Social media is full of influencers trying to teach us about financial planning. Our friends revel in imparting unsolicited tips on investing. Your elders may share anecdotes filled with horrors of money-mismanagement. Financial literacy and planning are gaining momentum faster than anyone would have expected due to the knowledge and ease that technology has gifted us with.
They will tell you to set up a budget, save for retirement, diversify your portfolio, invest in income-earning vehicles, plan for future expenses, purchase life insurance, save for a house, manage your risk, balance liquidity, understand about tax implications. These are the only financial matters you need to take care of. Maybe not!
Estate Planning: The Missing Link in Youth Financial Literacy
Financial planning and personal finance are not just about the above. The final step of wealth management is Estate Planning, which means a plan for transfer of your wealth during and after your lifetime. The investment advisors and wealth managers study estate planning as part of their curriculum, because any financial advice is incomplete without it.
Colleges will not even teach personal finance. They take upon themselves the responsibility of educating only to be enough to earn money.
We see many people having no idea about the basic laws of inheritance. They do not know of the processes involved in the transfer of properties and assets. This leaves them clueless and even more stressed when they are with demise of a loved one. Education in estate planning at college level will equip people to deal with such unavoidable realities of life with confidence. It will help them with the basic knowledge of laws, regulations and processes to plan adequately for the transfer of their own future wealth.
Estate planning and personal finance education at college level will preserve and enhance family wealth through generations. This early learning will propel younger generations to be part of fruitful family discussions around inheritance.
Regrettably, conversations about estate planning are often considered taboo or procrastinated on until it's too late. Not many families are comfortable with discussions involving wills, nominations, or the distribution of assets, resulting in disputes and legal complications that could have been avoided. More often than not, this is due to a lack of knowledge about where to start, what documents are needed, or what, in fact, "estate" actually means.
Also Read: The First Salary Trap: How India's Young Earners Can Avoid Lifestyle Inflation
Building a Culture of Financial Continuity and Preparedness
If there were estate planning taught in colleges as part of their education in financial literacy, though young adults could clear the fog of uncertainty and possible paralyzing anxiety around coming into inherited assets, they would understand, too, the importance of planning for themselves, regardless of the amount of wealth - no matter how meagre. Estate planning is not for the super-rich or the elderly; rather, estate planning is for anyone who has something of value, whether that be actual money in a bank, an investment, digital assets, or even intellectual property.Additionally, the legal frameworks that inform estate planning, can differ across religions, geographies and family forms in India. Therefore, a brief overview of the succession legal frameworks such as the Hindu Succession Act and the Indian Succession Act and the difference between testamentary succession and intestate succession, would allow students to confidently navigate this complexity when they inevitably face these situations. Additionally, students would then understand the type of professional help they require when the time arises and not just go by hearsay or wait for a crisis to force them into action.
Understanding the need for estate planning on an individual family level is only the beginning of the advantages of early estate planning education. As citizens who are increasingly financially informed, the economy benefits and so do the institutions supporting wealth distribution and inheritance, by having fewer avoidable disputes over inheritance and easier intergenerational wealth transfer. In other words, estate planning will support our collective financial literacy agenda, build a culture of preparedness, accountability, and respect for their legacy.
Similarly to educating students about financial independence, we should also educate them on financial continuity — planning, not just for themselves, but for their loved ones to come after them . By normalising estate planning as part of the larger financial literacy discussion, we are contributing to destigmatising discussions about death and inheritance by diminishing the fear.
We need to stop thinking of estate planning as an outcome or a later part of the process and view it step into the complete financial architecture we create for young people. Because true financial literacy does not end with the growth of wealth, it ends with the preservation of it!
About the Author
Pranjali heads the Estate Planning vertical at Agnam Advisors. She comes with a deep industry experience of advising and helping high net worth individuals with their Estate Planning requirements related to inheritance, succession, Wills and Family Trusts. She oversees the Compliance function at Agnam, ensuring Agnam’s compliance with SEBI RIA regulations. Pranjali has worked with organizations like IIFL Trustees & Investment Advisors, Spark Family Office & Investment Advisors and Anand Rathi Wealth Management. Pranjali has earned her LL.M. degree in Business Law from Symbiosis Law School, Pune.