28-05-2012

1

Estate Planning

A simple way to invest in equity and create wealth

CONCERNS� Concerns – Family vs. Business

� Preservation of assets incase ‘generation next ‘ is not as per expectations

� Preserve assets and Reputation of Family

� Bring Love/ Bonding / Togetherness in the Family

� Business succession (Management & Ownership)

� Sustainability of Family and Business till Perpetuity

� Upkeep, education, marriage, etc of ‘generation next’

� Fund growth without loosing control on my assets

In India

� Judicial and legal framework not conducive for speedy resolution

� Inter‐generational transfers not planned systematically

� Lack of uniform laws for geographically diverse assets

28-05-2012

2

WHAT IS ESTATE PLANNING?

� EstateEstateEstateEstate planningplanningplanningplanning deals with leaving your wealth back to your heirs.

� Tools for Estate Planning – Nominations, Will, Trust, Power of Attorneys

� Estate Planning minimizes confusin and emotional strain on beneficiaries of

the estate

� It ensures your assets are distributed in the manner you want to distribute

� It helps to preserve your assets

� It ensures minimum or no court involvement

� It helps to protect your dependents

WHAT IS ESTATE

Your "estate" consists of all property owned by you at the time

of your death, including:

�Real estate

�Bank accounts

�Stocks and other securities,

�Life insurance policies,

�Personal property such as automobiles, jewelry, and artwork

28-05-2012

3

TOOLS

Wills

A legal declaration of the intention of a testator

with respect to his property, which he desires to

be carried into effect after his death

Trusts

A Trust means vesting or placing property under

the control of a person in the confidence that he

will hold it for the benefit of a third person and/or

himself. Depending on the end objective, a trust

can be public, private or charitable

Family Council

A working governing body elected by the Family

among its members to deliberate on family and

Family business

STEPS OF ESTATE PLANNING

� Family Information

� Financial Information

� Goal Setting

28-05-2012

4

STEPS OF ESTATE PLANNING

� Legal and Tax Analysis..

� Plan Recommendations..

� Prepare Documents

STEPS OF ESTATE PLANNING

� Review Documents

� Execute Documents …

28-05-2012

5

WILLS V/S TRUSTW

ILL

• Comes in to existence post demise of the will creator.

• Way of passing ownership of wealth to Future Generation. Invariably leads to fragmentation

• Does not allow control of end use, monitoring etc.

• Probate formalities are compulsory in almost all cases

• Contestability of Will is easy

• Low Confidentiality Structure: Its becomes a public document during probate

• Can be revisited unlimited no of times, only last tested will is accepted by court of law

• Not a Bankruptcy Remote Structure

• Cost of Will is lesser than Trust, Cost to probate a will can be substantial

T R

U S

T S

• Vehicle to pass on the wealth in a planned manner / over a period of time.

• It provides for management of the estate during one’s lifetime & also provides for distribution & management of wealth post demise in a planned manner

• Provides control for distribution and monitoring

• NIL probate required

• Contestability is difficult

• High Confidentiality Structure

• Bankruptcy Remote structure: : If assets are unencumbered

• Cost more to prepare, fund and manage but avoid cost and hassles of probating.

DIVERSE OBJECTIVES OF A FAMILY TRUST…

Succession Planning: Preservation and growth of Family Succession Planning: Preservation and growth of Family Succession Planning: Preservation and growth of Family Succession Planning: Preservation and growth of Family Wealth for future Generations Wealth for future Generations Wealth for future Generations Wealth for future Generations

Separate Business Assets from personal assets Separate Business Assets from personal assets Separate Business Assets from personal assets Separate Business Assets from personal assets ––––Bankruptcy Remote Bankruptcy Remote Bankruptcy Remote Bankruptcy Remote

Reduction in Administrative HasslesReduction in Administrative HasslesReduction in Administrative HasslesReduction in Administrative Hassles

Ring fencing family wealth and leveraging Ring fencing family wealth and leveraging Ring fencing family wealth and leveraging Ring fencing family wealth and leveraging

Management of Wealth Management of Wealth Management of Wealth Management of Wealth ---- Extremely Relevant for NRI for Extremely Relevant for NRI for Extremely Relevant for NRI for Extremely Relevant for NRI for management of Indian Assets.management of Indian Assets.management of Indian Assets.management of Indian Assets.

Confidentiality of Financial Transactions Confidentiality of Financial Transactions Confidentiality of Financial Transactions Confidentiality of Financial Transactions

28-05-2012

6

TYPES OF TRUST…

� Public Trust

Members of an uncertain and fluctuating body and the

Trust itself is of a permanent nature and indefinite

character.

� Private Trust

The beneficial interest is vested absolutely in one or more

individuals or beneficiaries who are ascertainable.

28-05-2012

7

TRUSTEESettlor, Family Members

TRUSTTRUSTTRUSTTRUST

SETTLOR

(Lead Family Member)

BENEFECIARIES BENEFECIARIES BENEFECIARIES

Distribution of benefit as per trust deed

PROTECTOR

Cash Deposits,

Securities, Real estate,

loans, Investments, INVESTMENT ADVISORS

(Individuals/ Holding Company)

PRIVATE TRUST

SETTLOR (Lead Family Member)

BENEFECIARIES BENEFECIARIES BENEFECIARIES

Draft Trust Deed

Define Trustees & Beneficiaries

Gift of Assets

Ownership & administer the trust

Achieve objectives as per trust deed.

Distribution of benefits as per trust deed

PROTECTOR

FAMILY TRUST

WHO NEEDS ESTATE PLANNING?

If you own anything or have people who rely on you it is a good idea to have

a plan. The more complicated your personal and financial affairs, the more

important it is. You should also review your estate plan at least once every

three years and whenever your circumstances change, such as:

�getting married, living with a partner, separating or getting divorced

�as soon as you have children or step-children

�buying real estate or other valuable assets

�buying, selling or operating a business

� if you have family members with special needs or children who are

vulnerable

� if you set up a family trust or company

28-05-2012

8

THANK YOU

For any further information, please contact:For any further information, please contact:For any further information, please contact:For any further information, please contact:

Mr. Gajendra Kothari, CFA, CAIA, ICFAMr. Gajendra Kothari, CFA, CAIA, ICFAMr. Gajendra Kothari, CFA, CAIA, ICFAMr. Gajendra Kothari, CFA, CAIA, ICFAM:+91 98678 24321E: gajendra.kothari @eticawealth.com

ÉticaÉticaÉticaÉtica Wealth Management Private LimitedWealth Management Private LimitedWealth Management Private LimitedWealth Management Private Limited501, T-39 Sunshine Building,Shastri Nagar, Lokhandwala Complex Road,Andheri West, Mumbai - 400 053Landmark: Suburban Diagnostics, Near Lokhandwala Circle

T: +91 22 2632 9644+91 22 4264 8740

E: info@eticawealth.com