Maybe it is the excitement of fatter pay cheques. Maybe Indians are too busy building assets and feeding their new-found ambitions. Maybe it is the myopic perspective of financial planners busy selling mutual funds and insurance policies that is to blame.

But the obvious just doesn’t seem to be registering—the fact that all wealth creation and management is incomplete.

Incomplete without providing for its use and distribution in the event of the owner’s death — incomplete without a will. Not to say that the concept of wills is alien to us. Certainly not as unknown as wealth creation and financial planning were till very recently. But we never really realised that this document actually determines the final allocation of our assets.

This crucial oversight on the part of the most prudent and disciplined investors is probably because wills are rarely seen as a part of financial management. The emotional and legal aspects associated with testaments are so overwhelming that many shy away from even exploring the option of making wills. Add to this the many misconceptions and wills have all but been buried away. Contrary to popular perception, a will is not meant only for those rolling in wealth or with big families. Neither is it an unwanted complication if the bequest is to be made only to the natural heirs.

In the age of nuclear families, the absence of the security of living together with uncles and aunts makes it even more necessary to leave a will with precise details about the allocation of assets. This relieves the family of running around for succession certificates or letters of administration in case banks or any other authority insists for them before releasing money or transferring the title of assets.

This procedure can be very time consuming and if the deceased has left behind dependents, in case of litigation, they may be left with no source of income until the verdict is out. Of course, it is the only way out to ensure that someone other than the legal heirs receive a share of the will-maker’s (called testator in legalese) estate.

Also, as Delhi-based advocate Satvik Varma points out, a will acts as an inventory of the assets left behind by the deceased. Often it is only the breadwinner of the family who is aware of the types of investments made and the whereabouts of the relevant documents. A will serves as a ready reckoner for the survivors while deciding on how the money must be managed.

Something that Kolkata-based Deep Banerjee sorely misses. Still mourning the sudden loss of his father, the absence of a will has made it very difficult for his family to assess its financial condition as no one knows about his investments. Similar was the case of Shantanu Mukherjee’s (name changed) family. Accustomed to a lavish lifestyle during Mukherjee’s lifetime, his sudden demise four years ago caught his wife and two children completely off guard. Ignorant of his investments, they were forced to borrow money from friends and relatives to run the household.

Such a situation can be easily avoided by a little caution at the time of making investments. Eitheror-survivor bank accounts, joint holdings in shares and mutual funds and nominations in insurance policies ensure that money flow does not stop in the case of the death of one of the holders. Hence, succession planning does not start and end at wills but must go hand in hand with financial planning.

Interestingly, collating details of assets while drafting a will is helpful for the testator too as it puts in black and white his entire investment portfolio. It might also bring to mind some forgotten asset or investment. Chandigarh-based Anoop Paul certainly wishes that his father had done something similar. Having bought a property in his name when Paul was just 16, he forgot to include it in his will. It is only now, when Paul is himself a grandfather that he has discovered this asset.

If at all, most people think of making wills only in old age. This notion is as correct as saying that people die only in old age. It is best to make a will as soon as an individual builds a sizeable corpus (defined as what may be of utility to those you hand it down to) or when you have dependents, whichever comes first. Says Anil Srivastava, advocate in the Supreme Court of India: “A simple, correctly written, unambiguous will makes transfer of assets smooth for the beneficiaries and in accordance to the wishes of the deceased.” Clearly, a person can only will what he or she owns and has exclusive rights over. Following this principle, directorships in public limited companies and club memberships cannot be willed and expire with the death of the owner.

Talking Inheritance It is arguably one of the toughest task in the world: persuading your parents or relatives to write a will. It is a difficult topic to broach because it involves two issues that are very personal and uncomfortable for most people: money and death. But you cannot afford to ignore the issue of estate planning. MONEYTODAY tells you how to break the ice.

Start by asking what they want: Ask your parents if there is something they want you to do. Give them the confidence that you want to fulfil their wishes and ensure that their goals are met.

