Sudden, unexpected loss of life or job and displacement due to the Covid pandemic has, of late, brought into sharp focus the need for succession planning. Experience shows that while people attach a lot of importance to wealth creation by focusing on one’s career or business, succession planning of that wealth is very often taken lightly.

In the present scenario, when life has become so uncertain, it is critical for people to have conversations on wills, passing of wealth, etc with family members, and to plan suitably for unexpected and sudden life-altering events. Planning for and leaving a safety net for our loved ones must be taken up on priority.

A quick guide for families to plan the smooth transmission of their wealth includes creating and maintaining an assets register, having joint holdings and nominations in all investments where possible, having a will in place expressing one’s desires, and creating a legacy guidance document — in simple words, a guide to one’s digital assets, email and other digital account passwords, liabilities and specific guidance to family members on specific issues.

In the event of the sudden demise of a family member, where these have not been done, here is a checklist of items to look for and follow.

• Check if there is a will
• If there’s a life insurance policy, take necessary steps to make a claim
• Make a list of assets and liabilities
• Check if any of the assets were jointly held or had nominations
• Check with all financial institutions on how to process transmission of assets

When the asset-mix and family structure is straightforward, a will can be a simple and effective tool for an individual. However, if there are many branches in a family tree and assets are spread out across geographies, it is advisable to set up a private trust.

A will needs a probate – a court certificate confirming the will is genuine – after the death of the will maker. The process to get one can, at times, turn tedious and expensive. A probate is a public document, which also means it exposes the family to public glare, should there be a dispute over assets. In such a scenario, a trust offers privacy.

A will can be challenged in court by any heir who is unhappy with the asset distribution. This can result in bitterness among family members and lead to protracted legal disputes. On the other hand, the grounds on which a well-executed trust can be challenged, are fewer. Lastly, a will is created today, but comes into effect on one’s demise, while a trust, once created, becomes operational during one’s lifetime.

Discussing inheritance and succession planning with family members is extremely critical. With proper long-term financial planning and guidance, families can ensure the smooth passing of wealth.

The author is Head of Family Office and CEO, Estate Planning and Trusteeship, at Kotak Mahindra Group