This COVID- Pandemic has taught us one thing that Life is uncertain. We all know that Death is certain, Life is not.
Creating wealth for our family and future is just one aspect of financial planning. However, the process will be complete only when you decide what happens to your accumulated wealth after you are gone. A wise decision taken today shall be perceived a prudence and wisdom by the next generation. Thus, if you wish to pass on the hard earned legacy, one has to execute it through meticulous planning a succession.
Hence, it is absolutely critical that we should be ready with our plans of transferring our hard-earned assets, Financial as well as Physical to the beneficiary/ies, as per our wish and desire. It is our Succession plan for the distribution of our assets, as per our choice after our demise. If you don’t write a Will w.r.t. assets exclusively owned by you, it will be allocated in a standard way as defined by succession laws- which may not be in sync with your preference.
Many of us think that Nomination is sufficient and there is no need for making a Will but we should know that mere nomination or joint holding is a temporary arrangement, which helps in ensuring to carry out required administration of the estate of the deceased, till the legal heirs take the necessary, formal steps and have the assets transferred in their names. Nominees are in the nature of trustees of the assets of the deceased till the assets devolve upon the legal heirs and /or beneficiaries, as the case may be. Will takes legal precedence over a Nomination and Nomination cannot ensure acquisition of assets.
One of the most commonly used instruments for succession planning is the Will. Will is the easiest and most cost-effective way to ensure the devolution or distribution of one’s wealth. However, it is the only document where the person signing the document is not available at the time of it’s implementation and therefore, it is very critical that it should be made keeping in mind all the details about your assets that you need to be allotted to your successor as per your wish and it should be prepared carefully and envisaging all possibilities.
For making a Will, you can identify one or more person/s as Executor/s who should be trustworthy, and dependable as he/she/they will be the one who will implement and ensure the adherence to the Will, in your absence. It is advisable that as far as possible, Executor of the Will should not be a beneficiary of the Will. You also need 2 independent witnesses at the time of signing of the Will but the beneficiaries to the Will cannot be the witnesses and this condition is mandatory. Also, it is strongly advised that one should get a Doctor’s certificate confirming the person(i.e.Testator) who is signing / executing the Will was in a sound physical and mental health at the time of making a Will.
Moreover, It is strongly recommended to have a separate Will for husband & wife, because if a single Will is executed by the husband & wife simultaneously, then say upon the death of a spouse, the surviving spouse will not be able to alter the Will to add one’s new family in case of remarriage or exclude any of the children, due to change in circumstances.
There is no specific format of a Will but it’s advisable to get the legal advice, in drafting a Will due to complex laws and even more complicated legal process and by taking a proper advice one can easily avoid prolonged, counter-productive and expensive litigation, as that is the last thing one intends to pass to the next generation. It is important to state in the Will clearly and unambiguously as to what amount or a share of property is being left for the successor and the reasons for any unequal distributions, if any so as to avoid any confusion or dispute. Ideally, the Will ,should be comprehensive with all details like all Bank Accounts, Demat accounts, Instruments such as Policy, MFs, Bonds etc, physical assets like flat/s, plot/s of land, jewelry, donations to Charitable organizations, details of your Wealth Manager or Financial Advisor if any. It is also recommended to revisit a Will, every 5 years as the property or assets held could change or even devolution may change.
Will once made can be altered any number of times or in case of minor changes, addendum/s can be done (codicil) with witnesses. However, only the last Will made before his/her death shall be valid and enforceable.
It is also advisable to get the Will registered or at least get it notarised as many times financial institutions like Banks and other govt. offices don’t readily accept the unregistered Will and are quite reluctant to act on the same The said Institutions/govt. bodies may insist for obtaining a Probate (Certified copy of a Will by the Court) which is a time consuming process (upto 1 or 2 years) and legal heirs need to pay court fees stamp which is ad valorem i.e. a percentage of value of the assets. In Maharashtra, currently the maximum court fees stamp , payable is Rs.1.50 lacs.
It’s also suggested to get additional certified copies of the Will along with original Will. The original should be sealed and should be kept with the Executors. Additional copies may be kept with persons whom you think should be in know of the same in your absence and even the beneficiaries can have a copy of the same.
Some people prefer Institutions as Executors instead of any individual person/s. There are some private family offices and some Banks and Financial institutions who act as Executors and help in drafting and executing a Will by charging fees.
Another option is setting up of a Family Trust. In this case also, some private firms, Banks and financial institutions act as Trustees and Executors. Sometimes, Family Trusts are created to protect the assets from getting attached / liquidated in the event business goes bankrupt. These are generally done by high net worth individuals or for persons who cannot handle their finances on their own or for the benefit of special children. They handle the expenses required for the maintenance of the beneficiary, manage their Funds and tax related issues as well charging some fees.