CA TUSHAR DOCTOR
Estate planning helps to decide about one’s heirs and also fix important details like when, how and in what proportion they are to receive inheritance. Making a will is the easiest and most common way of bequeathing your property. There are also other options like making a trust, gifting assets during one’s life time, family settlement, nomination, power of attorney.
Make your will on a piece of paper. A will states how you wish to distribute your assets. You should get two witnesses to attest the will. One can even destroy the existing will and make a new one or attach a codicil to the current will. A codicil is an addition or supplement that explains, modifies or revokes a will. Though you don’t need to register a will, it’s preferable to do so to avoid legal hassles in the future. When you register a will, the original is returned to you, while a copy is kept in the court. This is beneficial because if your copy gets damaged or stolen, there is a back-up. There is no stamp duty for registering a will, though minor costs, such as court fee or the cost of the stamp paper, will have to be borne. A probate is a copy of the will that has been certified by a court. A will can be used only to distribute your assets, not to dictate how your successors are to use the property bequeathed to them. A will is more likely to be challenged in court than other instruments as a person who is left out of the will may object to it in court.
If you want to give away assets during your lifetime then you may make a trust. A trust is made for another person, usually a child, elderly person or a mentally challenged relative. Here, your assets are to be utilized for the benefit of the other person, but you retain control over how they are to be used. Other trustees can be appointed so that on your death, the functioning of the trust can be carried on smoothly. A trust cannot be challenged after you die as it would become operational during your lifetime and thus there is hassle-free transfer of your property.
While you can keep changing your will several times, you cannot pull out an asset once you hand it over to a trust, unless it is a revocable one. So, you need to ensure that you put only those assets in the trust that you won’t require during your lifetime. Making a trust is more costly than writing a will as it is a complex and requires professional help. Also a trustee (if not reliable) may cheat a beneficiary.
Alternatively, you may just gift property to your family members during your life time. Just make a simple gift deed stating the transfer of the asset. In case of an immovable property, you need to get the gift deed registered, stamped and attested by two witnesses, according to the Indian Registration Act. Stamp duty will apply if a gift deed is made. A gift deed too is not likely to be challenged as it has been made during the lifetime of the donor.
Many families own properties jointly. Where there is no clarity as to which property belongs to whom, for them, a family settlement is useful. The family and lawyer mutually work out how the property should be divided. HUFs mainly use this method to partition the coparcenary property. As the settlement is done mutually the chances of legal battles are less.
You can give a power of attorney (PoA) to a family member so that he can carry out transactions on your behalf. This can be revocable or irrevocable, but it’s valid only during your lifetime. Note a will prevails over a PoA.
Most financial institutions ask you to appoint a nominee for your assets, whether it is a bank account or shares. In case of shares and debentures, the nominee is entitled to these even if you have named another person in your will. If there is no will the law of succession takes over. As per Indian Succession Act, the property will be divided equally among the following heirs son, daughter, widow, mother, children of any pre-deceased son/daughter, widow of pre-deceased son, children of pre-deceased child of a pre-deceased son/daughter.
The transfer of your assets may be smooth or mired in legal disputes. Make proper estate planning so as to avoid legal hassles subsequently.
