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Writing a will? Here are tips to keep in mind

Writing a will? Here are tips to keep in mind

How early planning facilitates smooth transfer of your legacy.

As cinema buffs, we have watched several films where the villain hatches a complex plot to misappropriate property through forged wills or by keeping the legal heirs in the dark. The villain may also try to prevent the heirs from fulfilling the conditions of the will. Such plots have been turned into good suspense, thrillers as well as action movies. After watching such movies, have you ever thought of writing your own will? Quite likely that it did not trigger the thought.

Maybe, we are too busy slogging and switching jobs for fatter pay cheques. We spend all of our time planning real estate purchases and creating wealth through stocks and gold. Isn't all of 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.

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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
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

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.

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.

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.

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.

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.

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.

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.

Published on: May 25, 2011, 12:00 AM IST
Posted by: Gaytri Madhura, May 25, 2011, 12:00 AM IST