When the Reverse Mortgage Scheme was introduced in 2008-09, it was expected to be widely accepted and beneficial to senior citizens. However, in its 5 year history, there have been few takers, and only Rs. 800 crores worth Reverse Mortgage Loans have been disbursed of the estimated market size of Rs. 20,000 crores. To sweeten the scheme and attract more senior citizens, the Government has recently brought about some important changes to the scheme, the most important being making annuity payments tax free.
So what is the Reverse Mortgage Scheme? For the uninitiated, let’s give a quick background. Budget 2007-08 saw an introduction of a scheme, wherein senior citizens (above the age of 60) could unlock the value of their property and earn a regular income, while continuing to remain owners and staying in the property. This means a senior citizen who owns a property and is in need of regular cash flows can mortgage his property with a bank or housing finance company. The bank will value the property and set the interest and tenure of the loan.
The senior citizen then gets a certain proportion of the house value as a loan. Part of the amount is paid as lump-sum and the remaining amount is regularly paid as annuities as per the frequency opted i.e. monthly, quarterly etc.
The Reverse Mortgage Scheme has had few takers in its 5 year history. The Government recently announced some changes to the scheme to increase its popularity. These include making the annuities received by the senior citizens tax exempt, increasing the period of annuities receivable to the lifetime of the borrower and a possible increase in the amount of annuity received.
SUMMARY – We like to have a good time during festivals and yes we should enjoy; but the bottom line to remember is keeping expenses under control. This will help to keep the financial plan intact and save you from stress post the festivities as well. Enjoy!
It is the festive season. We like to go all out during festivals like Diwali, New Year and Christmas so that we have fond memories. But step back and think about how much you will spend and whether your spending could lead to financial burden. Just like for everything else, planning is the first and most important step. List down the expenses much in advance. This will help you to know how much you can afford and will act as a check so that you do not spend unnecessarily. We have some tips here so that your finances are intact post the festivals.
Buy during discount periods and sales – Make a list of what you want to buy much before the festive season starts. This will help you space out your purchases and you can buy when interesting offers are available in the shops. Most shops have discounts, offers and sale offers going on just before/during the festivals’ time. Make use of these offers and ensure that you buy only as per the list you have and not because some item is on sale or has an offer. This will help you save money and keep you away from unnecessary spending.
Say ‘no’ to Gambling – Gambling is a favourite ritual during the festive season. If you really have to play to follow tradition, keep the gambling round short and the stakes low. Stick to the rules you have laid down.
Decorations and Gifts – There are fancy decorations available in the market to lure us. You should check what you had bought last time around and reuse some of the stuff. You can go creative and have some DIY (do it yourself) decorations. This could also be a fun family activity. For example, rangolis done by the family together is the best and most beautiful decoration compared to any fancy stuff available in the shops.
We like to shower love and affection to our near and dear ones by splurging on gifts. This can prove to be a costly affair. List out the people whom you want to give gifts. Decide on the items to give much before the festive season and keep an eye for special offers so that you need not buy it at the last minute when no offers/discounts may be available. Compare prices for the items on online stores as well. Many special deals are always available online.
Office Diwali/Christmas Party – If you have an office or a business where you throw Diwali or Christmas parties, think of ways to cut down on expenses. Many MNCs are taking that route to cut costs anyways. For example, you can do a potluck lunch in the office instead of ordering food from outside. Instead of getting gifts for everyone in the office for Christmas, each employee can become a Secret Santa for another and get a gift. These things will also help team building.
If there is no escaping from buying gifts and throwing an office party, plan for such activities beforehand. You can buy in bulk so that you will get better prices. You can buy from online stores (it could be a cost effective option). You can reserve party places well in advance and get a discount.
Holiday Travels – We also plan vacations during the festive season. It is advisable to plan these well in advance and make reservations at least 2-3 months before as the prices of flights, accommodation etc. rise as the festive season nears.
