Disintegration of the common family system, emergence of the nuclear family
Over the past quarter of a century, the social fabric of our country has radically changed. There has been a gradual disintegration of the common family system and the emergence of a “nuclear family”. Reflecting the rise of nuclear families in urban India, these households are small: 88% have three to four members with no elderly and only 11% have more than two children. It is mainly about building more financial stability, making children less dependent and inclining them towards personal and academic development.
In the past, most families lived in a mixed family system. As there were many family members living together, the responsibilities were shared. There was a common life, shared responsibilities and utilities and also a coexistence, which played a key role in development. There used to be a “Karta” who was the head of the family and was responsible for taking care of the family. All active family members contributed to the pool. The assets were mainly ancestral in nature in the common pool held, the “Karta” having the power to decide. With the changing times, families began to disintegrate and became more nuclear in nature.
Main reasons why nuclear families should plan their succession:
Over the years, various sociologists have asserted in their studies that the rise of nuclear families – made up of a couple and their unmarried children is compatible with rapid urbanization. With the emergence of nuclear families, much has changed in the way these families function. From now on, an individual must fend for himself and ensure the future of the nuclear family. The members of a family are reduced to three or four people. However, with the explosion of the nuclear family, more and more individuals become owners of huge assets, both liquid and illiquid, at a very early stage. These families began to face different types of risks. Family safety planning, children’s education and housing, old age and retirement plans, and medical emergencies have become priorities and are some of the main reasons nuclear families should plan for their estates.
This is where wealth management strategies for estate planning come into play and are an integral part of asset allocation.
But often people the importance of this. One example is the recent tragedy where a senior Bajaj human resources official and his wife died in a car accident, leaving two minor children without proper succession.
Sudden death, disability, separation or legal problems are not predictable. Estate planning for nuclear families will not only provide the necessary impetus for estate planning, but will also emphasize engaging the right kind of expertise for the desired estate.
I recommend creating a will (that is, if it is not already in place). However, if your children are minors and / or your parents are dependent, creating a family trust makes more sense. You should also have a power of attorney executed, which would be useful in the event of incapacity. A power of attorney will also allow you to decide on the right person to be the financial guardian of your estate. By creating a trust or will, you can ensure that your children’s future is secure and that they won’t have to fend for basic needs like education and housing on their own.
There is merit in both systems. Even today there are few families who remain happy in the common family system and then there are nuclear families who remain unhappy together and vice versa. However, estate planning is necessary and important for both.
– Sandeep Nerlekar, CEO and Managing Director – Terentia Consultants