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Areas Covered Under Estate Planning – Assets & Legal Rights

Note

Exam Relevance: Students should be able to list the categories of assets that form an estate, specifically the emerging category of "Digital Assets".

Introduction

When doing Estate Planning, you need to create an inventory. This inventory is the "Estate". It covers everything you have a right to.

1. Tangible Assets (Physical)

These are things you can touch. Use current market value for estimation.

  1. Real Estate: Residential house, commercial shop, agricultural land, plots.
  2. Personal Effects:
    • Jewelry (Gold/Diamond).
    • Vehicles (Cars/Bikes).
    • Art, Antiques, Expensive Watches.
    • Household goods (Electronics/Furniture - usually low value but sentimental).

2. Intangible Assets (Financial/Paper)

These hold value but are not physical objects.

  1. Bank Accounts: Savings, Current, FDs, RDs.
  2. Investments:
    • Shares (Demat Account).
    • Mutual Funds.
    • Bonds / Debentures.
    • PPF / EPF / NPS accumulations.
  3. Insurance: Life Insurance proceeds (Sum Assured).
    • Note: Insurance is a unique asset that "creates" cash exactly when estate planning is triggered (death).
  4. Business Interests: Partnership share, sole proprietorship ownership.

3. Digital Assets (The New Frontier)

In the 21st century, these are increasingly valuable.

  1. Cryptocurrency: Bitcoin, Ethereum (Private Keys are crucial).
  2. Online Accounts: Email (Gmail), Social Media (Facebook/Insta - sentimental value).
  3. Intellectual Property: Blogs, YouTube Channels (that earn revenue), Copyrights, Royalties.
    • Risk: If family doesn't have passwords, these are lost forever.

4. Liabilities (The Negative Estate)

Estate Planning is not just about giving; it's about settling dues.

  1. Debts: Home Loans, Car Loans, Personal Loans, Credit Card dues.
  2. Taxes: Any pending Income Tax.

Rule: The estate must pay off all debts first. Only the remaining (Net Estate) is distributed to heirs. Heirs are NOT personally liable for parents' debts unless they inherit the asset attached to it.

5. Nomination vs Will (Crucial Distinction)

Who owns the asset after death? The Nominee or the Legal Heir?

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Conclusion: Ideally, Nominee and Legal Heir should be the same person to avoid confusion.

Summary

  • Inventory: The first step is making a spreadsheet of ALL assets.
  • Digital: Don't forget passwords.
  • Net Estate: Assets minus Liabilities.
  • Nominee: Only a caretaker. Will is supreme.

Quiz Time! 🎯

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Next Chapter: Estate Planning Process (Legal & Financial)! ⚖️

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