The term 'retirement planning' is slowly forming a part of the lexicon of people of all hues. Although many feel that they are too young to begin planning for retirement, an increasing number are accepting the importance of saving and investing for their 'silver years'. Also, emerging products such as the New Pension Scheme (NPS) and reverse mortgages are expanding the options available to prospective and current retirees.

Unfortunately, consumers in the country are yet to warm-up to the logical follow-up to retirement planning and that is succession planning - also known as estate planning. Often, whenever a Certified Financial Planner (CFPCM) raises this topic, people brush it under the carpet either considering it an inauspicious subject or stating that their families are models of domestic bliss and that they do not foresee any problem on account of division of their estate.

Here are a few common ways to carve up your property/estate:
While Alive :
A Trust: Creation of a trust involves three parties - the creator of the trust, the beneficiary and the trustee. Such an arrangement enables you to ring-fence your assets in favour of the beneficiary. These assets usually cannot be appropriated by other individuals/agencies in case of a dispute.
Gifts: You may gift parts of your estate to your beneficiaries even while you are alive. The only drawback to this is that you lose all rights over the gifted property.
Joint Holding: It is best to hold all your assets in joint names. Also, wherever possible, opt for the 'anyone or survivor' mode (i.e. in bank accounts, mutual fund units etc).

After Death :
A Will: It is the most common and often the most misunderstood mode of estate planning. Basically, a will is a statement of intention of the person drawing it (the testator) stating the manner in which assets be divided amongst various beneficiaries after his/her death. A Will drafted on a plain paper is valid so long as it is not prepared under duress/undue influence and is signed by two eligible witnesses. There is no compulsion to register it. The testator can also make periodic changes in the Will (known as a Codicil) as and when circumstances change.

Nomination:
Naming a nominee wherever possible is an effective way of ensuring smooth change in ownership. Legally, the role of a nominee is limited to receiving the property and handing it over to the executor of the estate. However, only in case of disputes is the right of the nominee to receive the proceeds, questioned. In any case, nominating someone is preferable to not nominating.

Life Insurance :
Though it is usually purchased either as an investment or tax saving product or as an income replacement tool, its importance as an estate planning tool should not be underestimated. The sum assured/fund value can be directed towards the nominees mentioned therein. However, as mentioned above, a nominee's right to the monies could be challenged in court. This could be avoided by assigning the policy. Assignees have absolute right over the proceeds.

Finally, it may be useful to be conversant about certain emerging options such as Living Trusts and Family Limited Partnerships (FLP) which are currently not very common in India but will certainly gain importance in the future.

A structured approach to estate planning is one of the best ways of ensuring that your descendants will always have sweet rather than bitter memories about you.