Focus on life, not death: Inheritance and death are intertwined, but don’t let death drive the discussion. In fact, it’s best if it is not even touched upon. Instead, focus on how they have worked so hard in their life to build the estate for you and other heirs.

Stress on how a will protects their assets: The last thing that anyone wants is leaving behind a disputed inheritance. Convince them that writing a will would help protect the assets they have built up from unscrupulous elements or troublesome relatives.

Encourage them to consult an expert: By doing so, you send a message that you still trust them to handle their own affairs. More importantly, they won’t feel as if you want to control the situation and hustle them into bequeathing everything to you.

Involve everyone in family: A will may not treat everyone in the family equally, especially if the assets cannot be easily divided.To avoid conflicts later, involve all your siblings in the discussion.

Be patient and understanding: The first conversation on this topic won’t be the last. It could several days before you make a little headway. Be patient with them and think of it as an ongoing dialogue.

There is no fixed format for a will. For all practical purposes this means that a will does not require a lawyer at all. Not even the stamp paper is mandatory. Write a will whenever and wherever inspiration strikes—on the white space of a newspaper or even the paper napkin of your favourite restaurant.

All that a valid will requires is the signature of at least two witnesses attesting it by stating that the will has been executed in their presence and the signature or thumb impression of the testator.

While there is no prescribed language for the will, it is smart to write that it has been executed by the testator in sound mind and free from any “undue influence”. The will must also provide for an “executor” who is duty bound to transfer assets in accordance to the provisions of the will. Of course, it is important that the testator takes prior consent of the person to be appointed as executor.

Dating the will is important as only the last will by a person is upheld. However, given the extent of litigation that wills are subject to, a few other dos and don’ts minimise the possibility of disputes. A will can be challenged only on two grounds — that the will is forged or has been executed under duress or not in a stable mental state. To safeguard against these, one can request a doctor to sign as a witness of the will and attest that the testator was in sound mind or attach a doctor’s certificate stating that the person was in good health and sound mind at the time of drafting the will.

Signing on every page of the will and twice on the last page along with putting a thumb impression reduces the possibility of claims that the will is not genuine. In case the bequest includes persons other than natural heirs or deprives any of them, it is worthwhile to include the reasons for doing so to pre-empt any doubts that might arise due to the shocking content of the will. You can establish that a will is fictitious or made under duress if you can prove that it was drafted under “suspicious circumstances”.

Mumbai-based Mrudula and Jyoti Rao proved a will false on these grounds. The offender had produced a will allegedly made by Mrudula’s father when he was in the ICCU during non-visiting hours. It was later established that her father had been in no condition to write the will and there was no record of the person visiting him.

You might have made your will with utmost care, but if it isn’t followed up by utmost care of its safe keeping, the will may be lost or fall into the wrong hands. The plot is then set for schemes and machinations by the deprived party that would put a soap opera to shame. This is exactly why it is recommended to register wills, though it is not mandatory. If a will is made early in life, it is only natural that the testator might want to amend.

In case the change is minor, he may attach an appendage called a codicil. Ideally, even such an appendage must be registered.

As Srivastava says, registering a will dispenses with the need of proving it and also ensures its safety. But Srivastava probably failed to factor in the apathetic condition of our government offices and their hospitality to rats. Also they seem to have mysterious powers of wishing away documents just when you need them. As Delhi-based Mrinalini Choudhury’s experience suggests. Her mother had left her a prime land in Guwahati and registered the will. However, after her demise it was discovered that the will had been “misplaced” from the office of the registrar. Her sisters filed a petition claiming that the will was fictitious and then ensued a 12-year long battle before she won the case. Supreme Court lawyer Davinder Pal Singh advises, “It is a good idea to ask the chief beneficiary of the will to keep it safely. Selfinterest is enough motivation for him or her to safeguard the document.”