We all know that prevention is better than cure. Great! Medically, we look at prevention as below:
So here are few tips for you to save your medical costs:
Dr. Sejal Shah
SUMMARY - Financial Planning cannot be afforded by everyone. You can try planning your finances yourself by referring to good personal finance books, attending personal finance training sessions, personal finance websites and blogs and using personal finance software. These methods will not give you the benefits of hiring a professional planner, who brings in rich knowledge and experience. Nevertheless, these are good resources to help you start planning your finances, rather than not doing anything about it. After all, taking some action is better than taking no action at all.
Expert financial planners are increasingly being engaged by more and more people, as professional advisors bring in the much required experience, knowledge and objectivity to their advice. But can everyone afford financial planning by a professional? We understand that this may not be feasible for many and therefore thought we can let you know of some resources which will help you start planning your finances.
Hiring a professional planner and doing financial planning yourself cannot be compared. Services of a planner also cannot be replaced. The different components of a financial plan like insurance, retirement, goal planning, investment planning and budgeting are interlinked and therefore require you understand the complete picture before making financial decisions. You must also be prepared to go through a lot of paperwork and review your plan regularly. However, we believe that some action is better than no action. Although these resources cannot help you build a comprehensive plan by yourself, it is a good starting point.
Personal Finance Books: Personal finance books can give you knowledge and understanding about various aspects of financial planning. You can visit a library or simply order these books online. Select books which are written in easy language and which explain concepts in a simple manner. You can select personal finance books written by Hemant Beniwal, the Jago Investor Team or Parag Parikh. Ranjan Verma’s Lights Camera Action Steps on Money Management is also another book on financial management concepts. All these can help you understand various personal finance topics. We, at GettingYouRich have already released our free eBooks on Insurance and Mutual Funds and will shortly release our very own Personal Finance eBook as well. Do visit our Free section to read our eBooks. Although books can be a great source to enrich your knowledge, sometimes, information given is pretty generalised and may not cater to your unique needs. A book can also not give you the practical knowledge needed which a financial planner gives you.
Personal Finance Training: Leading Personal Finance experts in the country schedule their training sessions regularly. Such sessions will allow you to learn lot more about personal finance and take result oriented actions. Even if you like to understand more about Financial Planning before you decide on an engagement with a Financial Planner, then attending such sessions may be a good idea. MoneyLife in Mumbai conducts such sessions regularly. These are also made available on YouTube. Jago Investor and The International Money Matters also conducts such sessions. GettingYouRich.com too has an initiative for Financial Wellness sessions. You can check more details about our sessions and schedule by clicking here.
Personal Finance Websites: There are innumerable personal finance websites and blogs available which can give you a wealth of knowledge and information. Blogs by SubraMoney, Manish Chauhan, Hemant Beniwal, OneMint and TheWealthWisher are some such resources*. Goodmoneying, fpgindia, networkFP and the blog by Ranjan Verma also carry a wealth of information. Our own blog has a wide range of articles on various areas. You can read all our articles by clicking visiting our Blog section. Websites and blogs can give you knowledge, but again, like books, not the personal touch required to put your finances in order. You must also be wary of the credibility of the website, as any wrong advice followed can upset your finances.
Personal Finance Software: There are some personal finance softwares and Do-It-Yourself websites available which can help you either partially or completely do financial planning.
The above Do-It-Yourself resources may not give you the advantages which a professional planner brings to the table. Nevertheless, these can be good starting points and can enhance your knowledge considerably. Start today and use these resources to start understanding your finances. You can always reach out to a professional financial planner for complete financial planning.
* Source: Ranjan Verma’s blog on Top 10 Personal Finance Resources in India
Disclaimer: We do not have commercial interest in any of the products mentioned above.
