Estate planning

DEATH IS NOT THE END, THERE REMAINS THE LITIGATION OVER THE ESTATE.

Ambrose Bierce

PRESENTED TO:

DR. MANISH SITLANI

ESTATE PLANNING

PRESENTED BY:

ANJALI PATELMANASI KELKARNIKITA AURORA

Objective of Estate Planning

Explain the use of a will…

Describe estate taxes…

Explain the use of trusts, gifts, and contributions…

Introduce other aspects of estate planning…

ESTATE PLANNING

The act of planning for how

your wealth will be allocated on

or before your death is Estate

Planning.

ESTATE

An Estate represents a deceased person’s assets after all debts are paid.

At the time of a person’s death, the estate is distributed according to that

person’s wishes.

WILL

A legal request for how your estate should be distributed upon your death.

It can also identify a preferred guardian for any surviving children.

In will, you can specify the beneficiary.

WILL

To create a valid will, minimum age is 18

or 21

One must also be mentally competent

and should not be subject to undue

influence or threats from other.

BENEFICIARY

Beneficiaries are also regarded as Heirs.

The person specified in a will to receive

a part in a estate of a person is

beneficiary.

TYPES OF

WILLS

• Simple

• Traditional Marital Share Will

TYPES OF WILLS

Simple Will: A will that specifies the entire

estate be distributed to a person’s spouse.

Traditional Marital Share Will: A will

suitable for larger estate that distributes

half of the estate to the spouse and other

half to any children or trust.

Executor

Guardian

Signature

Letter of last instruction

KEY COMPONENTS OF A WILL

KEY COMPONENTS OF A WILL

Executor/personal representative – The person designated to execute the instructions of the will regarding distribution of assets.

Guardian – Person assigned for caring of children and managing any estate left to the children.

KEY COMPONENTS OF A WILL

Signature – Its needed to validate the will and ensure that its not a fake will.

Letter of last instruction – A supplement to a will that can describe your preferences regarding funeral arrangements and indicate where you have stored any key financial documents.

SAMPLE WILL

1. Introduction of family

2. Payment of debt and taxes

3. Distribution of the Estate

4. Trust for Children

5. Executor

6. Guardian

7. Power of Executor

8. Power of Trustee

ARTICLES

FOCUS ON ETHICS

If the court determines that there is a fraud or unethical behavior or some

form of undue influence on the creator of the will, it may prevent the person

who used fraudulent or unethical behavior from receiving any benefits.

The will may be changed if the person :

Move to a different state.

Get married or divorced after creating the will.

The person wants to change it because of any reason

CHANGING YOUR WILL

CHANGING YOUR WILL

The new will must specify that previous will was revoked to avoid multiple wills with conflicting instructions.

For minor changes, a CODICIL can be added. This document specifying changes in the will. These are only minor revisions.

EXECUTING A WILL DURING PROBATE

To adhere to the instructions of the will, probates are formed.

Probate is a legal process that declares a will valid and ensures the orderly distribution of assets.

PROBATE PROCESS

To start the probate process, the executor files forms in a local probate court, provides copy of the will, provides a list of the assets and debts of the deceased person, pays debts and sells any assets that need to be liquidated.

Alternatively an attorney can be hired to complete the process.

TRUSTS

Trust is a legal document in which one person transfers assets to

another who manages them for designated beneficiaries.

The two parties are:

PartiesGrantor

Trustee

TYPES OF TRUSTS

LivingTestamen

tary

Revocable LivingIrrevocable

Living

Standard Family

LIVING TRUSTS

Assigning the management of your assets to a trustee while you are living.

Managing the assets includes making decisions on how to invest or spend cash in terms of need.

REVOCABLE LIVING TRUST

Dissolve or revoke the trust at any time you being the legal owner.

The two reasons:To replace the trustee.To manage the trust yourself.

By using a revocable living trust probate process is avoided but not the estate taxes.

IRREVOCABLE TRUST

Living trust that cant be changed.

Can provide income to the grantor but the assets in the trust are no longer legally yours.

Not subject to estate taxes upon your death as assets are not the part of your estate.

STANDARD FAMILY TRUST

Also called Credit-Shelter trust.

Established for children in a family.

It is a type of testamentary trust.

TESTAMENTARY TRUST

Trust created by wills.

Not structured as a living trust but it can be used to avoid estate taxes just as the irrevocable trust.

GIFTS is a tax free distribution of funds from one person to another.

Individuals receiving shares or jewelry, valuable artifacts, valuable drawings, paintings or sculptures or even property valued over Rs 50000 as gifts from non relatives have to pay taxes.

GIFTS

CONTRIBUTIONS

CONTRIBUTION TO CHARITABLE ORGANISATIONS:

Any money donated from an estate to a charitable org is not subject to estate taxes. Many individuals plan to leave donations for charitable orgs regardless of the tax implications.

OTHER ASPECTS OF ESTATE PLANNING

Living will – a legal document in which individuals specify their preferences if they become mentally or physically disabled.

EXAMPLE:-Not keeping an individual on a life support when he falls ill to ensure that his assets are used in the way that he or she prefers.

OTHER ASPECTS OF ESTATE PLANNING

Power of attorney – a legal document granting a person the power to make specific decisions for you in the event you are incapable.

EXAMPLE:- Naming a family member or a close friend to make investment and housing decisions if one falls ill.

Durable POA for health care – a legal document granting a person the power to make specific health care decisions for you.

It works in the circumstances when the situations is not covered by your living will.

Necessary decisions will be made by someone who knows your preferences

OTHER ASPECTS OF ESTATE PLANNING

MAINTAINING ESTATE PLAN DOCUMENTS

Estate planning information such as will, living will and power of attorney.

Life insurance and other insurance policies.

Retirement account information.

Home ownership and mortgage information.

Ownership of other real estate.

Personal property such as cars and jewelry.

MAINTAINING ESTATE PLAN DOCUMENTS

Mortgage information

Credit card debt information

Ownership of businesses

Personal legal documents

Personal tax filing

Bank account information

Investment information

RISKS AND DRAWBACKS

An individual's goals or wishes on how his assets are to be distributed may not be fulfilled.

Huge costs of transfer and taxes.

Time consuming legal procedures.

RISKS AND DRAWBACKS

An individual's family may be in financial distress if the process is not properly planned.

There may be insufficient liquidity to meet client's debts and taxes.

INHERITENCE LAWS

According to FEMA Regulation 2000, a non-resident who is a citizen of India

can only transfer properties to:

1. A resident of India2. A citizen but not a resident3. A non-resident of Indian origin

What Inheritance Laws apply in India?

No uniform codified laws apply. Different religious groups subscribe to different

laws.

Hindus have their own codified law (Hindu Succession Act) as well as a part uncodified.

Muslims have their own Islamic Law on Succession.

Parsees, Christians come under Indian Succession Act.

Taxation

No inheritance or gift tax is levied in India. Recipient of assets is subject to wealth tax.

Net wealth tax is levied at 1% on a taxpayer’s net assets if it exceeds INR3 million (US$60,599).

Income tax authorities are responsible for assessing property value.

Estate Planning Decision

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Financial Planning tools

Liquidity Management

Financing

Protecting your assets and income

Investing

Retirement planning

A man may keep a woman, but not his estate.

Samuel Richardson