HANDING OVER YOUR WEALTH BATON & WRITTING A WILL-HERE ARE TIPS....
In the absence of a will, your property gets distributed equally among
your heirs according to the succession laws. The law wouldn't know that
you wanted to leave the prized vintage car, which you had refurbished
over the years after buying it from a scrap dealer, for your youngest
son who was always keen to help revive the old automobile. The law also
doesn't know that you wanted to leave your art collection for your
daughter who has interest in paintings.
Would you want your prized car and art collection to be sold and the
proceeds distributed among your heirs according to the succession laws
and not as per your wishes? Keep the Tap Flowing Getting the property of
a deceased transferred to legal heirs can be a longdrawn process.
When unforeseen events or hurdles delay the transfer of money and
property, the family members may have to face financial challenges if
the deceased was the primary breadwinner. What can you do to save your
family from such hardships? Most financial instruments, including bank
savings accounts, provident fund accounts and insurance policies, have
the option of having a nominee. Having your spouse or other family
member as the nominee will facilitate the transfer of the assets to your
family without the need for a succession certificate.
However, a nominee is not the owner of the asset but its caretaker. The
person takes the assets in his custody and then transfers it to the
legal heirs of the original owner. Another option for avoiding any
obstruction in the flow of money is to have co-owners for assets and
financial accounts. In case of a bank account, you can open an account
along with a family member which allows either of the survivors to
operate it. You can also make investments such as savings certificates
and mutual funds jointly with a trusted member. Don't forget to keep
your spouse or other family members updated about your assets and
liabilities. If you don't want to disclose it right away, keep a record
at a safe place and let your family know where to look for it in case of
any eventuality.
Creating wealth is just one aspect of financial planning . It is
complete only when you get to decide what happens to your accumulated
wealth after you are gone. It is important to have a wealth succession
plan in place. What is the best way to do it? The smoothest way is
leaving behind a will to ensure that the final allocation of your wealth
happens according to your wishes. Why a Will The concept of will is not
alien to us, but how many of us actually make the effort to write one?
Most of us don't bother based on the assumption that it is required only
for those who are rolling in wealth.
"Succession planning is important to ensure transfer of wealth in a
manner and at the time as per your decision. It ensures that wealth is
transferred to people you choose, that the interests of the weak or of
minors are provided for, that your wealth is distributed without family
disputes and that your wealth is transferred to trusted people who will
respect what you have accomplished," says Yogesh Kalwani, director and
head of investment advisory, BNP Paribas Wealth Management.
Succession planning can be done through wills, corporate entities and
trusts. A will is a testament that declares the intention of the person
with regard to his wealth and property which he wants to be executed
after his death. If one dies without making a will (called 'intestate'
in legal parlance), his wealth is inherited by the heirs according to
the inheritance laws. "If a person dies without a will, the law of
succession applies based on the religion of the deceased. Since laws of
marriage and succession are the most intricate among the religious laws,
inheritance issues in India are very complicated. In case of more than
one heir, distribution of assets can lead to family disputes," Kalwani
adds. If you want your spouse to get all your properties after your
death, you should still write a will mentioning this. "All the assets do
not automatically get transferred to the deceased's spouse.
The applicable succession laws (depending on ones religion) usually
provide for distribution of the assets among the natural heirs, which
includes other relatives in addition to the spouse of the deceased,"
says Kalwani. Whether it's a son drawing a huge amount as salary or a
daughter who is still pursuing her studies, both of them get a fixed
portion of your wealth when the laws of succession come into play. A
will offers you the option to give more to your daughter if she needs
support. Even if you plan to distribute your wealth equally among all
your heirs, you should write a will to that effect to avoid disputes
among your family members and make the transition of wealth easier. A
will does not only distribute wealth; it can also offer
responsibilities.
Who will take care of your children in absence of you and your spouse?
