Page 235 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning

Notes By implementing a gifting program, an estate owner can dramatically reduce the size of
the taxable estate.

A trust is used in estate planning to manage or dispose of property, either during the
grantor’s lifetime or after death. A trust can hold virtually any kind of property...real or
personal...tangible or intangible, and can be as flexible as it needs to be to meet the estate
owner’s objectives.
Power of Attorney’ is defined under Indian law as a legal document in which the appointer
of the document authorizes someone else to act on his behalf.
A will or testament is a legal declaration by which a person, the testator, names one or
more persons to manage his/her estate and provides for the transfer of his/her property
at death.

12.9 Keywords

Gift: The distribution of assets during one’s lifetime by a simple transfer.

Hindu Undivided Family: Hindu Undivided Family is a legal entity created and registered
under the Hindu Act, which includes assets inherited from ancestors and the resulting income.
All members have a collective right to this.

Insurance: It allows a person to leave a legacy by passing on his investment along with death
benefits to the beneficiaries when he passes away.
Power of Attorney: It allows an individual to appoint a person to manage the assets on his
behalf and take financial decisions if he is unable to do so.
Private Trust: Private Trust is a legal entity, which holds the title to the estate and is managed by
a trustee. A trust can be created and administered while the settler is still alive.
Will: It is a legal document, which allows the testator to distribute his estate in a specified
manner after his death.
12.10 Review Questions

1. What is Estate Planning?
2. What are the objectives of estate planning?
3. Explain the steps in the estate planning process.
4. List the various types of tools of estate planning.

5. What are the various tools used for estate planning during the lifetime of an individual?
6. What is the difference between a trust and a will?
7. What do you mean by Power of Attorney? What are the various types of Power of Attorney
documents?
8. Enumerate the tools used for estate planning after the death of an individual.
9. Discuss the risks and drawbacks involved in estate planning.

10. Elucidate the requirements for a valid Will.
11. Explain the procedure of execution and attestation of a Will.
12. What do you mean by revocation and alteration of a will? How are they done?

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