The term 'estate' immediately brings to mind the image of a rich and wealthy individual.

And 'estate planning' makes most relate to preparing a will when they are old. However, everyone has an estate, regardless of its size and worth. It is nothing but the difference between your assets and liabilities at the time of your death, which will be inherited by your legal heir(s).

The purpose of estate planning is simply to ensure that at the time of your death, your estate is distributed to the people of your choice or for certain purposes (that you want) in the same way you want it to be passed on / distributed / used, of course in the most cost-effective and tax-efficient way possible. Many individuals shun the mere idea of estate planning since the value of their assets put together may not sum up to a sizeable amount (or to their satisfaction). In fact, estate planning involves very basic issues and having the right documents in place, and not necessarily something complex or pertaining only to the wealthy.

If you are one of such individuals who have been postponing planning your estate, you should keep in mind that if an estate plan is not in place, then the estate would be passed on in accordance with the succession laws and regulations, as applicable. Depending on your religion, these laws could vary and may lead to the estate being passed on to people, merely because of their relationship with you and much against your desire.

No doubt estate planning involves property matters, but it could also include decisions regarding donations to charitable institutions that you want to make, taking care of specially abled children /disabled relatives, your own medical costs in case of any disabilities, taxes, and so on. Making adequate provision for these is imperative and the same can be achieved with proper planning. This process is a continuous one and should be treated as an integral part of financial planning.

Here we will talk about a situation where sound estate planning helped an individual complete his responsibilities towards his family.

Akash Kumar and his family spent the last ten years living abroad due to his work commitments. The Kumar's came back to India two years ago. Given his experience, Kumar managed to bag a well paying job here with an accommodation from his employer. With age and increasing stress, Kumar decided to quit the job in no time and look out for an assignment that would be less strenuous.

Kumar's parents lived in one of the suburbs in Mumbai in their own apartment (registered in Kumar's father's name). While he was staying abroad, Kumar had bought a bigger flat adjacent to his parents' for the purpose of investment.

As Kumar quit his job, he had to vacate the employer-provided accommodation, as well. He preferred to have an accommodation in the outskirts of Mumbai to enjoy a bigger place and lesser crowd. While he did manage to locate one, the cost of the same was higher than Kumar had expected it to be. He had decent savings to his name, but he neither wanted to use all his savings for the new house nor did he not want to take a home loan as he was yet to find a job and hence repayment would have been an issue.

To his relief, Kumar's father offered to sell his own flat and help Kumar with the proceeds to fund the shortfall needed for the new house. The estimated sale proceeds from his father's house was equal to the gap in funding that Kumar faced.

Kumar accepted the offer and for the purpose of tax optimisation included his father as a co-owner in the new flat.

Meanwhile, his parents shifted to Kumar's flat in the same housing society, without any inconvenience. With all the affection they had for their son and vice versa, they had very little reason to worry about their future without a house of their own.

While all of this got over and everyone lived happily, Kumar was very worried. It stemmed from the fact that his father that sold off his own house and if something had to happen to Kumar, where would the parents go as the flat they occupied was Kumar's and after him, his family could decide against letting his parents live there. As for the new flat, his father was just a co-owner and there was nothing preventing Kumar's legal heir(s) to pay off his father's share in the flat and ask them to fend for himself. Although nothing was wrong within the family at that point in time, Kumar was still bothered. He wanted to ensure his parents are allowed to continue staying in his flat for their respective life times and at any cost.

Kumar decided to talk it out with his financial planner, just in case he was offered some help.

During his discussion with his planner, a mutually agreeable solution was derived. As a part of his estate plan, his planner advised Kumar to have a 'family arrangement' with his parents, granting them the right to stay in his flat till the time they would want to or till both / any one of them is alive. The arrangement being a legal document would be legally enforceable, if the need arises in future or in the absence of Kumar .This relieved him.

One should keep in mind that estate planning is all about taking care of the complications involved with the unfortunate event of one's death. It is all about anticipating the worst situations that could come up and taking steps to prevent it. In the above case, Kumar was not a wealthy individual, but anticipated a situation that could create complications when he dies. Everyone should have at least a basic estate plan and the basic legal documents like wills, power of attorney and so on ready.