An individual should consider succession and estate planning not just at the time of making a will but at the time of making an investment. It is prudent and advisable to make all investments in moveable or immoveable properties in joint names.
For moveable assets, such as deposits, shares, mutual funds, bank accounts etc where investment in joint names is not possible, it is advisable to make a nomination in the name of an heir. Such a facility will minimise documentation required to transfer assets from the name of the deceased to that of his heirs.
A nominee is however not entitled to be the owner of the asset to which he has been nominated. He is expected to act as an executor for the estate. The nominee collects all such sums to which he has been nominated and distributes them according to the wishes expressed by the deceased (in case of a will) or as directed by law, in case there is no will.
Nomination facility does not exist for investment made in immoveable properties except in certain cases where the immoveable property is in co-operative group housing societies. In all other cases if the immoveable property is in a single name it is advisable to make and register a will.The failure to do so not only can make succession an expensive and long drawn out affair but it can also cause family litigation and defect in the title of the property, thereby reducing its value.
|Bank Accounts: Opt for a joint account. Operated on an either or survivor basis is the best|
|Property: For land make a will or nominate a successor. For flats, a power of attorney works|
|Securities/MF: Joint holding is the best. Heir can submit death certificate to the firm for transferring shares|
|Life Insurance: If heir has nomination details, policy document and death certificate of the policyholder, the claims can be settled quickly|
|Business: Instead of sole proprietorship go for partnership. Make spouse partner in sole proprietorship businesses or make heir apparent a sleeping partner|
An individual could also own certain other properties like jewellery, artwork, antiques where nomination facility need not be expressly defined. In case of lockers it is meant only to facilitate access to it by the successors. It does not ensure any right of ownership. It is therefore essential that all such assets be identified and distributed among the legal heirs through the creation of a visible mode — a will is the best form of such an expression.
A will should list out the assets and liabilities, define the heirs and specify the distribution of the assets. It must be signed by the individual in the presence of two independent witnesses.
If there is a doubt about the individual’s mental health, a medical doctor should certify the individual’s health at the time of signing the will. It is always advisable to take legal opinion before making a will and ensure that it is registered before a court registrar.
However, if that is not possible, even a handwritten will would suffice provided it specifies the estate, defines the heirs and distributes the estate among the heirs. Again two independent witnesses should be present.
Taking these simple precautions will ensure that the wealth of an individual is protected and distributed among his heirs in the manner he desires. It is something which every individual owes to his family to ensure that they are able to live with dignity and pride, even after the individual’s death.
(By Arvind Nair, Chartered Accountant)