While making a will is quite simple and the testator is saved from running around lawyers and courts, the beneficiaries may not be so lucky, certainly not if there is a dispute in the family over succession. The situation only worsens in case someone dies without leaving a will (called intestate in legalese). Intestate succession for Hindus is governed by the Hindu Succession Act and for Muslims by the Muslim Personal Law. Others are covered by their own personal laws. These laws clearly provide the chain of succession and proportion in which the property of the deceased is to be devolved.

Power Of Attorney There is a lot of confusion regarding the superiority between power of attorney and will. Here's a quick glance at the concept.

DEFINITION A legal instrument whereby you authorise someone to act on your behalf.The power of attorney is operational in the lifetime of the issue.

TYPES General: A free hand is given to the person acting in your behalf to do whatever he thinks fit. Specific: Precise duties are prescribed for the person given the power of attorney with instructions to do and not do certain things.

WILL OR POWER OF ATTORNEY In the event of a “conflict of interest”, that is if a power of attorney is operational at the time of the death of a person who has willed the same property to someone else, then the direction in the will gains precedence.

But don’t be under the illusion that all is easy and hassle free. Our genetic inclination to bend and swerve rules coupled with a few grey areas in the procedures themselves has led to a proliferation of ifs and buts that make the actual transfer of assets very tedious. Once the beneficiaries are aware of their inheritance, they can apply for a succession certificate in the courts either individually or jointly.

A fixed percentage of the value of the asset (varying across states) is charged as court fee. On receipt of such an application, the courts issue a public notice, usually in the newspapers, stating the details of the application and inviting anyone to challenge the inheritance. After clearing the application the court issues a succession certificate stating that the applicant is entitled to the property. If the heirs want to transfer the entire property of the deceased, they have to apply for what is called a “letter of administration”.

The procedure followed in court is similar to that of succession certificates. But there are conflicting views on whether a letter of administration is mandatory for immovable property.

But getting these documents can be a long-drawn and exhausting exercise. Usually, it takes four to five months for the first court hearing to take place. Says Indorebased Punya Priya Mitra, who had to wait for 10 years for the succession certificate to come through to transfer his father’s shares in his name: “The delays were very frustrating. At times, I almost gave up.

If only my father had left a will, I would have been saved the trouble.” Somewhat similar is the experience of Delhi-based Leela Saini. Her husband died intestate and accessing his single account in a bank took her almost two years. “The bank made us run around, first asking for one document and then the other. Finally they asked us to submit a succession certificate,” she says. The problem was solved when the bank agreed to release the money if they deposited an equivalent amount (about Rs 2.5 lakh) with the bank as security.

The absence of a fixed rule for transferring property title and releasing money in the name of the deceased has led to many such problems. It is a common practice that if the value of assets in question is not too large submitting a death certificate with a memorandum of understanding with other heirs is enough for a transfer of assets. In such a situation, if all heirs are consenting, there is no need for a succession certificate.

But increasingly, professionals in banks, companies and fund houses are insisting on these documents. It would be easy to advise that a succession certificate is the safest thing to do only if it was not as cumbersome as has been established.

In case the deceased has left behind a will, the executor initiates what is called a “probate”. The application is best made in the high courts as they enjoy territorial jurisdiction even outside the state. A probate granted by a court is conclusive evidence of the validity of the will and establishes the legal authority of the executor to distribute the property according to the testator’s wishes. Interestingly, even before the will is probated, the executor can seize the property of the testator after seven days of his demise, called the “cooling off” period. Actual transfer of assets occurs by applying to the authority concerned with a copy of the will.

Again it is unclear if a probate is necessary in case there is no dispute among beneficiaries and those who have been deprived of a bequest. Many a times, a copy of the will suffices for transferring the assets in the name of the heirs. Some lawyers believe that the beneficiaries must sit tight with the will in case the assets are already in their possession.