SUMMARY - Right methodology, goal based investment and your commitment is a key to a successful investing in Equity MFs. Here are the key considerations:
1. Align investment to your goals
2. Ascertain Capacity to take Risks
3. Design your MF portfolio
4. Identify top performing MFs
5. Invest through SIPs & withdraw through SWPs
6. Keep a regular check on your MF portfolio
7. Hire an expert
8. Manage logistics
Here is the methodology that we suggest.
This article was originally published on Stockmusings.com
Summary - Social Entrepreneurship means running an enterprise that provides suitable solutions for social problems. They can be non-profit or for profit enterprises. It requires motivation, a passionate team, requisite funding and a platform to showcase it to become successful. We provide some guidance on social entrepreneurship here.
Social Entrepreneurship is using one’s business acumen to build a sustainable enterprise to address social problems and needs. This model could be a business for profit or a not for profit organization.
If you wish to be a social entrepreneur and bring about a positive change in society, that is a noble thought indeed. We provide some resources and guidance on how to go about it –
Balance one’s aspirations and reality – Becoming a social entrepreneur is not easy to say the least. There can be conflicts of personal goals and aspirations. Social ventures can also be profitable in today’s times. Although the monetary rewards that you might get if you put in the same efforts in a fully profit making organization could be much more, the satisfaction you get by creating value, creating livelihoods or enabling people to live better lives is unparalleled. You should go for it only if you are passionate about the social venture and are highly motivated to make it a success.
How to start? – If you have already identified the area which you want to work in, you can join an existing organization to get some experience. Once your plan is in place, you need to get people to work with you who have the same passion and energy levels like you for the venture and to make a difference to society. You need money for starting and running your venture. You should talk to people, organizations, banks who could help with funds. But for this you should have a proper business plan in place with objectives, approach, financial plan etc. This will enable them to understand the venture and make a decision about funding. Once you start the venture, market it in the media (social and other forms). This will help your venture get visibility and interested people can contribute in different ways.
Change in Existing Systems - Existing social systems have been in place for many years. Bringing a change in them is difficult. You will be fighting the system continuously and will have to work towards changing the mindset of people. You will have to think of innovative ways to bring about a change in the system. You will have to work with the community, governing and law enforcing bodies. It is a long but self-satisfying journey.
Resources for networking and guidance
You can check web resources like www.ilid.org and yourstory.in that can help in your venture.
I end this article with stories of two social enterprises that have made a difference to the society hoping that it will motivate you to take up your cause even more strongly.
SUMMARY: Tax Planning not only involves making the right investments, but also involves taking proactive steps in making these investments and collecting the investment proofs on time. Adopt an organized approach by maintaining a log of all your investments for tax purposes and details of other provisions you use. Start collecting the proofs on time to avoid missing out on any aspect. Make sure you are enjoying all tax benefits.
Last week, we carried an article on how to do Easy Tax Planning. But Tax Planning is not simply investing in the right instruments. More importantly, you must submit your tax proofs on time to your employer to get the tax benefit. Otherwise, you will have to face the hassle of claiming refunds when you file your tax. Here are a few quick pointers when it comes to tax planning.
So have you covered Sec 80C? Irrespective of your income bracket, the maximum deduction you can claim under this section is Rs. 1 lakh. But there are a host of options available for investment including insurance premium, PPF, NSC, ELSS, ULIPs, EPF, principal component of home loan, NABARD bonds, 5 year bank fixed deposits, full time education fees paid for up to 2 children’s education, etc. Although the investment options are several, some individuals, especially below the 35 years age group do not make full use of this section, because of carelessness.
Are you missing the other deductions available? So here are few ‘commonly ignored” deductions..
Invest well before the cut off so that evidence is easily available: Usually, all employers would require you to submit the proofs by December or January to make the necessary adjustments to your salary. Therefore you must make sure your investments are completed well before this deadline. Ideally, one has to start tax planning and making the necessary investments from April itself. In the case of EPF or Home Loan, the investments automatically take place as deduction from your salary and EMI payment respectively. Pay your insurance premium well before the due date and submit your medical bills also on time. Remember when you make the tax eligible investment decision at the last moment; it’s likely that you will end up making an unsuitable investment.
