As more and more women enter the workforce and accumulate assets, it is becoming integral for them to ensure their smooth transition as well. The latest data indicates that Rs 82,000 crore of funds in financial securities lies unclaimed. One of the most common causes could be that following the death of the investor, the family was not aware of the investments and thus could not claim it.
In this episode of 'Financial Quotient', CNBC-TV18's Sumaira Abidi speaks to two experts who can break down the best practices in estate planning -Mrin Agarwal, financial educator & director at Finsafe India and Abhishek Mathur, partner at L&L Partners.
On what is the ideal way to go about estate planning especially for women, Agarwal said, "I think it is a really important topic for women as to when I look all around, women are hardly involved in managing finances. The first step really is to be involved in financial planning and to be aware of the financial assets of the family."
"The start of estate planning is putting down all your assets and figuring out how you want to bequeath them. You also need to remember that assets that are jointly held are not yours to bequeath the way you want to. So, you can only give away the part of it that is owned by you. You need to put thought as to how others singly held and how are the jointly held assets going to be given out. With gold jewellery, what I normally see is that people don't actually have a list. So I think it is very important to itemize all the things, especially jewellery, so make a list of everything that you own, and how do you want to really give it out," she said.
"If you are a business owner, remember, personal liabilities still need to be paid off by your heir. So if you have loans in your personal name, even if they were taken for a business, they still need to be paid off by your heir. So you need to figure out that what is going to happen on your death. Who does the business go to, who is going to take care of the loans and I think you really need to simplify your financial life at every age. If you are going to have three or four properties, all of this becomes very, very complicated and very difficult for the heirs, for the executor to actually manage. So I think from a financial perspective, the first thing is to see how can I simplify my financial life before I even write a will honestly," Agarwal said.
On legal issues, Mathur said, "Essentially, estate planning is about devising the means to ensure that your estate which is all your wealth, asset properties, whatever you call, it, effectively gets transferred to your identified successors, the people who specifically want to benefit from your estate after you. Let us break it into three parts. First is the identification of the property. Secondly, is a clear identification of the successor or the beneficiaries and thirdly, the instrumentality, which you would want to deploy to ensure this effective transfer of your assets to the next generation."
For the full interview, watch the accompanying video...