A Holistic View on Inheritance Planning
By Ashishkumar Bairagra, M L Bhuwania and Co LLP
It’s been said that you cannot imagine the gravity of a situation until it happens to you. A few months ago, my friend’s wife Rachel called to inform me that my friend Asher did not survive a heart attack while driving his car. Asher has just celebrated his 40th birthday last year and was a seemingly healthy individual. He left a registered will and Rachel inherited everything, but how would she take care of it, rather all of it!
This event got me thinking about how many individuals actually plan their inheritance keeping in mind the heir? Most of the inheritance documents stop at saying that heirs would inherit this and that, without a detailed thought on how they would manage the inheritance, especially business assets, investments and other non-personal assets, and without a detailed thought on what they would actually need after the event.
While planning inheritance, one needs to be mindful about the needs of the heirs, and some of the pertinent questions to answer are:
- Would they like to continue your business? If yes, who can they look to for guidance?
- What about a partnership with other business associates? Can they step in or will they have to exit? Which Partner would help them in case they decide to step in?
- Details of investments with specified objectives, e.g. which investment is set up for future education or weddings or seed capital for the businesses of children? Which investment is set up for emergencies like this one?
- If you live in a rented house, is there a dedicated investment which they can use to buy a house, even if it is smaller?
- How would you like them to manage the life insurance receipt?
This event also made me realise the increased need for using family trusts as part of the inheritance plan and, if possible, a family trust with professional trustees, who are not only entrusted with the wellbeing of the rest of the family after the event, but will also be able to guide the heirs onto the next steps.
Ashishkumar BairagraM L Bhuwania and Co LLP, Mumbai, India
T: +91 22 6117 49 49
M L Bhuwania and Co LLP is an organisation dedicated to offering professional services by employing the industry’s brightest minds. Their services range from collaborative audit, consulting, and financial advisory to risk management and tax services. The firm’s diversified client profile across industries has helped improve its ability to advise clients on the dynamic and challenging environments in which they do business.
Ashishkumar has been in practice and a Partner of the firm since 2001. He handles international taxation matters, internal audits, management audits and consulting assignments. He offers consulting services to various family businesses and HNWI’s on transition, expansion, exits and entrepreneurship.
Published: Trust & Estate Planning, No. 03, Spring 2019 l Photo: OlegD - stock.adobe.com