Logistics of collecting all the required tax eligible investment proofs:. Some cases like insurance premium paid can get you the premium certificate immediately. However, other proofs like home loan principal and interest exemption will require you to make specific requests to your bank to give you the required certificate. Make a list of all your investments for tax purposes, claims and other provisions under which you seek tax exemption separately in a book or excel sheet. Start your efforts of collecting the investment proofs from as early as possible but no later than October. This way, you can be sure to collect all the proofs and submit it on time, without missing anything.
We observe from our clients that the Tax Planning is often neglected. However, remember that your investment criteria should not be solely with the intention of saving taxes; rather, it should take care of your financial goals and risk profile.
Start today. Be more organized. Minimize your tax outflow!
Summary – If you are planning to start your own venture, be sure that your business idea is realistic and has potential. We have some tips to guide you to set up your business –
2. Develop a Business Plan
3. Manage Funding
4. Separate out You and Your Business
5. Reach Out and Connect
6. Choose the right type of business entity
7. Optimum Use of Resources
You have a good business idea, are ready to take the plunge and all set to start your own venture. We wish you all the best and give you some tips on how to kick start your venture –
You think your idea has great potential and so do your family and friends. But that is not enough. You have to do primary and secondary research. Go out and talk about your idea to different kinds of people especially to your target audience. Try to find out if people are ready to pay for the product/service that you are offering. You will learn a lot and understand the potential of your idea
Develop a Business Plan
You should have a business plan in place however small or big your idea seems. When you write a business plan, you will be forced to think on all aspects of the business. The business plan should have all the important information like
Needless to say, capital is extremely important when you start on your own. It is important to plan for expenses, investment and operations in the initial period of the business. When you should calculate start up costs, you should consider cash to cover personal and business expenses for the first few months or a year as you might not have an alternate career which gives you money on a periodic basis. You should consider costs for running the business, taking orders, payment of salaries, suppliers’ payment etc. so that there is money to sustain the business and yourself for a couple of years.
You should then think of different sources of funding. It could be your savings and investments, loans from friends and family, VC funding, bank loans etc.
Reach Out and Connect
You should make an effort to reach out to other entrepreneurs who have seen it all, mentors and people knowledgeable about the industry and market you are targeting. You can join groups supporting entrepreneurs. You should attend seminars, industry conferences and training courses. These will help you learn a lot, as people will share the obstacles they faced, mistakes they made. You will also be able to network with many people in the industry.
There are many start-up resources available on the Internet that will help you in getting your business going. For example, TheRodinhoods.com by Alok Kejriwal is a one-stop website for sharing business ideas, getting answers to your questions, getting help with funding and meeting like minded people.
Yourstory.in is an online platform based out of Bangalore which provides guidance for start-ups and also holds events for entrepreneurs.
Separate out You and Your Business
The business is a separate entity and it is not you. The time, money and all other resources spent on the business should be separately accounted for. Income and expenses of business should be separately accounted from your personal finances.
Choose the right type of business entity
There are different ways to register a business legally. Your business can be any one of the following entities –
Optimum use of resources
You will need cash to kick-start your venture. Do have a plan on how to source funds for the business and how you plan to meet various investment requirements and expenses along the way. Think up on ways other than bank loans to get funds.
It is not necessary to have a big marketing budget. Try out innovative but cost effective marketing tactics. Social media and technology can be used very well to advertise your business.
Summary - You should try out this new concept in shopping. You should go to a cashback website which has a tie-up with different online retail stores. You shop to your heart’s content in these online retail stores via the cashback website. Then you get some cash back as an incentive for using this method. You can shop at your convenience from wherever you want and escape the hassles of offline shopping like traffic, crowds and billing queues. Happy Shopping!
