We’ve all heard those tales of how a pauper became a millionaire overnight after inheriting a fortune from a rich distant relative, who wrote away all his wealth to him in his will. Not just men, pets too have shot to fame after their wealthy owners bequeathed all their assets to them, bypassing even their family. That’s the power of a will. And while few would dispute the need for succession planning to smoothly pass on their wealth to their successors, most of us believe it’s important only for the really wealthy. But, that’s not quite so.

What to do

As long as you have assets to bequeath, do give a thought to succession planning. Writing a will is, of course, the simplest, though not the only way of doing it. You can, alternatively, create a trust to manage your wealth on behalf of your family, after you pass away. Some families also go for what is called a family settlement agreement, which is a mutually agreed contract between all on how to distribute and manage the common family wealth.

Drafting a will essentially involves listing out your assets along with the names of the people to whom these are to be bequeathed on a sheet of paper, signed in the presence of two witnesses.

On the other hand, chalking out the contours of a trust (as laid out in the trust deed) or a family settlement agreement requires legal expertise. Also, unlike a will, a trust and a family settlement agreement have to be registered.

A will is, therefore, a feasible option for everybody, even for those with few assets. This is particularly so if you want to exclude one/some of your immediate heirs from inheriting your assets or alternatively want people from outside the family to get a portion of your wealth. Also, if you wish to bequeath different assets to different people, do write a will. In the absence of a will, your entire wealth gets divided equally between your heirs.

Law takes its own course

So who gets what, if you leave behind no will? Rajesh Saluja, CEO and MD, ASK Wealth Advisors, explains this in detail. If a man or a woman dies without making a will, the wealth gets divided between his/her heirs based on inheritance laws.

In case of Hindus, Jains, Buddhists and Sikhs, the Hindu Succession Act applies. Under the Act, the property of a Hindu man is passed on to his Class I heirs which include his sons, daughters, widow and mother, among others. If there is no nearest heir, it then goes to the heirs next in line, which include the father, grandfather, grandmother, uncles and aunts, among others. Under the Act, the gender of the deceased too has its implications.

So, if a man is survived by his wife and parents, his property will be divided equally between his mother and spouse. The father does not have any rights here. If the man has two children as well, then the property gets divided into four equal parts. Additional factors have to be considered in cases such as remarriage of the deceased’s widow.

In case of Muslims, the succession is governed by their religious inheritance laws, which vary across different sects. For Parsis, Christians and Jews, the Indian Succession Act, 1925, applies.

Writing a will

When it comes to drafting a will, all you need to do is to clearly list out who gets what. While there is no prescribed format, if you want, you could check out some sample wills on the internet. If you want professional help, you could seek out online service providers such as willjini.com, indianwillmaker.com and ezeewill.com.

You can include all your movable and immovable assets, both Indian and overseas, such as stocks, jewellery, mutual fund investments, bank deposits, land or a flat in your will. But, when it comes to inherited assets (in which your siblings too have a share) or other jointly held assets, you can pass on only your share in it, through a will.

You can also consider registering your will. Though not mandatory, registering a will adds to its authenticity in case it is contested.

But, go for registration only if you intend doing it each and every time you write a new will to reflect the changes in your asset holdings. That is because once you have registered a will, any subsequent unregistered wills will not be taken into consideration. Remember, you may also have to periodically update the beneficiaries in your will with births and deaths in the family.

Once you are done with writing your will, you also need to appoint an executor (any trusted person) who will help carry out what has been laid out in the will. It is he/she who gets the will probated (wherever required) and sees through the division of assets among the beneficiaries.

Executing a will

But before a will can be executed subsequent to the person’s death, it has to be probated. That is, you have to get a probate (certificate) from the District or the High Court stating that the will is valid. The probate is issued after the court hears all the interested parties — the beneficiaries, the executor and the witnesses to the will. Once that is done, the process of transfer of assets in the name of the intended beneficiaries can be initiated. A will has to be probated before it is executed if it has been written in one of the three cities — Chennai, Mumbai and Kolkata or if any of the properties included in the will are located in one of these cities. In all other cases, no probate is required unless the will has been contested by someone.

So, what documents are needed when you request for a change in asset ownership in the records? “While these could vary depending on the asset, you will typically be asked for a copy of the will and the death certificate. You are also likely to be asked for a legal heir certificate (to be procured from the local tehsildar’s office), if you are a blood relative,” says S Gokul, Legal Consultant, Metis Family Office Services.

Also, do note, in case of property transfer, no stamp duty will have to be paid to facilitate the change in name since the process has been initiated pursuant to a succession.

When not to will

Though having a will has many advantages, in certain cases you can very well do without writing one.

“If you are okay with your assets being divided equally among your immediate heirs, as provided under the succession laws, then one really needn’t write a will,” explains P B Balaji, a Chennai-based lawyer.

In fact, if that is what you want, then having a will could sometimes complicate matters.

This is because, if the will has been, as already mentioned, written in Chennai, Mumbai or Kolkata or if any of the properties included in the will are located in one of these cities, then it has to be probated. This applies to Hindus, Jains, Buddhists and Sikhs.

Getting a probate usually takes 4-6 months and can be inconvenient if the children of the deceased are abroad. What’s worse, if the will gets challenged, then getting a probate can drag on for years. Also, if the assets involved are substantial, there will be significant outgo in the form of probate fees.

In Chennai, for instance, the fee is levied at the rate of 3 per cent of the market value of the entire wealth. In such situations, it makes sense not to have a will and instead let the inheritance laws take their own course.

Related Topics
comment COMMENT NOW