Who needs a Will? Everything You Need to Know About Estate Planning

What is Estate and Estate Planning?

Most people understand the term "estate" to mean something like a coffee estate or a tea estate. However, estate means when all your movable and immovable properties are put together, including investments in stocks, debentures, mutual funds, vehicles, gold jewellery, etc.

And the purpose of estate planning is to organize and manage your financial affairs during your lifetime and plan for the distribution of your assets after death. It involves taking stock of your assets, determining the value of your estate, and deciding how you would like your assets to be distributed after your pass away.

What is a Will? How to write a Will?

​A will is a legal document that specifies how a person's assets should be distributed after death to their legal heirs or beneficiaries. To create a valid will, it should include the person's intention behind making the will, as well as their declaration of assets, debts, loans, etc. A person can also mention how to transfer the assets and include medical expenses if a minor child needs to be cared for. However, the will must be in writing and signed by the testator (the person making the will) in the presence of two witnesses.

Who writes a Will?

Anyone who can read and write in English or any vernacular language is eligible to write a will. The only condition is that the will should clearly declare the person's intention, asset identification, and distribution in an easy-to-understand language.

In what ways can medical expenses be mentioned in a Will?

A will is executed after a person dies, so it's normal to be curious about how medical expenses can be included in a will. To explain this, let's take an example from real life. A person named 'X' is in the ICU and cannot write a cheque. Plus, his account is not a joint account, so who will withdraw the money? Therefore, considering such cases, X can include his medical expenses in the will, where he can mention who will have the authority to withdraw the money in his absence.

When is a good time to create a Will?

When a person acquires his first property, he becomes eligible to make a will. Here, age doesn't matter. It's just like insurance: once a person starts earning, he takes insurance because his family depends on him. In the same way, when a person acquires his first property, he can create a will because if something happens to him, the will would legally authorise how his estate shall be transferred and handled.

Secondly, a person who owns an expensive car can also create a will. This is helpful because if the person dies, the new owner can avoid all the paperwork hassles of the RTO (Regional Transport Office or Road Transport Office).

What happens when somebody dies, and there is no Will?

There are two types of inheritances: one is testamentary, and the other one is interstate. In the case of testamentary, there is a valid document which says who should get what and it's legally accepted. In the case of an interstate transfer, there is no document. Here, the succession laws come into play. 

In India, succession laws are based on religion. For instance, there is the Hindu Succession Act (applicable to Hindus, Buddhists, Jains, and Sikhs) and the Indian Succession Act (applicable to Christians, Parsis, and Jews). The Indian Succession Act also applies to inter-religious marriages registered under Special Marriage Act. At the same time, Muslim Personal Law (Shariat) Application Act applies to Muslims. Although the laws are clearly defined, it would be difficult to understand the distribution of assets. Therefore, it's always better to execute a will.

Does a Will have to be registered?

As per law, registration of a will isn't mandatory. However, not registering a will can lead to complications. Let's say Mr. X who lives in Bengaluru owns a physical property and has created a will that isn't registered. After his demise when his son Mr. Y  takes the will to the Sub-Registrar's office, they ask him for a document to prove that he is the legal heir to Mr. X. In such a case, Mr. Y may have to get a family tree in Karnataka. Therefore, it's better to register a will to avoid all these complications.

What is the process for registering a Will?

This is a general outline of the process for registering a will in India:

1. The will must be presented to the office of the Sub Registrar in the district in which the testator resides.
   
2. The will and the required documents, such as proof of identity and address of the testator and witnesses, must be submitted to the Sub Registrar's office.
   
3. The Sub Registrar's office charges a fee for registering the will. It's important to note that the fee doesn't depend on the estate's value.
   
4. The Sub Registrar reviews the will and the supporting documents and, if everything is in order, registers the will. The testator will be given a copy of the registered will.
   

What is a Probate? Does every Will have to be probated?

Probate is the process of certifying a will in a competent Court. In other words, the Court will attach a stamp on the will. However, before attaching the stamp, the will undergoes a verification process, including verification of the testator, witnesses, etc. When everything is valid, the Court puts a seal, which gives the will evidentiary value.  

Probate is mandatory only in Chennai, Mumbai, and Kolkata. However, probate may be beneficial depending on the circumstances, like family disputes.

What are the different types of Will?

Typically, a will has two classifications:

Unprivileged Will: A will executed by a common man.  

Privileged Will: A will executed by a member of the Indian Army, Indian Navy, Indian Air Force, etc. Such a will is often made under difficult or unusual circumstances.              

However, any person creating a will can include condition(s). For instance, if X has put a condition that his son cannot be a beneficiary until he (son) is 21, the will becomes a conditional will.

Do liabilities also get transferred to the new owner?

In short, yes. For instance, X is a father with two sons. X built a house for which he took a loan of ₹1 crore. Now X can include a condition in his will mentioning that he will clear 50% of the loan and the remaining 50% will be cleared by his two sons (25% each).

What happens in joint property ownership if one of the partners dies and there's no Will?

In case there's no will, every person in the family will have equal rights on the property of the deceased. For instance, if the property is still in debt, first and foremost, all the debts must be cleared. After clearing the debts, the family members will have to sit and talk about who should be the owner within the family. If A and B are two adult children in the family besides the deceased's wife, A and B must execute a 'release deed' in favour of their mother. In other words, A and B are surrendering their rights in favour of their mother.

Is there any type of property ownership in which the rights transfer directly to the joint property holder?

It all depends on how the deal is drafted. When two people buy a property jointly, the deal should include all relevant information, such as the ownership ratio, how much money each person contributed, etc. Although tenancy in common doesn't transfer rights to the other partner directly because, legally, all family members fall under tenancy in common.

Also, there is another type of property ownership known as 'joint tenancy.' To learn more about this, it's better to consult with a legal professional.

If a person dies and only has bank accounts or fixed deposits, is it necessary to create a will besides adding a nominee?

Generally, the nominee gets the money because the bank is discharged from their responsibility. However, because the nominee is only a custodian or trustee, he/she will not become the sole owner of the funds. For instance, X has two sons, A and B, and the nominee on his bank account is A. If X dies, the bank will transfer the entire bank amount deposit (let's say 10 lakhs) to A. But, A can only keep 5 lakh rupees and give the rest to B.

Are there any tax implications for inheriting a property?

There is no inheritance tax in India.

How does one execute a Will for mentally challenged or specially-abled dependent?

In such a case, a will may not be beneficial unless the person has named someone as an 'appointing guardian' for his dependent. However, it's always better to set up a family trust to protect the rights of specially-abled dependents.

How can NRIs create a Will?

The succession laws in two different countries are different. Therefore, creating two different wills is better to avoid legal complexities. For instance, if an NRI staying in the US buys a property in the US, he must follow all applicable laws of the US. Now, if he wants to create a will for someone who stays in India, he needs to follow all the legal inheritance procedures of India. 

However, the UAE is one exception. In the UAE, after an expat creates a will, he must translate it into Arabic and submit it to the Court for registration. After registration, the will becomes valid.

Is it necessary for an NRI beneficiary to be present in India when the Will is executed?

If an NRI is a beneficiary, he/she is not required to be present during the execution. 

About Prop.Academy

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In this video, Sapna Chandiramani, Co-founder of PropertyAngel, speaks with Vijay Upendra, Estate Planning Consultant, PropSeva.