You, I or any of us can vouch for the independence that we enjoy. Many people interpret the idea of independence differently, though none can deny that true independence is impossible and incomplete without financial independence.
Independence Day: Writing a will to free yourself from the moral obligation to your heirs. All you want to know
Earning money can be hard. However, the idea of leaving behind money to those who would need it the most in your absence need not be terrifying. A detailed will ensures clarity of succession with no scope for doubt or disputes in your absence.
Financial independence stems from financial empowerment which is not only about the money you earn and accumulate but also that you relegate to others in your absence. By doing so, you ensure the financial independence of those who depend on you now for your income and would find it difficult to continue living a similar lifestyle in the event of your sudden demise.
Document a will for financial independence
You spent all your life planning and accumulating enough wealth to ensure your family’s financial well-being. However, all efforts would fall flat once you are no more. What is the point in saving and securing enough for your family when you do not know if the same would be distributed and used as envisaged by you? The best way would be to leave behind a written document that will dictate all your wishes and how you wish them to be implemented.
A will is a legally binding paper that details the distribution of your assets once you pass away. It holds significant importance in estate planning, playing a crucial role in guaranteeing the fulfillment of your desires once you’re no longer here.
What happens when you make a will?
If said succinctly, writing a will makes you feel financially empowered and those intended to benefit from what is written in the will documented. Indeed, you have the option of verbally expressing or jotting down your wealth distribution intentions on paper. Nevertheless, there exist several compelling reasons why utilizing a will remains the optimal approach. Some of these include:
- Legal binding: A will holds legal authority, ensuring that your desires are upheld in a court of law, irrespective of any disagreements among your loved ones. In contrast, distributing your wealth verbally or through a non-will written document might not lead to the realization of your wishes.
- Flexibility to change: The flexibility of updating a will is a notable advantage. Adjusting your will to accommodate changing circumstances is straightforward. Conversely, modifying wealth distribution plans expressed verbally or in a non-will written form can be more complex.
- Secrecy guaranteed: Confidentiality is enhanced with a will. It remains a private record, accessible only to those you choose. Conversely, sharing wealth distribution details verbally or through a non-will written document may jeopardize maintaining the confidentiality of your wishes.
Beyond these merits, a will plays a pivotal role in averting familial discord. In the absence of a will, surviving family members might be compelled to engage in a court process to determine asset inheritors. This potentially arduous and costly procedure can ignite conflicts within the family. A will circumvents such issues by unequivocally outlining your asset distribution preferences.
Additionally, while the verbal or non-will written distribution of wealth is plausible, the benefits of having a will are substantial. A will is legally binding, adaptable for updates, and offers enhanced confidentiality. Moreover, it serves as a mechanism to prevent family conflicts.
Put an end to disputes with a will in place
Instances, where family members resort to legal action to settle property or wealth disagreements following the passing of a loved one, are not uncommon. This process can stretch over a considerable period, prove financially burdensome, and take a toll on emotions. The existence of a will can pre-emptively avert such situations by providing a clear outline of your asset distribution preferences.
Your will serves as the solitary document conveying your intentions regarding the legal transition and conveyance of assets upon your demise. Ensuring the validity of your will and its alignment with your desires holds paramount importance. Additionally, it's crucial to keep your will up to date as the circumstances of your life evolve.
If you presently lack a will, it is imperative to contemplate drafting one. This step is a vital component of estate planning, acting as a safeguard to guarantee the posthumous realization of your wishes.
Details of your assets are hidden
You obviously would not want the world to know and covet what you saved and left behind for your family. You would not want your family members to succumb to the greed of thugs and cheats. This explains why anyone writing a will, including a will, would want to keep the details of all deposits, accounts, and assets hidden.
Furthermore, even if you were to attempt such tracking, managing every financial fragment scattered here and there could prove challenging. A will compiles all the wealth amassed by you throughout your lifetime onto paper, simplifying the procedure of fair allocation.
The likelihood of overlooking specific modest assets is eradicated, ensuring that everything is rightfully transferred to its designated recipients.
How do you write a will?
There are so many ways that you may pen your will. One way is that you consult a legal advisor and get the contents of the will drafted by him or her. Should arranging a meeting with a legal consultant prove challenging, you have the option to compose your will from the comfort of your home and subsequently transmit the final draft via email for assessment and ultimate refinement by their experts. Nevertheless, it's crucial to recognize that this approach differs from having your will professionally drafted by a lawyer. An attorney possesses the capability to offer legal counsel, guaranteeing the legitimacy and enforceability of your will.
Before drafting your will, it holds paramount significance to compile a comprehensive inventory of your assets and liabilities. This step will facilitate the determination of your desired asset distribution posthumously.
You can systematically categorize your assets and liabilities as follows:
- Moveable properties: These encompass assets that are transportable, including cash, stocks, bonds, and vehicles.
- Immovable properties: This category covers assets that lack mobility, such as land, buildings, and automobiles.
- Personal belongings: These are possessions of sentimental value, like jewellery, furniture, and cherished family heirlooms.
Once you have assembled this list, you can then contemplate how you wish to allocate these assets after your passing. Options include designating specific individuals or charitable organizations as beneficiaries. Alternatively, you might opt to establish a trust to manage the distribution.
To ensure the legal validity and enforceability of your will, seeking the review of an attorney is imperative. Additionally, you should periodically update your will to align with changes in your life circumstances.
The assets may be viewed, visualised, and categorised differently. So, it would make a lot of sense to consider the following:
- Tangible assets: These are items that can be physically touched, encompassing elements such as furniture, jewellery, and artwork.
- Intangible assets: This category includes non-physical possessions like intellectual property, copyrights, and patents.
- Liquid assets: These are readily convertible to cash, such as cash reserves, stocks, and bonds.