We Indians love shopping and when there is a bargain involved, we love it even more. Some entrepreneurs are betting on this trait and have set up online shopping websites where you can earn money for shopping. Yes you read it right, you shop for something you want and then get money back. This is a popular concept in countries like US where customers have been taking advantage of these websites for quite some time now. It is a relatively new concept in India but slowly catching on.
Here we profile three online cashback shopping websites – cashkaro.com, pennyful.in and cazbak.in.
In the case of all the cashback shopping websites, you of course have to sign up with the website and only then start shopping on other online stores that they have a tie-up with. The website gets commission from the shopping portals for getting them customers and this commission is shared with the customers in the form of cash in their account with the cashback website or coupons for further shopping on the particular online shopping portal. This can be used on the website to shop at any online shopping portal and not necessarily the same one on which it was got from.
Let us look at some key features of the three cashback shopping websites.
Cashkaro.com again is a cashback and coupons website. You can shop via cashkaro.com in many online retail stores like Snapdeal, Myntra, makemytrip etc. You get cash for shopping from cashkaro.com and coupons and/or discounts from the online store where you shopped. So it is a great one-stop shop for people who want to save money.
It has recently launched restaurant offers as well wherein you get discounts on your food and drinks bill if you reserve a table in the restaurant via Cashkaro.
Cashkaro also claims to have the largest Facebook following amongst all Cashback sites. It has a fan base of almost 3 Lakh people. They have been featured on over 50 news sites like Businessworld, Hindu Business Line, Entrepreneur & TV Shows like CNBC AwaazYou can sign in with your Facebook account as well on Cashkaro. They also have a lifetime referral program where you get 10% of your referral’s Cashback forever from Cashkaro.
Once you get Rs.250 in your account, you can request for this money to be transferred to your bank account.
Cazback.in allows you to sign in with your Facebook account. This portal offers products not only in all the usual categories – clothes, accessories, food, travel etc. but also has tie-ups for selling financial products. For example, if you buy from Bankbazaar.com or Apollo Munich Health Insurance via Cazback.in, you get some cash back offers.
You can avail of coupons offered by the merchants as well at Cazback.in which is a double treat.
Once you earn Rs.300 for shopping here, you can request for the money to be transferred to your Paypal or Check account (online cash accounts). You can then transfer this money to your bank.
Pennyful.in another cashback and coupons website which promises to give cash for shopping online via the site. As a customer you can also use discount codes on items on the e-retailer sites here as well. So you get cash from Pennyful.in and discount from the retail store. Thus, you get discount + cash back which is a sweet deal. It also gives Rs.100 cashback for the first online transaction that every friend you refer does. The friend also gets Rs.50 for the first transaction after joining as a referral.
As a customer, you do not require any minimum amount to be in your account for redemption. Whatever be the amount in your account, you can request for a transfer to your bank account.
Pennyful.in also has a healthcare related retail site called medicash.in where you sign up and identify a healthcare partner. You can then avail the services of healthcare provider. You pay the entire bill amount but show the medicash membership proof. You will get cash in your website account in some days and this can be transferred to your bank account. This is helpful considering our rising medical costs.
Have you used any of these websites or any such website either in India or abroad? We would love to know your experiences and opinions on the same.
Summary – Tax planning is an important component of personal finance and you must invest time to understand it and do it for your income. There are different ways to minimize tax liability and depending on your income and risk profile, you should choose the most optimum ones.
I know the word tax brings terror in the minds and hearts of people. Moreover once you file your taxes for the year, many of you sit back and relax till the date of the next filing of returns comes close. But tax planning is an important component of personal finance and fear not, I will help you make your journey in tax planning easier and maybe less scary
Tax Planning is the process of managing your personal income such that you take maximum benefit of all deductions, allowances and rebates so that your tax liability is minimized as much as possible within the legal framework. Tax planning should also be done on the basis of your risk profile. I have listed down 5 steps here that will help tax planning become more convenient.