Should they be raised by your brother who is in a financial mess or you
want your elder sister to take care of them? One can write a will
appointing a trusted person as the guardian of their children when
neither of the parents survives. One can also write a will for creating
trusts. Inventory of Assets Consolidating the assets is the most
important and difficult situation faced by the heirs after the death of
an individual. If the person had been investing and buying properties
without telling anything about the purchases to his heirs, the task
becomes difficult. The heirs will have to scour the heaves of papers to
know the deceased's legacy.
Tips on Making a Will Click here to Enlarge Today, when the online
investment platform is becoming more popular and all our bills and
receipts are delivered in our email account, it might not be possible
for the survivors to know about all the investments of a deceased. As
several banks are moving away from passbook-based savings accounts to
Internet updates, some accounts may remain undiscovered. Indian banks
have around Rs 1,350 crore in more than 1 lakh dormant accounts, of
which 75% are savings accounts, the Reserve Bank of India has said in
March 2011. The family may have to face a financial turmoil in the
absence of a will recording the assets and liabilities, especially if
the deceased was the sole breadwinner.
A will clears the air on financial implications of losing a family
member and helps the survivors prepare better for the challenges ahead.
Preparing a will also benefits the person (testator) who is writing it
as he is forced to list all his investments and assets in black and
white. The exercise helps him have a better understanding of his
finances. What Can Be Willed? The succession of property is governed by
complex laws of inheritance and religion as well as customs. The laws
also differ for men and women. A Hindu (which also includes Jains,
Buddhists and Sikhs) man can write a will for any property earned and
owned by him.
Types of WILL
UNPRIVILEGED WILL A will written by any individual other than a
soldier, a sailor or an airman engaged in a war or on an expedition, is
an unprivileged will.
These wills need to be signed by the testator (the person making the
will) in the presence of at least two witnesses who also sign the will.
These wills can be revoked by writing a new will or destroying the old
one.
PRIVILEGED WILL If a soldier, sailor or airman is in the battlefield or
engaged in an expedition, he may make a privileged will. If the person
writes the entire will with his own hands, it does not need to be signed
by any witness. These wills can also be written by another person. Such
wills can be revoked by an unprivileged will.
CONDITIONAL WILL An individual can attach certain conditions to his
will. For example, one can write a will which will come into force if
the person dies during a particular period. One can also leave a
property for a person subject to fulfilment of certain condition such as
marriage and attaining certain age. However, if one writes a will with
illegal or immoral condition, it is not considered a valid one.
JOINT WILL A joint will is written by two or more persons together who
dispose of their property as a team. Such wills come into effect after
the death of all the testators. Any of the testators can revoke the will
during his lifetime even after the death of the other.
MUTUAL WILL Two individuals can write a mutual will giving their wealth
to the other in case of their death. For example, a couple can write a
mutual will which makes the survivor the sole owner of their wealth.
CONCURRENT WILL Ideally, one person should leave only one will. For the
sake of convenience, individuals who have properties in more than one
country execute separate wills for properties in different nations.
SHAM WILL If a person writes a will and completes all the formalities
only for some hidden objective, it is considered void. However, one
needs to prove the intent. "It can be any property such as flats,
jewellery, land, cars and cash; actually, any right of a valuable
nature. Even obligations and liabilities can be passed on with the
assets," says Girish Vanvari, executive director, KPMG India. However, a
person cannot include those assets which are not legally transferable
in his testament. "For an inherited property, a Hindu man can only
distribute his share in the property through a will," says Saurabh
Tiwari, a Delhi-based lawyer. Let's assume that a person has Rs 1 lakh
in cash earned by him and Rs 5 lakh inherited from his father. He is
free to give only the Rs 1 lakh at his will. If he has four legal heirs,
the Rs 5 lakh will have five claimants (one being the person himself).
So his share in the inherited money is only Rs 1 lakh. He can give his
share in the inherited asset to anyone he wants. In contrast, a Hindu
woman has absolute ownership of all earned as well as inherited
property. She can write a will for her entire property.
