November 30, 2020
The ongoing Corona Virus or Covid 19 has affected all of us across borders, nationalities, income groups and religion. Its effect will be far reaching in times to come. While some economies had slowed down even or slipped into recession before the onset of Covid 19, the recent event has precipitated an economic crisis globally. While job losses and business shut downs are a distinct possibility -such events and health issues only adds to stress! While everything currently is in a lockdown mode, it gives each of us an opportunity to sit back and take stock of our lives and that of our dear ones!
Do we have any backup plans in the event something unfortunate should happen? How will the family be taken care of? How will assets take care of cash flows when earning members in the families get adversely affected or something happens to them?
I am sure that these are some of the questions that may run through peoples’ mind. Very often we find that it is an event or an unfortunate happening that jolts us to reality that life is uncertain and that it is our obligation as heads of the family and bread winners to provide for our families through structured plans.
For the benefit of those who did not get a chance to read my earlier article, I have repeated certain aspects:
Why is making of a Will so important?
- Making a Will is important as you can bequeath certain assets to a specific relative to the exclusion of another with a particular intention in mind! Without a Will your estate will devolve on your legal heirs according to your personal law!
- The most important thing about a Will is that it leaves comprehensible and explicit instructions about the deceased’s property and estate.
- Without a Will in place will lead to chaos and confusion amongst your loved ones, misunderstandings and disputes. Not that a Will cannot be challenged! But a carefully drafted Will with precautions considered will minimise such a challenge and family disputes!.
- A Will drawn up considering your family dynamics can go along way in protecting family members under specific circumstances. For example, providing of life interest to a spouse will ensure basic protection and a roof over her head or an asset through which she can sustain from!
- Creating appropriate structures through your Will (e.g Testamentary Trusts) can help to make provisions for minor children. Through your Will you can appoint a Guardian of your choice and also make financial arrangements for them.
- A Will can also be instrumental in protecting one’s business by passing on your shareholding in a defined manner thereby reducing friction in business ventures.
- One can also create specific structures through which assets can be housed for specific purposes which can achieve long term goals.
- Making specific desires such as charity and philanthrophy will ensure that something you are passionate about will be achieved after you.
- Creating structures for special children and dependents (Testamentary Trusts).
- How does one handle digital assets?
- While making one’s Will a lot of unanswered questions and issues worrying the mind could get resolved.
A Will can always be revoked by a fresh Will. Just as one reviews ones’ financial portfolio, it is recommended to review ones’ desires and Will! Making your Will is better than having no plan in place!
While it is said that making a Will is an easy process, certain precautions need to be kept in mind such as:
- Choosing Executors-their willingness and capability to act. Choosing an independent Executor if you foresee family disputes
- Choice of Witnesses-not as a matter of a formality but with a purpose and credibility of Witnesses.
- Your Asset Profile and geography of assets-whether one Will or separate Wills for each jurisdiction (e,g India, US etc)
- Family dynamics and desires
- Making specific your desires and intentions clear and unequivocally
- Timing and mental frameup
- Your Personal law and governance
- Registration of a Will and its value proposition.
Sanjay is a practising lawyer, a qualified chartered accountant and a member of the Society of Trust & Estate Practitioners. He specialises in estate planning, property law and corporate commercial matters.