Change your approach to tax planning - Tax planning is an important component of Personal Finance and therefore affects all aspects of personal finance like investments, asset allocation and risk management. You should approach tax planning with these aspects in your mind. You should also ensure that you spend some effort and time on tax planning from the beginning of the financial year so that last minute investment decisions with the perspective of saving tax are not made. Your time and effort will ensure that you make informed investment decisions for tax planning and over time, the process will become simpler and you will be more confident of your tax planning skills.
Understand your income structure and tax policy - Understand your income structure. If you are salaried, look at your HRA component, PF component and other headers in which your salary gets classified into and how this affects tax. If possible, have a discussion with your HR and Finance colleagues to classify the salary in such a way that it attracts minimum tax liability. Compute your taxable income at the beginning of the financial year so that you know how much tax you have to pay and how you can minimize the same.
Learn about different ways to minimise tax liability - Now that you know what is your income and what is the tax payable by you, the next step is to think of ways to minimise your tax liability.
Investment in different types of instruments - There are various instruments that you can invest in to get tax deductions. Below we have a table with details on the same.
Invest in property using a Home Loan – If you buy a house using a home loan, you qualify for certain deductions on the principal amount and the interest amount of the loan.
Gifting - You can gift money to specified relatives like spouse, brother sister and other close relatives in your family tree and neither you nor they have to pay tax on the same.
Invest in the right instruments - Here is a list of investment instruments with some details which will help in guiding you to make the right decisions
I hope this information has helped you and you can look at income tax with a fresh perspective.
EXECUTIVE SUMMARY: Last week, IRDA has launched the Insurance Repository system, which will enable you to maintain your insurance policies online, in the demat form. The facility is at present free of cost, and you will need to open an e-insurance account for the same. All your policies will be centralised and this will save you both time and efforts. We recommend you to opt for digitisation as there are several benefits associated with this move.
Till last week, you could access stocks, mutual funds and bonds online. Now you can add insurance to this list. Last week, Finance Minister P Chidambaram launched the Insurance Repository System of IRDA, which will help you access and maintain your insurance policies in the electronic form. Read on to understand more.
What this means? An insurance repository is a means of holding your insurance policies in the demat form, just like how you hold stocks and mutual funds. You will need to open an e-insurance account with an insurance repository to enable you to do this.
How do I open an account? IRDA has approved five entities in the country with which you can open an e-insurance account. These companies are Central Insurance Repository, SHCIL Projects, NSDL Database Management, CAMS Repository Services and Karvy Insurance Repository. One individual can have only one e-insurance account. To open an account, you can either approach any of the five repositories directly or route it through the insurance company where you hold a policy. You can also avail the services of an ‘Approved Person’ appointed by the repositories. You should fill an account opening form and give the completed form along with your photograph, cancelled cheque and KYC documents (for proof of address and proof of identification). The Aadhaar card is also accepted as a valid document for this purpose. When the process is completed, you will be sent a welcome kit with the login ID and the 13 digit account number along with the account operating instructions. The PIN will be sent subsequently. After this, you can start digitising your policies.
What are the policies which are applicable? At present, IRDA has extended this facility only to life insurance policies. It is expected that this will be available for car, health, home and other forms of life and non-life policies as well in a few months time.
What are the charges for this? At present, the policyholder can open an e-insurance account free of charge. There is no charge to be paid even for converting existing policies to demat form. Experts opine that even if this facility is made chargeable in future, policyholders should go ahead and opt for this as it is advantageous.
What is the treatment in case of a new policy? When you purchase a new insurance cover, you can opt for an e-policy. For this, you must have an existing e-insurance account. If you do not have one, you should first open an e-insurance account and then purchase the new policy. When you purchase the policy, you can quote the e-insurance account number in the form and opt for the electronic policy. You will not need to submit fresh KYC documents, as this was already done when you open the e-insurance account. When the new policy is issued, it will be reflected in your demat account.
