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Thursday, January 01, 2015

Understanding and Creating an Indian Will

Creating wealth is just one aspect of financial planning . On the other hand, death is a reality. Ignore this reality at the peril of strained relations among your family and relatives post you are gone.
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. So, here is all that you should know about your Will.

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. 
We spend all of our time planning real estate purchases and creating wealth through stocks and gold. Aren't these efforts partly aimed at leaving behind a rich legacy for our loved ones? You need to bequeath it to someone, preferably through a proper will.

What is a Will
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.

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.
On the other hand, a will ensures that:
  1. The wealth is transferred to people you choose
  2. The interests of the weak or of minors are provided for,
  3. Your wealth is distributed without family disputes
  4. Your wealth is transferred to trusted people who will respect what you have accomplished.
  5. Even if you intent to transfer all your wealth to your spouse, you would need a will. 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.
  6. 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.

What if you leave no will
  1. In the absence of a will, your property gets distributed equally among your heirs according to the succession laws. The law wouldn't know what property to be given to whom, and therefore the law of equal distribution. However, 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.
  2. Consolidating the assets is a big challenge 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, and has also not left any will, the task becomes difficult. The heirs will have to scour the heaves of papers to know the deceased's legacy.
  3. 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 easy for the survivors to know about all the investments of a deceased in the absence of a will. 

Key Terms / Roles in Will making
  1. Testator - The person making the will.
  2. Witnesses - Persons who are witness to the preparation of will.
  3. Testament - Will Statement
  4. Beneficiaries - People who benefit from the will
  5. Executor - A person who is entrusted with the responsibility of transferring the property as desired by the testator.
  6. Codicil - A supplementary statement to the will
  7. Probate - Court Order verifying the genuineness of the will. Needed by the beneficiary or the executor
  8. Nominee - A trustee of the will until it is executed. Does not become a beneficiary by default.

Types of WILL
1) 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.
2) 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.
3) 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 fulfillment 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.
4) 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.
5) 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.
6) 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.


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.
  1. A Hindu (which also includes Jains, Buddhists and Sikhs) man can write a will for any property earned and owned by him.
  2. Even obligations and liabilities can be passed on with the assets.
  3. However, a person cannot include those assets which are not legally transferable in his testament. 
  4. 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.
  5. 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.
  6. 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.
  7. In case of a leased property, only the rights for the remaining period of the lease can be passed on through a will.
  8. Both Indian as well as foreign assets can be passed on in a will.

Pre-conditions for Writing a Testament 
  1. There is no fixed format for a will. 
  2. You don't need a lawyer to draft it. Just write your will on plain paper or even a leaf from your journal.
  3. 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.
  4. The law does require the will to have been made when you are sane and free from any duress or undue influence.
  5. A minor cannot dispose of his property through a will.
  6. 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.

Registering a Will
  1. Though it is not mandatory to get your will registered, getting it registered is one way of ensuring safety of your will while making it easy to establish it as your genuine testament.
  2. 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.
  3. For getting a will registered, you will have to visit the registrar's office along with your witnesses.
  4. A will can also be registered by the executor or any beneficiary after the testator's demise.
  5. There is no stamp duty for registration of a will.
  6. 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.
  7. 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

Execution of Will
  1. First of all, it is not essential to appoint an executor, but where the property is huge and needs to be administered for a long period of time, it is better to appoint an executor. even for smaller properties, to be on the safe side, appointing an executor can only help you.
  2. You should appoint only a trusted person as the executor of your will after seeking his consent.
  3. 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.
  4. If there is no executor of a will, the court will appoint one.
  5. While 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. The beneficiaries or the executor need to get a court order, or probate, verifying the genuineness of the will
  6. A succession certificate is required when a person dies without writing a will.
  7. 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.
  8. Once an application for a probate is accepted, the court issues a notice in newspapers inviting objections to the inheritance claims.
  9. 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.
  10. Though, legally, you can also have one of the beneficiaries as the executor of your will, but selecting a beneficiary as your executor might lead to a conflict of interests because a beneficiary who is also an executor may be required to choose between awarding assets to him or herself or to another beneficiary. This situation is best avoided from the beginning by selecting an executor who is not a beneficiary.

Changing your Will
  1. 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.
  2. 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.
  3. If you need to make some major changes in your will, create a new one.
  4. 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.
  5. Make sure that the will clearly mentions the date of creation. The last will supersedes all earlier ones.

A Sample Will

I, _ _ _ _ _ _ _ , son/wife of _ _ _ _ _ _ _ ,resident of _ _ _ _ _ _ _ ,age _ _ years, am making this will on the _ _ day of _ _ _ _ _ _ _ out of my free volition and without any coercion or undue influence whatsoever and state that this is my last will and that I hereby revoke all Wills and codicil made by me at any time heretoforce, I bequeath my property , interests and other rights as follows:

1. I bequeath on my death to _ _ _ _ _ _ _ ,my title interests and all other rights which i have as owner of the residential / Commercial Property at _ _ _ _ _ _ _ , I hereby sate that he shall be
entitled to use and enjoy the said property at his own will after my death.
2. I bequeath on my death the following ornaments and jewellery belonging to me to _ _ _ _ _ _ _ :-(Give the list of the ornaments)
3. I bequeath on my death, cash balances lying with me at the time of the death to _ _ _ _ _ _ _ .
4. I bequeath on my death,bank balance lying in my name at Savings/Current Bank Account No._ _ _ _ Bank of _ _ _ _ _ _ _ ,_ _ _ _ _ _ _ Branch, _ _ _ _ _ _ _ at the time of my death to _ _ _ _ _ _ _ .
5. I bequeath the amounts receivable by me the time of my death from various parties on various accounts to _ _ _ _ _ _ _ .
6. I bequeath the amonts and other valuables owned by me and lying in locker number _ _ _ _ in my name at Bank _ _ _ _ , Branch at the time of my death to _ _ _ _ _ _ _ .
7. I direct that a sum of rupees _ _ _ _ Only (Rs. _ _ _ _ /-) be set apart from my assets at the time of my death and be donated to a charitable trust or persons whose aim and objective is to provide food, medical assistance, education assistance, etc to the needy persons.
8. I direct that before distributing my assets in accordance with this will , all my debts , liabilities and monetary obligations including all testamentary expenses, costs, charges,expenses in respect to probate and other legal charges at the time of my death be met out of my assets.
9. I bequeath all the other residuary property , assets and other rights whether or not existing at the time of my death to _ _ _ _ _ _ _ .

I further state that Mr, _ _ _ _ _ _ _ is appointed as the executor of the this will.

I declare that I am the owner of the properties mentioned in this will and an entitled to make this will. I am of sound mind and health at the time of making this will.

In witness whereof , I have hereunto set and subscribed my hand and signature on this _ _ day of _ _ _ _ _ _ _ .


Signed

Signed by Mr. _ _ _ _ _ _ _ on his last will and testament, all being present at the same time. Thereafter at his request and in his presence, We subscribed our respective names and signatures as attesting witnesses all being also present at the same time.

Signature of the Witnesses
1. I have witnessed and read the aforesaid will.

Sign

2. I have witnessed and read the aforesaid will.

Sign 

3. I have examined Mr. _ _ _ _ _ _ _ on the date of this will and wish to state that he appears to be in of sound mind and sound mental health at the time of making the above will.

Sign of doctor

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