Succession Planning: Making a WILL

by Gopal Gidwani on September 14, 2012 · 0 comments

in Financial Planning,Taxation,Uncategorized

Almost a decade back, the owner of one of India’s biggest business conglomerate died inestate. He did not leave behind a WILL. Some time down the line after the father’s death, ownership issues came up among the two sons as to how the business, built by their father and the sons together, will be controlled by the two sons after their father’s death. The business control legal fight went on for sometime, making all people involved (including shareholders) anxious, before the dispute was finally settled. The above incident highlights the importance of succession planning. One of the ways of ensuring smooth succession is making a WILL.

In this article we will discuss the following:
a) Need for a will
b) Terminologies associated with a will
c) Requisites of a will
d) Contents of a will
e) Sample format of a will
f) Other information that you may find useful about a will

Need for a will
Many people make a nominee for most of their assets like Bank FDs, insurance policies etc. and think their succession planning job is done. They think after their death, nomination will ensure smooth transfer of their assets to the nominee and the nominee can use the asset as per his / her wish. Well nothing can be more wrong than this. In case of most of the assets, nominee is just the caretaker / custodian / trustee of the assets and cannot use the assets as per his / her wish. If there is no succession plan in place then the nominee has to pass on the assets to the legal heirs as per the Succession Act or Rules or Inheritance Laws applicable to the asset owner. Same goes with the property of a person. After the death of a person, if there is no succession plan in place, then the property is inherited by legal heirs as per the inheritance laws. This process is time consuming and can lead to legal hassles and complicated family feuds and can also invite claims from unwanted family members (with whom relations have soured) for their stake / share.

This where the importance or need for a will comes into the picture.

What is a will?
During his / her lifetime, in a properly structured document (will) a person can clearly mention how after death, his / her assets will be divided and in what proportion among the beneficiaries leaving no scope for disputes among beneficiaries.
A will ensures peaceful division of assets and smoother transfer to beneficiaries after a person’s death. Hence making a WILL is an important event in one’s lifetime.

In India, any person who is not a minor and who is of sound mind, can make a will. It will be considered legal, provided that testator (person making the will) has not been coerced (forced) or has not been under any sort of undue pressure while making the will.

Now that you understand the importance or need for a will, let us understand some technical terminologies associated with a will that will help us in easier understanding of process of making a will.

Terminologies associated with a WILL
Let’s have a look at various terminologies associated with a will
a) Will: It is a legal document, in which a person can state the process for distribution of his / her assets among family members or any other beneficiaries after his / her death
b) Testator: The person making the will is known as the testator
c) Beneficiary or Legatee: Individual/s receiving the assets as per the will is / are known as beneficiary / beneficiaries of the will. Beneficiary is also known as legatee.
d) Executor: Executor is the person who is responsible for the distribution of assets after the testator’s death, as per the provisions of the will.
e) Intestate: Person dying without making a will (succession plan) is said to have died inestate

Now that you are aware of some of the technical terminologies associated with a will and are ready to make your own will, there are some requisites of a will you need to know before you can get going on making one.

Requisites of a WILL
There are certain requirements for making a will. These requisites are as follows:
a) Will has to be documented: A will can be written on a plain paper or on stamp paper. It is not compulsory to make a will on stamp paper. A will can be either handwritten or typed. Even if the testator prepares a handwritten will it will be acceptable in court, provided that it is duly signed by the testator and is attested by at least two witnesses.
A will can be written in English or Hindi or any other language. A will should be written using simple words, so that the intent of the testator is clearly understood. One should avoid use of any technical words. A will cannot be challenged by the beneficiary or beneficiaries or the legal heirs or anyone else as a will represents a testator’s wish as to how his assets should be distributed after his death.

b) Will should always be dated: A will should always be dated. A will is a revocable document and can be modified / changed any number of times by testator in his lifetime. If the same will has been modified once or more than once at a later date, then the will with the latest date will be accepted. Other old dated wills automatically get nullified.

c) Decide on your beneficiary or beneficiaries:
The person/s receiving the asset/s as per the will is/are known as beneficiary/beneficiaries of the will. A will can have a single or multiple beneficiaries. The person making the will can make anyone as the beneficiaries. Beneficiaries can be any immediate family member/s, relative/s, friend/s, loyal servant etc. etc..

d) Will has to be signed by testator: A will has to be duly signed in the end by the testator along with date and place of signing the document and duly attested by atleast 2 witnesses. If a will is of more than one page, then each page should be signed by testator.