- Illiquid assets: Assets that cannot be swiftly converted to cash, such as real estate properties and businesses.
By thoughtfully considering the diverse array of assets you possess, you can ensure that the contents in your will faithfully reflect your desires and that your assets are distributed according to your preferences.
Do not forget your liabilities
When composing a will, it's crucial to take into account both your assets and your liabilities. Liabilities encompass debts you owe, such as credit card balances, auto loans, and mortgages. These debts do not dissipate upon your passing; instead, they are transferred to your heirs.
However, your assets’ value will be offset by the sum of your liabilities. This implies that if your assets are valued at ₹10,00,000 and your liabilities total ₹50,000, your heirs will inherit ₹950,000.
This consideration should be at the forefront as you draft your will. It’s essential to ensure that your beneficiaries are cognizant of your liabilities' extent. Additionally, ponder establishing a trust to manage your assets and liabilities posthumously.
Here are a few liabilities that might be deducted from your asset valuation in the context of writing a will:
- Mortgages: If your home carries a mortgage, its value will be diminished by the mortgage amount.
- Credit card debt: Outstanding credit card debt will lead to a reduction in your asset value.
- Car loans: The worth of your vehicles will be lessened by the corresponding loan amounts.
- Other debt: Potential other debts could include student loans, medical expenses, or personal loans. Their total will similarly decrease your asset value.
The legal frameworks governing asset and liability distribution after death differ across countries. In case you're uncertain about the treatment of your liabilities in your country, seeking advice from a legal professional is advisable.
Adding heir(s) or nominee(s) to your will
You surely would not want any discrepancy regarding the division of your assets among your heirs. History is witness to so many incidents of swords being drawn out over an unclear description regarding the nominees’ rights.
Therefore, incorporating your heirs as joint account holders or nominees on your moveable properties is a prudent strategy. This approach facilitates their access to your assets upon your passing. Furthermore, designating specific individual heirs as recipients of distinct immoveable properties is advisable. This measure serves to pre-empt potential disputes among your heirs. In cases where segregating individual properties isn't feasible, your will can delineate your desired distribution method for these assets.
- Benefit(s) to heir(s) matters: Consider the well-being of your heirs when deciding on asset distribution. For instance, if you have young children, establishing a trust that provides them with income until a specific age can be advantageous.
- Be attentive to details: When drafting your will, be meticulous in detailing how you intend for your assets to be allocated. Specificity is key to minimizing the likelihood of conflicts among your heirs.
- Update your will regularly: Regularly revisiting and updating your will is crucial. Life changes, such as the addition of more children or divorce, necessitate amendments to your will to accurately reflect your circumstances.
Creating a will is an ongoing process, not a one-time event. Consistently reviewing and revising your will ensures that your intentions are upheld following your passing.
Leaving behind for social causes
Maybe you wish for your support for particular social causes or charitable organizations to endure even after your passing. However, your heirs might not always share this sentiment. Nonetheless, you have the option to allocate a specific portion of your assets to these causes within your will.
By stipulating this designated portion of your wealth in the legal framework of your will, you effectively ensure that your beneficiaries cannot impede the continuation of your charitable contributions. If they attempt to hinder these donations, legal recourse can be sought, potentially resulting in a court order compelling them to release the funds intended for donation.
The benefits of designating a charitable bequest within your will include:
- Ensuring the continuity of your charitable contributions beyond your lifetime.
- Directly supporting the causes that hold significant personal importance.
- Mitigating your estate tax obligations.
- Establishing a lasting legacy that positively impacts others.
Who will execute your will?
You would not want every Tom, Dick, and Harry to look into the execution of your will. Identify people whom you can trust so that they can be called upon to execute your will in your absence.
The designated executor of a will assumes the role of gathering the deceased individual's assets, settling their outstanding debts, and disbursing the remaining assets in accordance with the stipulations outlined in the will. This comprehensive undertaking is referred to as estate administration.
Preferably, the executor should be a reliable person, ideally younger than the testator (the individual who authored the will). This precaution is taken to mitigate potential complexities in the event that the executor passes away before the testator, which could necessitate the appointment of a new executor and add further intricacies for the beneficiaries.
Here are some alternative ways to express the information:
- Spouse: Your spouse often makes a suitable choice for an executor. They possess knowledge of your assets and desires, and their availability to manage the responsibilities is likely.
- Adult child: A responsible and mature adult child can also be a fitting executor. They are familiar with your assets and intentions, and they can readily undertake the role.
- Trusted friend: Opting for a trusted friend as executor is another viable option. They are likely to have an understanding of your assets and wishes, and they can capably manage the responsibilities.
If there are no family members or friends you feel comfortable entrusting with the role, you have the option to enlist a professional executor. This expert is typically a lawyer or experienced professional skilled in estate handling.
Before officially naming your chosen executor in your will, it's crucial to engage in a conversation with them about your wishes. This ensures their comfort with the responsibilities and a clear understanding of your desires.
- Estate size and complexity: In cases involving substantial or intricate estates, an executor experienced in managing such matters may be more suitable.
- Asset locations: If your assets are spread across different regions, an executor familiar with the relevant legal regulations in those areas could be advantageous.
- Executor’s age: For elderly executors, selecting a co-executor who can take over if needed is worth considering.
Ultimately, the selection of an executor should be based on trust and their ability to fulfill your wishes. By thoughtfully evaluating these factors, you can identify the ideal individual to carry out your will's executor role.
You may contemplate how to draft a will before actually sitting down to write it. In the end, clarity regarding your heir(s) and how you wish to divide your assets or treat your liabilities matters. Financial independence comes with a sense of responsibility to ensure that your loved ones continue to remain financially independent even when you may not be there for them anymore.
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