What is the procedure for existing policies? The doubt arises as to what should be done when you already have several policies across different insurance companies. The procedure is quite simple. You will first need to convert your existing policies to demat form if you want to store them in the e-insurance account. You should approach your insurance company and fill in the conversion form. Submit the filled in form along with the policy documents. The insurance company will co-ordinate with the repository, post which the data transmission will take place. You will then receive the confirmation of the same.
How can I make changes in the policy? As all your insurance data is in one place, you should make the changes in the insurance repository. That is, the repository will be the single point of contact. Changes can be either at the account level (change of address or other contact details) or at the policy level (change in nomination or account details). If the change is at the account level, the repository does the changes and forwards it to the insurance company. If the change is to be made at the policy level, then the request is first forwarded to the insurance company. After the changes are made at the company’s end, it will be reflected in your account.
Is this a compulsory process? No, the policyholder can choose not to convert his existing policies to demat form. Re-matting is also possible; that is, the policy holder can also change the electronic version back to the physical form at any point in future.
What are the advantages of an online policy?
Should I opt for digitising my policies? Yes, definitely! We, at GettingYouRich recommend you to opt for digitisation as there are several advantages associated with this, as mentioned above.
Are there any drawbacks? The scheme is an easy and convenient way of maintaining insurance policies. However, there seems to be a problem in the designing of the system. This is because, a policyholder is allowed to have an account with only one insurance repository. Whereas, the insurance companies are free to have a tie up with one or more repositories. So if a policy holder has an account with a particular repository, but his insurance company does not tie up with this repository, then the whole concept fails. So the key to the success of the e-insurance concept is for every insurance company to have a tie up with each of the five repositories.*
* Source Link: MoneyLife.in #gettingyourich
Estate Planning is an important part of financial planning. It is necessary to have an estate plan in place so that your wealth is transferred to intended beneficiaries without hassles. It is not a simple process and therefore enlisting the help of a financial planner or a professional will help you in getting it right.
Estate means the networth of a person. Estate planning refers to making arrangements such that your wealth is taken care of and distributed to beneficiaries, as you desire after your death without too many legal hassles. It is an important aspect of personal finance and financial planning, irrespective of how big or small your networth is in your opinion. It is better to take professional assistance for estate planning, as it is a tough task. Here are some guidelines on estate planning –
Creating a will – It is important to draft a will. The will should state the wealth that you have and how it should be divided between your beneficiaries. It should also contain information about how donations should be taken care of. It can be either handwritten, in a computer file or there are even online services that can draft your will. It is important to name a person who will execute the will when you are not there. You should sign the will in the presence of witnesses. For more information on creating a will, you can read our article by clicking here.
Setting up a Trust - The other way to secure the transfer of one’s networth as desired is to set up a trust. This is normally done when the intended beneficiaries of the estate are not ready to take up the responsibility. The trust will take care of the estate and when the beneficiaries are ready to take up the estate, it will be handed over to them.
Division of assets and liabilities among heirs – Estate Planning involves listing down legal heirs who may not necessarily be relatives and detailing out who gets which part of the estate. Documentation of this aspect is important so that there is no confusion on who gets what.
Nominating a guardian for dependents - If you have any dependents, the estate plan should state how they should be taken care of in your absence. The plan should highlight who should be responsible for the dependents. For example, if you are taking care of disabled relatives, you should detail out how they should be taken care of when you are not there.
Financial Planning – As you know, financial planning is an ongoing exercise, it is important to have a broad outline of steps in place so that the ones taking care of your finances and do what is required to reach the financial goals set.
Review your estate plan – It is important to review/update the plan once in a while. Some reasons which could mean an update to the estate plan –
It is important to have an estate plan in place. Otherwise the estate would be given to legal heirs, as per the existing laws of the state, and not in the manner you had in mind. It has to be in place so that there are no complications on how your wealth should be distributed after your death.