e) Will should have atleast 2 witnesses: Witnesses can testify the authenticity of the will in case any dispute arises at the time of execution. A will needs to be attested by atleast 2 witnesses. It is not mandatory for witnesses to know about the content of the will. The name and address of the witnesses should be clearly mentioned in the will. Though not mandatory, it is advisable that the witnesses should be of younger age than the testator so that they are still alive for authenticating (if required) the will after testator’s death.

f) You need a executor: The testator should appoint a executor in the will. Executor is responsible to carry out / administer the division of the assets as per testator’s wishes after the testator’s death. If the testator wishes, he can appoint more than one executor (joint executors) of will.

Now that you know the requisites of a will and ready to make one for yourself, let us see what all information your will should consist of.

Contents of the will
There is no specific format for making a will. Testator should ensure that he covers all his movable and immovable assets while preparing a will. He needs to include following contents:

a) Declaration: A will should ideally start with a declaration paragraph, mentioning full name, address and age of the testator. Testator should clearly mention that the will is being written in full senses and he is not under any undue pressure or coercion while making the will. It is advisable, that the testator should always insert a declaration for revoking the previous wills (if any) while preparing the new will.

b) Details of assets: Testator should list out all the movable and immovable assets that he owns.
Movable assets include jewelry, savings account bank balance, fixed deposits, mutual fund units, insurance policies, post office investments, equity shares etc.
Immovable assets include house, shop, plot etc.

Testator should also specify the location of important documents related to all his assets.

c) Division of assets: Testator should clearly specify the proportion of assets that he wishes to give to the beneficiary. If there is more that one beneficiary, then he should clearly specify the proportion or the percentage share of each asset that he wishes to give to each beneficiary. In case the beneficiary is a minor, a custodian should be entrusted with the management of the asset, till the beneficiary turns major.

Testator should also clearly mention how the expenses related to the execution of the will should be taken care of.

d) Signing the will: The testator needs to sign the will in the end in the presence of two witnesses. The witnesses need to sign after testator, with a declaration that the will has been indeed signed by testator himself in their presence. The date and place should also be mentioned in the end. In case will consists of more than one page, each page should be signed by testator. Any modifications should also be countersigned. If there are too many modifications, then it is advisable to prepare a new will altogether.

e) Keeping the will in a safe place: Once the will has been duly signed, it should be put in a sealed envelope. The seal should also be signed by testator and the date should also be mentioned. The sealed envelope should be kept in a safe place. If possible, a copy of will should be prepared and kept with a trustworthy person.

Finally here is how a simple will may look like

Will Sample Format

Other information that you may find useful about a will

Registration of a will
A will need not be registered, though it is advisable. For registration, the testator and witnesses have to appear before registering officer of their area. The officer verifies the identity of the testator after verifying his identity document (driving license, PAN card, voter’s ID card etc.) and attest the same.
A Will can also be registered with a Public Notary.

What is a Probate?
Probate refers to ‘a copy of a will that is certified under the seal of competent Court’. It is important to obtain a probate from Court, as it proofs the authenticity of the will. Once a probate is obtained, the assets can be distributed as per the testator’s wish as mentioned in the will. Probate can be obtained by the executor appointed in the will.

Once executor applies for probate in court, a notice is sent to the legal heirs by the Court, so that objections if any can be filed by them. Accordingly, Court verifies both testator and executor’s competency on various criteria’s such as age, mental soundness, coercion or undue pressure etc.

A probate can be obtained only after the death of the testator.

What is a Letter of Administration?
A letter of administration needs to be obtained in such cases, where
a) the testator has not appointed an executor of his will
b) Executor refuses to act
c) Executor dies before or after the obtaining a probate, but before the administration of the will.

What if a person dies intestate?
If a person dies without making a will, then all of his assets are divided among his legal heirs as per Hindu Succession Act (for Hindus) or the Succession Act (if any) of the religion the person belonged to or the Indian Succession Act.

It is extremely important for any individual to make a will to ensure smooth succession after death. Ensure that you leave behind a well drafted will, so that your beneficiaries do not have trouble in claiming your assets. If possible, you can take the help of a lawyer for drafting the will, who can easily erase the possibilities of any legal ambiguities in the will.

Finally I would like to end with the following
Old saying: “Where there is a will, there is a way”
New saying: “Where there is a WILL, there are all relatives. Everyone wants to know what the dead man has left behind for them in his WILL” ……….. 🙂

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