Estate Planning Checklist For 2025: What You Should Do In The New Financial Year?

For anyone who hasn't begun the estate planning process, the first step should be asset inventory and consolidation. Depending on the family's goals, asset holdings, jurisdictions, and dynamics, a variety of estate planning methods may be taken into consideration and employed. The most important estate planning chores that people and families should focus on in FY 2025-2026 range from creating a will to establishing directives. According to an interview with Saurabh Bansal, Founder of Finatwork Investment Advisor, a SEBI RIA (Registered Investment Advisor), Certified Trust and Estate Planner (CTEP), here are the main estate planning tasks that people and families should focus on in FY 2025-2026 since a well-planned estate can help prevent family disputes and contentions over asset distribution.

Key estate planning tasks individuals and families should prioritize in FY 2025-26

1) Make an inventory of your Estate and ensure your family is aware of what you own and owe:

- Assets: Make a list of all your assets, including financial (bank accounts, mutual funds, life insurance, provident fund etc) and physical assets (properties, gold, vehicles etc). List out everything, including also include business ownership.

- Liabilities: Create a comprehensive list of debt obligations, including home loan, auto loans, personal loans, credit cards, etc

2) Make sure nominees are updated in all your assets:

- Nominee update: Review all your MF folios, bank accounts, broking account, retirement accounts (EPF/NPFs), life insurance policies, and annuities to ensure designated beneficiaries are up-to-date.

3) Review your Life Insurance: Ensure your life insurance is adequate for your family's needs, especially if you have minor children or significant debts.

4) Write a Will if you have not done so already. It's important that you have thought through how you want your assets to be distributed after your passing, ensuring your loved ones are taken care of.

5) Designate Guardian: In case you have young children, think about who would you like to be their guardian, also consider naming a backup guardian.

Common mistakes to avoid when creating or updating a will or trust

Wills:

1. Not having a will: Dying without a will can lead to succession laws governing asset distribution, which can be time-consuming and cause heartburn
2. Not signing or witnessing properly: Improper execution can render a will invalid.
3. Outdated wills: Failing to update a will can result in outdated or irrelevant provisions.

Trusts:

1. Not funding the trust: Failing to transfer assets to the trust can render it ineffective.
2. Poorly drafted trust documents: Unclear or ambiguous language can lead to disputes and challenges.
3. Not considering tax implications: Failing to consider tax implications can lead to unnecessary tax burdens.

Common Mistakes:

1. Not seeking professional advice: Failing to consult with an experienced estate planning professional can lead to mistakes and unintended consequences.
2. Not considering family dynamics: Failing to consider family dynamics and relationships can lead to disputes and challenges.
3. Not considering special circumstances: Failing to consider special circumstances, such as disabilities or special needs, can lead to unintended consequences.

Tips for planning around digital assets, tax liabilities, and nominee designations

Digital Assets:

1. Inventory of digital assets: Make a list of digital assets, including passwords, login information, and storage locations.
2. Use a password manager: Consider using a password manager to securely store and share passwords.
3. Plan for digital legacy: Decide what should happen to digital assets after death, such as deletion, archiving, or transfer.

Why estate planning is essential even for middle-income households

A well-planned estate can help avoid family conflicts and disputes over asset distribution.

Protecting Loved Ones:

1. Ensuring asset distribution: Estate planning allows you to specify how your assets should be distributed after your passing, ensuring your loved ones are taken care of.
2. Avoid Succession Laws: A well-planned estate can help avoid succession laws from coming into play, which cause delays, stress, and additional costs for your loved ones.
3. Providing for minor children: Estate planning allows you to designate guardians for minor children and ensure their financial well-being.