How To Safely Pass On Estate & Wealth To Next Generation? All You Need To Know

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How To Safely Pass On Estate & Wealth To Next Generation? All You Need To Know

Two of the primary causes of failing to pass on wealth to the next generation are procrastination and blind faith, which holds true not only for the extremely wealthy but also for middle-class earners.

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The significance of estate planning and methods for safely passing on money to the next generation are discussed in this article. But it's important to remember that each and every family will have distinctive requirements, and there is no one approach to estate planning.

A majority of affluent and prosperous businessmen make enough money to live comfortably for the rest of their life, and their offspring as well. But passing on wealth to the next generation is not as easy as it sounds. Two of the primary causes of failing to pass on wealth to the next generation are procrastination and blind faith, which holds true not only for the extremely wealthy but also for middle-class earners.

Most Powerful Estate Planning Model - A Will

A will is a legal document that outlines a person's intentions for the division of their assets after death. A will makes it easy for a person's legal successors to inherit wealth by ensuring that the deceased's wishes are carried out. After the testator's death, the will; will be handled by an executor who aids in its execution.

An estate can consist of any type of asset, including any type of property that is owned, bank accounts, stocks, bonds, business interests, artwork, vehicles, etc.

A legal heir and nominee might not be the same individual. An appointed nominee shall get payment in the event of a person's death, even though they might not be the legal heir, according to Section 39 of the Insurance Act.

In addition, Section 45ZA (2) of the Banking Regulations Act merely puts the nominee in the depositor's place after their passing and grants him or her sole control over the account's funds. In terms of the depositor's account, it grants him all of the depositor's rights. Nonetheless, it is vital to keep in mind, though, that this does not make the nominee the account's rightful owner. In fact, the nominee is expected to hold the estate proceeds for the rightful legal heir. This implies that a nominee is responsible for keeping the estate's proceeds in trust so that the rightful heir may bear his/her claim.

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Private Trust as a Means to Pass on Wealth

A private trust is one that is established for close friends, family members, or other individuals. A private trust can be used to transfer property from one person (owner or settlor) to another for the benefit of a single person or a group of people. The beneficiaries of the private trust are easily or quickly discernible. A family trust is the most common type of private trust. The settlor gradually transfers assets to the trust in order for beneficiaries to benefit from its assets.

Private Trust vs Will

In many ways, will and trust overlap. They are both used to determine and divide the testator's or settlor's assets or properties for the purpose of passing on wealth to the future generation.

Each has its own set of pros and cons. One significant distinction is that while a will can only take effect after the testator dies, a trust takes effect during the settlor's lifetime. Moreover, do note that a probate process may be required to execute a will after the death of the testator, although no such process is required to execute a trust.

Here are some of the major distinctions between a trust and a will -

  • A trust protects privacy, but a will can afford no form of privacy.
  • Additionally, creating a will is less expensive and less complicated than making a trust.
  • A trust cannot be challenged, but a will can.
  • The most significant distinction is that a trust offers creditor protection whereas a will does not.
  • Moreover, the assets retained under a will may be seized if the beneficiary goes bankrupt. However, since the receiver of a trust does not own the assets, those cannot be attached in the event of bankruptcy.

All in all a private trust is typically the ideal way to manage these matters if the family is large and there are several beneficiaries and assets to be managed. Furthermore, in a typical will, the assets may be seized by the creditors for non-payment. Because of this, an irrevocable trust is always preferable to the assets captured by a will.

The Takeaway

Vakilsearch experts believe that everyone should have a solid plan for distributing and passing on wealth to the next generation, and most people enlist the services of lawyers with expertise in this area. To know more about the best mode of transferring your assets get in touch with the professionals at Vakilsearch who have an answer to all your legal worries. Our attorneys specialize in all things estate planning and help pave the best way forward for you!

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