Divide it equally or not, is a decision that can be taken with complete conviction.

There are multiple formats under which a person can write a will. Also, it’s better to get a No Objection Certificate from the beneficiaries to the will and get it notarized so that the next generation won’t spend time in court fighting out for your hard earned assets.

One should also try and impart their value system of life through a will. The words should be carefully chosen as they will be an important communication to the next generation. Try to request the next generation to take good care of wealth bequeathed to them and never compromise on ethics to gain quick money.

“Dishonest wealth will dwindle, but what is earned through hard work will be multiplied.” – Bible 13:11

  • Give a portion of Wealth for Charity

One important part of Estate Planning should be charity. It’s our moral obligation to give back something to the society that helped us live a meaningful life. Sharing our wealth with those who are less fortunate often gives us a deeper satisfaction.

Just like Chankya said, “Money earned must be kept circulating and put to some good use. Just like the water of a pond having an inflow and outflow system is clean. On the other hand, Water-logged ponds collect dirt in them.”

To conclude, it’s important to spend time sharpening your axe before going to cut a tree. Same applies to organizing paperwork. A good amount of time is spent in bringing information under a single umbrella. After that, next steps are relatively easy. Hence, don’t be lazy with your paperwork.

If you need any assistance for your estate planning, please reach out to us. We will be happy to be in service.

– Jinay Savla


Leave a Reply

Your email address will not be published. Required fields are marked *