Why do people exchange gifts during the festive season? It’s a way of showing your love and care for your loved ones. And we bring to you one of the most practical gifts you can give to your family – the gift of the future!
You can gift the future to your loved ones through an estate plan, a Will, a living trust, a beneficiary designation on a life insurance policy, etc. In this blog, we discuss three ways to give the gift of the future to your loved ones while we also talk about the meaning of bequests and estate planning.
Bequest and Estate Planning
The act of transferring assets like stocks, cash, jewellery, heirloom, bonds, etc., to individuals or organisations is called a bequest in financial terms. This act is given motion via a Will or an estate plan. You can make bequests to charities, institutions, family members, and friends.
An estate plan is a legal document or Will via which individuals and families can grow or preserve their assets for the next generations to come. Some of the important tasks for estate planning include:
- Drafting a legal testament
- Naming a Will executor
- Setting up trust accounts for the beneficiaries to limit estate taxation
- Designate a legal guardian for living dependents
- Create or update beneficiaries on insurance policies and bank documents
- Set up annual gifting to trusts and non-profits to reduce estate taxes
- Establish a power of attorney to guard other assets and responsibilities on your behalf
3 Ways to Transfer Your Assets to Gift Your Loved Ones Their Future
Here are the options out of which you can opt for one as a means to give the gift of the future to your loved ones:
Transfer your assets as Presents
You can transfer your property to your loved one as a gift. This way, the receiver of the property can enjoy it immediately. As long as it is a self-acquired asset and you’re within the rules of the contract under the Indian Contract Act, you can transfer it to your loved one by way of a gift.
Any adult with a reasoning mind and who is not an undischarged insolvent can enter into a contract. With the help of a gift deed, you can gift an immovable property. Make sure to pay stamp duty on the date of execution and the market value of the gift deed.
Any living person can appoint someone on their behalf to gift someone their property. Remember that the gift also has to be accepted by the beneficiary of the gift or someone on their behalf during the lifetime of the original property owner.
Transfer your assets through a Will
A Will carries all the details regarding one’s assets or property and how they can be distributed among probable beneficiaries. However, there is a catch here. You can execute a Will only after the death of the owner.
However, a Will doesn’t require to be stamped or registered which means it is the cheapest way to transfer your property to your loved ones.
But if you take our word for it, we highly recommend getting your Will registered to minimise the chances of any litigation concerning property succession.
Death can distribute properties in two ways. In case of no Will, the assets pass on to the relatives according to the succession applicable to the dead person. When there is a Will executed, the assets are distributed as listed in it. Additionally, according to Hindu laws of succession, there is no restriction upon bequeathing one’s property while excluding legal heirs.
The gift through a Trust
The third way to leave your legacy as a gift for the future of your loved ones is a gift in trust. It is a legal, fiduciary arrangement allowing indirect bequest of properties to a listed beneficiary.
The plus point of a gift in trust is the non-occurrence of taxation when it exceeds the limit of the annual gift tax exclusion. This is the most common estate planning strategy used by parents or grandparents to transfer assets to the next generation.
Your whole life you live to build your assets and, in most cases, it is for your family and yourself. So, you should be wise in making decisions concerning your assets and your family. this holiday season, make plans for your loved ones’ future and give them the gift of tomorrow.