The Muslim law allows an individual with heirs to distribute only
one-third of his wealth through a will. The rest two-thirds of the
wealth is inherited according to the religious laws. The limitation does
not apply if the heirs give their consent. In case of a leased
property, only the rights for the remaining period of the lease can be
passed on through a will. Writing a Testament An assumption that you
need to write a will only if you are sick or old is as correct as the
assumption that people die only of old age. You should create a will
early in your life. As a simple rule, if you need insurance, you also
need a will as it will help you allocate wealth to specific people and
for certain purposes.
"There is no right or wrong age to write a will. As soon as an
individual believes that he/she has specific thoughts on how the estate
is to be dealt with which is different from prevailing succession laws,
they should consider a will," says Adrish Ghosh, head of wealth advisory
India, Barclays Wealth. There is no fixed format for a will. You don't
even need a lawyer to draft it. Just write your will on plain paper or
even a leaf from your journal. However, it will be considered valid only
when it has your signature or thumb impression and has signatures of
two witnesses certifying that it is your will. The law does require the
will to have been made when you are sane and free from any duress or
undue influence. Of course, a minor cannot dispose of his property
through a will.
"The first step of succession planning would be to start building a
thought process around it. The decision on ways to implement your
desires through use of wills, trusts, etc., will depend on various
factors, including complexity of family situation, businesses and the
stakes involved (in terms of value). It is best to get professional
expertise when it comes to implementation of any succession plan as they
would guide on the most suitable solution for each individual's needs,"
says Ghosh. "Apart from the testator and beneficiaries, a will should
also have an executor who is entrusted with the responsibility of
transferring the property as desired by the testator," says KPMG's
Vanvari. You should appoint only a trusted person as the executor of
your will after seeking his consent. If you do not seek his permission
in advance, there might be no executor for your will if the person
refuses to accept the responsibility after your demise. If there is no
executor of a will, the court will appoint one.
After making your will, should you disclose it to others? "Disclosure
or non-disclosure (of will and its content) is a personal issue. In many
cases, the will is revealed only after death. In some cases, the
beneficiaries know during the life of the testator as to what they will
get. This certainly enables a smooth transition," says Vanvari. Safety
Net Just writing a will is not enough; you need to make appropriate
arrangements for its safekeeping and execution. Getting your will
registered is one way of ensuring safety of your will while making it
easy to establish it as your genuine testament. A registered will is
kept in safe custody of the registrar and cannot ordinarily be tampered
with, destroyed, lost or stolen. For better safety of your will, you can
also keep a copy of your will with the main beneficiary or the
executor. For getting a will registered, you will have to visit the
registrar's office along with your witnesses.
A will can also be registered by the executor or any beneficiary after
the testator's demise. There is no stamp duty for registration of a
will. Getting your will registered is one way of ensuring its safety. It
will also make it easy to prove that the will is genuine. "Registration
of will is not compulsory. However, a registered will is difficult to
be challenged for its authenticity. If the will is excluding some heirs
from the inheritance then the reasons for such exclusion may be
explained to avoid a speculative challenge," says Kaviraj Singh,
managing partner, Trustman and Co., a Delhi-based law firm. However,
getting a will registered means that changing or cancelling it will
require a time-consuming process. Any subsequent testament will also
have to be registered. As the law mandates that only a mentally sound
person can write a will, you can attach a certificate from a doctor
saying that you were in good health and sound mind while making the
will. You can get the doctor to sign your will as a witness.
"Though anyone, including a beneficiary, can be witness to your will,
it is advisable to get some trusted person having no interest in the
will sign it," says Tiwari. If you fear that someone can challenge the
genuineness of your testament, you should also affix your thumb
impression on the last page. Scope for Revisions If you make a will, it
is only expected that you might want to change it with changing dynamics
of your family and your relationship with the beneficiaries or when you
acquire new assets or dispose of some old ones. Minor changes in the
will can be made through a supplementary statement, known as a codicil
in legalese. It is executed in the same way as a will. If you need to
make some major changes in your will, create a new one. If you haven't
got your will registered, destroying the old one and writing a fresh
will is all that you need to do to revise it. Make sure that the will
clearly mentions the date of creation. The last will supersedes all
earlier ones.
