Estate planning is an essential aspect of financial management that allows individuals to protect and distribute their assets according to their wishes while minimising legal complexities and tax burdens. A well-crafted estate plan is essential in India, where family structures and legal frameworks are diverse. Below are the essential steps to consider when undertaking estate planning in India.
The first step in estate planning is clearly defining your goals and objectives. This involves assessing your financial situation, determining your intended beneficiaries, and considering how you want your assets to be distributed. It is crucial to think about your family's future needs, philanthropic desires, and any specific concerns you may have regarding asset protection or tax planning.
Vehicle loan is a medium term product to finance the purchase of a vehicle e.g. two wheeler, four wheeler etc. You have to make minimum down payment (percentage of the vehicle price) and the lender will provide rest of the funds. You have to make loan re-payments in equal monthly instalments (EMI). In vehicle loan, the vehicle will be lien with the lender.
Designating responsible executors and trustees is a critical step in estate planning. Executors are individuals responsible for managing the administration of your estate, while trustees handle assets held in trust for beneficiaries. Carefully select trustworthy individuals who will act by your wishes and have the necessary skills to carry out their responsibilities effectively.
Trusts are legal arrangements that allow you to transfer assets to designated beneficiaries while providing protection and control over those assets. Setting up a trust can help minimise estate taxes, protect assets from creditors, and ensure that assets are managed and distributed per your instructions. Consult an estate planning attorney to determine the most suitable trust structures for your needs.
Review and update beneficiary designations on financial accounts, insurance policies, retirement plans, and other assets. These designations often supersede instructions in a will, so ensuring they align with your current intentions is crucial. Regularly review and update these designations as life circumstances change, such as marriage, divorce, births, or deaths in the family.
Estate planning involves preparing for potential incapacity, which may occur due to illness or accidents. Consider executing documents such as a power of attorney and a living will. A power of attorney appoints someone you trust to manage your financial and legal affairs if you cannot do so. At the same time, a living will outline your medical preferences and end-of-life decisions.
Understand the tax implications of your estate plan and explore strategies to minimise tax liabilities. Also, with continuous changes and updates in the Indian tax laws, it is essential to consult with a well-versed tax professional in estate planning to ensure compliance and take advantage of available tax-saving provisions.
This is very similar to loan against shares. You can get a loan by pledging your mutual fund units. The mutual fund schemes should be part of the lenders list of approved schemes. The loan amount to be disbursed is calculated as percentage of the NAV of the mutual fund units. Different percentages are applicable for equity and debt mutual fund schemes. You do not need to have a demat account to take loan against mutual funds. The Registrar and Transfer Agent (RTA) will mark lien against the mutual fund units pledged by you. Once you repay the loan, the lien will be removed from the mutual funds.
The plan and action of accumulating a certain corpus by the time you are of retirement age is known as retirement planning. It is a plan for living the choice of life you have dreamt for your silver years. This essentially means that you need to plan for a steady source of income for yourself at the time that you retire from your active career.
Planning for retirement is a very important financial decision you should make if you want to live a stress free independent life when your steady income from your job or work stops.
Your expenses that you incur today will not be the same when you retire, as with inflation, cost of living and all other expenses will only grow. Therefore your plan has to not only save for your retirement but also to invest in such a way that the future cost of living can be taken care of. For this, you need to start planning for your retirement as soon as possible, even if you find the retirement to be a remote happening.
The first step to plan your retirement is to decide what kind of life you see for yourself in your retirement. Do you want to live a quiet life in the countryside growing your own vegetables, or would you want to live in a community with like minded people. Would you like to spend time reading books, or travelling the world? The type of life you want to live will decide how much money you would need to save up for those days.
The next step is to take stock of your assets. Your value of your existing assets will make up some of your retirement corpus. The rest of the corpus needs to be built over the time you have left till your retirement.
A very important consideration while planning for your retirement is to take a look at how much time you still have till the time your retirement sets in. As a rule of thumb, the longer you have for your investment till your retirement, the larger the corpus you can build, helping you to come closer to your dream life. The investments you plan will have to be done with respect to the time left as well as your risk appetite.
The next step is to plan the investment avenues that can help you reach your goals. You can take your pick from a variety of options like, ETFs, NPS or mutual funds that may offer you the growth of equity or the assurance of debt. You may also consider investing in some good stocks for added returns.
