Effective wealth transmission is an important part of any wealth creation journey. In fact, ineffective wealth transmission is a major reason why wealth does not survive and grow across generations. One of the most widely used instruments to transmit wealth is a will. A will is a legal document in which an individual sets out how and to whom their wealth would be passed on. But there is more to creating a will than drafting a document and setting out a plan. So, in today's post I'm going to talk about what it really takes to create a will. I will also talk about how this process can be executed effectively.
Simply writing down who gets what portion of our wealth on a piece of paper does not constitute a will. A will should ideally be drafted with help from a qualified legal professional. This is because there is a certain format in which a will should be drafted. Also, it needs to be written in legal parlance with a number of legal terms appearing in the will. I have explained the most important terms among them, in one of my earlier articles The Glossary Of A Will. We also have to consider the question of whether or not to register the will. Legally speaking, it is not necessary to register a will.
But from a practical standpoint, it is always better to do so. This is down to the fact that registered wills carry more weight in case of legal disputes. So, a will is best created with help from a lawyer and registered.
We must ensure that our families have no problems accessing our wealth, even in our absence. It therefore helps to have a master document along with the main will. The document should ideally be password protected. It must contain details regarding bank accounts, insurance policies, investments, liabilities, location of important documents, passwords and keys. Our closest family members must know everything about the contents of the master document. Once the will is drafted and registered, the contents of the master document can be printed out. It can then be attached to the main will as an annexure. This would allow our family members to access our wealth without having to hunt for the relevant information.
Those of us who have minor children must appoint legal guardians for them. Doing this would be immensely helpful if something were to happen to both parents. Of course, the probability of something like that actually happening is relatively low. But since it is the worst case scenario, it is essential to plan for it in advance. The guardians we choose should ideally be someone within our family who is younger than us. They would be better placed to take care of our children. Those chosen to be our children’s guardians must not be named as beneficiaries of our will. Also, they must not know anything about the contents of the will. This is because, they may misuse such knowledge or their position as a guardian in the future.
Any will that is prepared should be signed in the presence of two witnesses. Therefore, we need to have a clear idea of who we want our witnesses to be. Also, as with appointing legal guardians for minor children, the witnesses must not be named as beneficiaries in the will. They must also not know the contents of the will. Also it would be a good idea to procure sources of ID proof from our witnesses. This would include documents such as their PAN card and Aadhaar card. Doing this would be beneficial in case of any future disputes with regard to our witnesses.
Once our will is properly prepared and registered, it would be ideal to make two copies of the will. We may retain one copy of the will with ourselves. The other one may be maintained with our lawyer or financial planner. This would ensure that there is an extra copy of our will to serve as a backup. The backup copy would be helpful if our will gets misplaced, mutilated or tampered with.We must also go through the will with our families. It is important for them to know how we have planned for our wealth to be passed on. It ensures that the entire family is on the same page regarding the contents of the will. Changes can also be made if the need is felt.
Planning the creation of a will is an essential exercise within a financial plan. It is also a one time exercise. Therefore it is important to do it once, and do it well. It is an exercise we undertake to secure our family's future after our time. Therefore, it is important to make them play an active part in the process. Ensuring easy access to the wealth we pass on is also vital. Creating a will this way leaves us well placed to pass on the torch to our families when the time comes.