This may happen if they are already occupying the landed property or are co-holders of shares and funds or joint holders of the bank accounts of the deceased. But what if the deceased wills the assets to someone else other than the joint holder or nominee of a particular asset? Explains Srivastava: “A will is one of the most sacrosanct documents in the eyes of the court since it constitutes the last wish of a dying man. In case of any conflict of interest, the will is given precedence.” Therefore, nominees and joint holders are deemed to be trustees of the deceased’s assets and are obliged to hand them over to the beneficiaries in the will.

But obtaining ownership of the asset is not an end in itself. In fact it is only the beginning of financial management of the beneficiaries. At the outset, the tax implications of the inheritance must be determined. According to Veer Sardesai, financial planner and CEO of Sardesai Finance, there is no immediate tax liability upon inheriting real estate or stocks. It is only when such property is sold that the beneficiaries have to pay capital gains tax.

Investment rules remain the same for inheritors without any dependents. But in case the bereavement has left the family without its only earning member, a well thought out simple investment plan is a must. A realisation that made Monika Birla and her mother take charge when her father died about four years ago. “We were four siblings and at that time two children in the family were minors.

Though my mother was employed, a sound investment strategy to take care of at least some of the expenses was absolutely necessary”. With the advice of some relatives, Monika’s family invested the pension money in IDBI and HDFC bonds and a children’s education fund to take care of long-term expenditure and fixed deposits to meet monthly expenses. They also picked up a monthly income scheme with a three year lock-in period that is now coming handy for the marriage of a daughter.

Sardesai suggests that families suffering such a loss invest enough money in fixed deposits to meet monthly expenses through the posttax fixed deposit interest. In case none of the survivors are financially savvy, they may still safely invest the remaining amount in an index fund. This allocation is a safe way to participate in the equity market. Exposure to equities is essential to help the family fight over inflation. The importance of maintaining a strict household budget and keeping expenses to the minimum cannot be emphasised enough. For emergency situations, the money kept in fixed deposits may be used.

Investments in equities are best tapped when a lump sum is required, for instance on the occasion of a marriage in the family.

 So, do you now see all your assets trapped in the many dos and don’ts, laws and procedures of succession planning? Or maybe it is a crushing feeling of all investment strategies going waste. Take heart.

The fact that you are reading this is hope enough. You are alive and hence qualified enough to make a will. Do so at the earliest.

 With the right signatures and a couple of phrases thrown in, write out the future of your wealth and complete your financial management.

Groping in the dark

My 60-year-old father suddenly passed away a month ago. He left behind no will and my family is clueless about his investments. We share a four storeyed house with two uncles, each having one floor and the ground floor being common to all in accordance to my grandfather’s will. I have the following questions about succession:

- Deep Banerjee, Kolkata

My father had some joint accounts with his brothers. Is it possible to get my father’s share from these accounts in case my uncles are unwilling to part with the money?

It is difficult to give an exact advice until we know a few more details of these bank accounts. However, according to the law, all the assets of your father including joint bank accounts must be devolved according to the provisions of intestate succession.Usually, banks do not allow the surviving holder of a joint account to operate it without submitting a memorandum of understanding with the heirs according to the will or otherwise.

Is it possible to track his fixed income and equity investments through his PAN or demat account number?

Only the equity investment made by your father through the demat account may be traced through the number. Investment made through agents or otherwise cannot be so determined. It is not possible to trace your father’s investments through the PAN card number because the computation system of PAN cards is still not so systematised to automatically record any transactions made where the number is used.

My grandfather owned some shops in Calcutta. The rent received was hitherto distributed among my uncles and father according to his will. If I do not possess a copy of my grandfather’s will, how else can I claim my father’s share of the rent?

If your father had been receiving rents for all these years there must be some records like rent receipts or a record with the tenants. Since this is a commercial property, the municipality must also have records of mutation in your father’s name.Any of these can be produced in a court to prove your claim in case a litigation is required.

In case I want to sell the floor of my house, where I stay, am I still under obligation to sell the property to my uncles?

No, if the floor was owned by your father, you may sell it to anyone you like.