Succession Route Making a will is a simple process which doesn't
require any help from lawyers or visits to any government office or
court, but the same is not true for the beneficiaries. "When a person
leaves behind a will, the beneficiaries or the executor need to get a
court order, or probate, verifying the genuineness of the will," says
Tiwari. In contrast, a succession certificate is required when a person
dies without writing a will. There is no fixed format for a will. Write
your will in your style on any piece of paper. A fixed percentage of the
total value of the assets is charged as court fee for obtaining a
probate, which differs from state to state.
Once an application for a probate is accepted, the court issues a
notice in newspapers inviting objections to the inheritance claims. Once
the application is disposed of, the court issues a probate. However, a
probate is not required for immovable properties of Hindus, except when
it is located in West Bengal, Mumbai and Chennai. What if a person
inherits properties in other countries? "Both Indian as well as foreign
assets can be passed on in a will. Inheritance of overseas assets is
specifically permitted under the Foreign Exchange Management Act.
However, you need to check the foreign exchange regulations in the
overseas jurisdiction to confirm whether any specific approvals are
required for the transfer. Most countries have no such restrictions,"
says Vanvari. "In the last few years, there have been a lot more cases
of families facing disputes over transfer of wealth.
This is making people aware about issues that the heirs may face if
there is no succession planning. An increasing number of our clients ask
for succession planning, but this segment is still small," says Kalwani
of BNP Paribas. So if you belong to the majority who haven't planned
their succession yet, it's time to collect your thoughts and write your
will. Make sure that your assets and wealth are put to best use even
after you are gone. Stop procrastinating and jot down your legacy on a
piece of paper. When You Fail to Make aWill... A will is like the last
wishes of a man. It supersedes inheritance laws, but only for the
property which is solely owned by the deceased. The rest of the assets
are disposed of in accordance with the applicable succession laws.
A Hindu man does not hold absolute ownership of the inherited property,
but jointly owns it with his legal heirs. A Muslim individual can write
a will only for one-third of his total assets. If a person dies without
writing a will, the assets and responsibilities of the deceased are
divided among his heirs in accordance with the Hindu Succession Act,
which is based on the proximity of relationship. "This Act applies to
all Hindus, Buddhists, Jains, Sikhs and any other person who is not a
Muslim Christian, Parsi or Jew," says Girish Vanvari, executive
director, KPMG India. The property of a Hindu male dying without a will
is given to nearest heirs who are categorised as Class I heirs in the
Hindu Succession Act. These include sons, daughters, widow and mother,
among others. If there is no nearest heir, the property is given to
heirs in the next line, which includes father, grandfather, grandmother,
uncles and aunts, among others. For example, if a man is survived by
his wife and parents, his mother and spouse will share his property
equally.
The father does not have any right in this situation. If the man has a
son and a daughter as well, the property gets divided into four equal
parts. "The widow succeeds to the property in equal share along with the
sons and daughters of her deceased husband. If she remarries, she does
not succeed to the estate of her former husband," says Kaviraj Singh,
managing partner, Trustman and Co., a Delhi-based law firm. "Children
born out of wedlock do not succeed to the estate of the deceased.
Live-in partners also do not have a right to succeed to the estate of
the partner," Singh adds. Unlike Hindu men who have only partial rights
to inherited properties, women have complete ownership of all
properties. They can dispose of all of their property through a will.
"Property of a Hindu woman dying without a will is succeeded by her
children, children of her pre-deceased children," says Singh. In case of
Muslims, the succession is governed by religious inheritance laws,
which are different for different sects. The shares of the heirs can
vary in different circumstances. "Under Islamic laws of inheritance
under, a son normally gets twice the share of a daughter," says Vanvari.
Courtesy:http://businesstoday.intoday.in/story/inheritance-plan-beforehand-for-smoother-transfer-of-property-will/1/14994.html
