Shri Varad Jain was born even before India could achieve independence from the Britishers. Coming from that era, he had seen the evolution of Indian freedom struggle and then his own struggles in setting up his businesses. His vision in all his efforts was simple, “The legacy must continue.” And it has indeed continued, as his great-grandson, Sudhanshu Jain reminisces sitting in his sprawling office.
Sudhanshu is Managing Director of Jain Chemicals Pvt. Ltd., a business he started without any financial support from his parents or siblings. How has the family legacy that was founded by Varad more than a 100 years ago, survived through generations? Sudhanshu sums it up in one line, “No one in my family told me that I should try to run my family business.”
Sudhanshu has been precise in his description, but there’s a huge lesson hidden in it. Probing further we found the following four steps that the family has followed to ensure a lasting legacy:
1. Estate Planning
People think they don’t need to do any kind of estate planning. However, a thorough estate planning expresses the decedent’s intentions to whom he or she wishes to pass money and property after his or her demise. This legacy was kept intact by the Jain family by forming Trusts. Perhaps the most powerful and straightforward way to use a trust was to ensure that the heirs had timely access to the family wealth.
Furthermore, the purpose of establishing Trust was to ultimately help realise a vision for the estate and, in turn, the family legacy. Additionally, Trusts helped reduce estate taxes and ensured that the retirement assets were distributed as the family planned.
2. Clear Succession Planning
Devising a Will was another important factor in succession planning for the Jain family. Doing so meant that heirs were provided for and the family distribution wishes were met. Thus, composing a Will helped to ensure that the family controlled how the estate was divided.
Moreover, family meetings were a huge part of the succession planning. The focus of such family meetings was “the big picture”. Thus, sending an outline before the meeting, resulted in better dialogue and, ultimately, a more effective succession planning.
3. Life Insurance Used Wisely
The Jain family always planned ahead–bought enough life insurance to cover the potential costs of settling the estate and ensured that the assets left to the survivors aren’t less than they intended.
And one of the most important advantages of including life insurance in estate planning was that it helped create an immediate estate. The future generations did not have to wait for a trust to settle or for probate to close.
Just like the Jain family, it is essential that you keep your family legacy intact through proper insurance coverage for your spouse and children. Even you can include term insurance plan for wealth protection and transfer. Additionally, you can buy term insurance online and provide financially for dependents or your spouse, preserve the value of your estate, and ensure money is available to pay for any fees, taxes, or outstanding debts upon your demise. Additionally, term insurance proceeds payable to your named beneficiary will pass to him/her free of income tax. Thus, a term insurance plan can be an effective step in the setting of long and successful family history.
4. Investing in Children’s Independence
Usually, families with big stakes in a certain business are too attached to let the children choose a path of their calling. But at times that could be exactly the thing to continue the family legacy.
Let the kids choose a path of their own, and plan for a future where they may choose something other than their family business. There is nothing wrong with that. Let your child explore a different field than what you intended for them. However, if they are willing to take your family legacy forward, help them. If they are supported and nurtured they will add another star to the legacy.
You need to focus on succession planning to continue your family legacy. However, inheritance can be a major responsibility. That’s why it should be appealing for you to have peace of mind from knowing that your loved ones are in a better position to be stewards of your family legacy. Make sure that you have charted a proper financial plan for them that can help them face any calamities in the years to come.