NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Estate Planning

Estate Planning Process and Role of the Investment Adviser

Updated 11 October 2026 · Fact-checked

The estate planning process is a sequence of steps: set objectives, gather client and family information, identify assets and liabilities, analyse gaps, draft a plan using tools like a will, trust or nomination, implement it, and review it regularly. The adviser coordinates the process and refers legal drafting to a lawyer.

Understand Estate Planning Process and Role of Adviser

Estate planning is arranging how a person's wealth will be managed during life, in case of incapacity, and passed on after death. It is not only for the rich. Anyone with assets, dependants or wishes about who gets what needs a plan.

The estate is everything the person owns, less what they owe. It includes bank balances, investments, property, gold, insurance, retirement benefits and business interests. Liabilities such as loans and credit card dues reduce the estate and must be counted.

The process follows a logical order. First you understand the client's goals and family. Then you list assets and liabilities and note how each is held (sole name, joint, with nominee). Next you compare what happens today if the client dies with what the client wants. The gaps drive the recommendations. Then the plan is drafted, put into action, and reviewed.

The adviser's role is that of a coordinator and facilitator. You gather facts, explain options, point out gaps, and work with the lawyer, chartered accountant and trustee. You do not draft the will or trust deed yourself or give legal opinions beyond your competence. You also keep client information confidential and act in the client's interest.

A plan is never finished. Births, marriages, deaths, new assets, tax or law changes and a change in wishes all call for review.

Key formulas to remember

Net estate: Net estate = Total value of assets − Total liabilities; Use this to size the estate and to check whether liquidity is enough to pay debts and expenses.
Order of the process: Objectives → Information → Assets and liabilities → Gap analysis → Draft plan → Implement → Review; Exam options often jumble this order. Drafting always comes after gap analysis; review comes last and repeats.
Adviser's role: Adviser = coordinator, not lawyer; Legal drafting of wills, trust deeds and similar documents is done by a legal professional.

How to solve Estate Planning Process and Role of Adviser questions

Use this method for any question on the process or the adviser's role.

1Identify what the question asks: the sequence, a specific step, or the adviser's responsibility.
2If it is about sequence, place the step on the line: objectives, information, assets and liabilities, gap analysis, drafting, implementation, review.
3Ask which stage the scenario shows. Collecting documents is information gathering; comparing current position to wishes is gap analysis.
4For role questions, decide whether the task is coordinating, advising and explaining (adviser) or legal drafting and registration (lawyer).
5Eliminate options that say the plan is one-time, that the adviser acts without client consent, or that liabilities can be ignored.
6Pick the option that is client-centred, complete and consistent with confidentiality and suitability.

Quickest way: Stage-matching shortcut

When to use it: Use it when a question describes an activity and asks which step it belongs to, or who should do it.

Underline the verb in the question: collect, list, compare, draft, execute, revisit.
Match it: collect = information, list = assets and liabilities, compare = gap analysis, draft = plan, execute = implementation, revisit = review.
If the verb is legal drafting or registration, the answer involves a lawyer.
Choose the option that keeps the client's goals first.

Common mistakes in Estate Planning Process and Role of Adviser

Putting drafting before gap analysis.
Students think the plan is just the will.
Fix: Remember that you first find gaps between the current position and the client's wishes, then draft the solution.
Ignoring liabilities when sizing the estate.
Focus on assets alone feels natural.
Fix: Always use net estate. Loans reduce what heirs get and create a liquidity need.
Saying the adviser drafts the will or trust deed.
Students confuse advice with legal work.
Fix: The adviser coordinates and explains. A lawyer drafts and advises on legal validity.
Treating the plan as a one-time exercise.
Students stop at implementation.
Fix: Review after life events and changes in law or assets. Review is a continuing stage.
Skipping how assets are held.
Only the list of assets seems important.
Fix: Record ownership, joint holders and nominees. These decide how each asset passes.

Worked examples

Example 1

An adviser has met the client, recorded family details and goals, and listed all assets and loans. What is the next step in the estate planning process?

Show the solution

The stages done so far are objectives, information and assets and liabilities.
The next logical stage is to compare the current position with the client's wishes.
This comparison is gap analysis, which comes before drafting.

Answer: Gap analysis, by comparing what would happen to the assets now with what the client wants.

Example 2

A client has assets of ₹2,40,00,000 and loans of ₹35,00,000. She wants a will. Which is the adviser's proper role: (a) draft the will personally, (b) explain options, flag gaps and refer her to a lawyer for drafting, (c) skip liabilities, (d) finalise it without her approval?

Show the solution

Net estate = ₹2,40,00,000 − ₹35,00,000 = ₹2,05,00,000.
Liabilities must be included, so (c) is wrong.
Acting without client approval breaches client-first conduct, so (d) is wrong.
Legal drafting belongs to a lawyer, so (a) is wrong.
The adviser coordinates, explains and refers, so (b) fits.

Answer: Option (b). Net estate is ₹2,05,00,000, and the adviser coordinates while a lawyer drafts the will.

Exam tips

Learn the order of stages cold. Sequence questions are common and options are shuffled.
For role questions, the safe answer is coordinator and facilitator, with legal drafting referred to a lawyer.
Watch for options that ignore liabilities, confidentiality or client consent. They are usually wrong.
On a 2-mark case question a wrong answer costs more, so match the scenario to a stage before you answer.

Practice questions from Basics of Estate Planning

Estate Planning Process and Role of Adviser in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Estate Planning Process and Role of Adviser: frequently asked questions

What are the steps in the estate planning process?

Set objectives, gather client and family information, identify assets and liabilities, analyse gaps, draft the plan, implement it and review it regularly. The order matters in exam questions.

What is the role of an investment adviser in estate planning?

The adviser gathers information, explains options, spots gaps and coordinates with the lawyer, tax professional and trustee. The adviser does not do legal drafting and keeps client data confidential.

Why must liabilities be included in estate planning?

Liabilities reduce the net estate and create a need for cash to settle them. Ignoring them can leave heirs with less than expected or force the sale of assets.

How often should an estate plan be reviewed?

Review it periodically and whenever a major event occurs, such as marriage, birth, death, a new asset or a change in law. A plan that is not updated may no longer match the client's wishes.