Most Non-Resident Indians (NRIs) do not pay attention to Estate Planning. The perception in India is that the will is written by the “filthy rich” to transfer their assets to their posterity. We see this stereotype played out in countless Indian movies, in which the rich transfer their assets to heirs on their death bed. This is a myth! People never think that they are rich or that they are going to pass away in the next few years! This article is to educate NRIs living in the USA to plan their estate properly so that they will not have surprises when they are still alive or to the family when he/she is no more!
To level set, everyone living in the USA whether you are on H1B, Green Card or Citizen need Will and Trust.
Passing wealth from one spouse to the other is generally not an issue. The United States Estate and Gift Tax Law allows the passing of wealth to a surviving spouse without incurring gift or estate tax liabilities with the unlimited marital deduction provision. The wealth transfer to kids and grandkids is more involved.
If the estate planning is not done properly, there can be potential challenges in the distribution of assets, estate taxes, etc.
Why do we need a will?
Each state has a set of laws that determines who should get property if a deceased person does not have a will or other plan to for distributing property.
Not having a will when you die might not be a big deal if you made a plan to distribute your property with other estate planning tools, like a living trust. However, if you die without a plan for your property, your state will distribute your property according to state laws. And you may want to make a will for other reasons, as well – like naming an executor or naming guardians for children.
What Happens When You Don’t Leave a Will?
If you do not have a will and you aren’t around anymore, and without a will, you can’t weigh in on major decisions that you might like to have a say in, like whom your children’s guardian will be. The courts will decide that for you, and you may not like the outcome. The process may take a lot of time to decide who will be the rightful guardian for your kids, but until then, kids will be with foster care nominated by the probate court. The point is – someone else, and not you, will make that choice.
Key Points for NRIs:
- Whether you choose a will or a trust, you should seek the advice of professional advisors (tax, investment, and legal).
- Trusts offer more control of assets, but they are more expensive, can be tedious to set up, and must be actively managed.
- If you do not have an estate-transfer plan, the state in which you live and the federal government will have one for you. This means making such a plan a priority now can save money and precious time later.
Options in setting up Will & Trust for NRIs:
- Do-It-Yourself: If you have time and you know what to research, download the forms, fill the forms and submit.
- Minimal guidance: Use online tools, answer a few Q&A, the software will create a Will & Trust document for you. Follow the instructions, sign the forms, and submit.
- An attorney: You don’t know what you don’t know. Use an attorney, meet with them, answer their questions and get yours answered, sign the forms and submit.
Most NRIs have family members in full-time jobs. Most of the employers do offer legal benefits as part of the open-enrollment costing $6-$9 per paycheck. If you have this benefit option, you can engage your employer-suggested attorney to do Will & Trust for FREE or minimal cost. If you have a special needs kid in the family or a complicated family relationship (divorce etc), it is recommended to work with an attorney to get your Will & Trust done.
Will & Trust is only a part of your Estate Plan. Power Attorney, Advanced, Health Directive, HIPAA etc are also part of the estate planning. Attend our FREE webinar to learn more about this important concept.