Life is not predictable and neither is death. We encounter innumerable reports of freak accidents occurring everyday in the newspaper.But more often than not,we don’t foresee a similar situation befalling us. A lot of folks plan their life to the minutest detail, but strangely enough, only a handful plan for death.No, its not a morbid statement and neither is it anything to do with mental conditioning,which while definitely, is a wonderful goal to achieve, is not the object of this post.
Imagine yourself dying today. This minute. Who is aware about your financial assets & liabilities ? Who will be the beneficiary to your assets ? Is the person(s) who you assume to be the beneficiary, also the beneficiary under law ? If you have kids and if you and your spouse were to die today, who will be the guardian to your children ? Who will ensure that the money goes to who it is meant for ?
Imagine the hassles for your family of you dying intestate.
A sudden fatality occurring in the family can leave everyone emotionally devastated.While dealing with the emotional turbulence is everyone’s personal struggle, the practical aspects can be sorted out to a great extent with proper planning. Having been exposed to circumstances which led me to appreciate this much more, I wanted to highlight some of the key things to do.
Nominations – This is the most basic and something many people forget to do.Many a times, an account is created after which a person undergoes a status change in his/her marital relationship.In such a scenario, the possibility of missing out naming a nominee or having a wrong nominee on the records, increases several fold. The accounts on which one can specify nominations include savings accounts, fixed deposits, mutual funds, demat accounts and insurance policies.Certain demat accounts might facilitate single authorization of a Nominee for all fund holdings but may still require a fresh nomination for new funds.
Who is a Nominee and what are his/her rights ? – In very simple terms, a nominee is just a representative to whom the FI/Bank can give the money to, after your death.This eliminates the hassle of producing a legal heir certificate or a succession certificate. An important point to note is that a nominee is a NOT a substitute for a legal heir. In most cases nominees are people whom you also deem to be one of the beneficiaries.
The distribution of a person’s assets are governed by the Succession Act and it is critical to understand the several categories of Legal Heirs.Class 1 heirs are the ones who are first in the hierarchy and authorized to receive your monies after your death on an equal distribution basis. According to Hindu Succession Act, the legal heirs are different for males and females.Class I heirs for a Hindu male are sons, daughters, widows, mothers, sons of a pre-deceased son, widows of a pre-deceased son, son of a pre-deceased sons of a predeceased son, and widows of a pre-deceased son of a predeceased son.Class I heirs for a Hindu female are sons and daughters (including the children of any pre-deceased son or daughter) and the husband.
So how does the nomination and the Legal heir system work together ? – In a nomination, as previously stated, all one is doing is naming the person, who will collect the assets on your behalf.BUT, this does not give the person absolute rights over the assets.This means,that the money once collected by the nominee is to be distributed as per the legal heir beneficiaries.In the absence of a nominee, the bank will ask for a legal heir certificate or a succession certificate.
Why does one require a Will ? - A Will is a legal declaration of the intention of the person to distribute his assets.So lets assume that you intend your sole beneficiary to be your spouse and the sole beneficiary is the spouse according to law as well, then one could safely conclude that the Will would become a nice-to-have document which can do away with the hassle of creating a Legal Heir or a Succession certificate.
But now lets now consider other cases where a Will is absolutely required -
1. If the beneficiaries you intend are different from the ones laid out under the law
2. If the proportion of assets you want to go to the beneficiaries are different from the equal distribution clause laid out under the law
3. If you have a clear mapping of your several assets to your beneficiaries – Say property in Mumbai to go to your spouse, property in Bengaluru to your mom, then this would not be possible without a Will.
A Will is a highly desirable document for distribution of properties as properties don’t have nominations.If your family needs to sell a property after your death, they would not be able to do so without a Will or legal heir/succession certificate. And for each of such sales, all the legal heirs need to be present for executing such transactions. Imagine a case, where a legal heir is living abroad and the hassle involved therein.Power of Attorney needs to be created in such cases if the remaining heirs agree to let go of the property in favor of one.
Now lets also look at other aspects of a Will, which are not fully financial in nature.
A Will can also act as a statement of intent. This, of course is left to the goodwill of your family members to act on it. This is typically true for guardianship.If you are a single parent or you want to make a joint Will, to be executed in the event of the death of both you and your spouse, then you can specifically state the guardian you want to nominate for your children. This takes care of unnecessary disputes among family members later.Imagine the peace of mind you would have in knowing, that if something were to happen to you and your spouse today , your child would still be taken care of, in the way you want. In the case of a Joint Will, it also aids a person who might not be an immediate family member, to have a record of all your assets and liabilities.It also enables you to bequeath certain specific possessions to certain people.You wanting to leave your precious stamp collection to a relative or a friend who’s equally passionate about it, is possible only through a Will.
For all this peace of mind, all you require is a piece of paper and some concentrated thinking. Yes, a Will can be written in a plain piece of paper in your handwriting. It should just cover that you are in a sound state of mind and should take into account all your assets and express your intent clearly.If you foresee disputes arising later, a Will can also be registered.
Life is not in our hands, but we can make things a bit easier for our next of kin by taking these simple steps.“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.” ~John Allen Paulos
Further reading :
1.Good information on Legal Heirs as per Hindu Succession Act – http://wealthymatters.com/2013/03/27/intestate-succession-as-per-the-hindu-succession-act1956/
2.Different between a Nominee and a Will – http://www.moneycontrol.com/news/investing/legal-heir-or-nominee-who-will-inherit-your-assets_759921.html
3.Quick reference for terms of a Will – http://www.legalserviceindia.com/wills.htm
4.Good information on various aspects of a Will – https://indianwillmaker.com/pages/services
5.A format for a Sample Will – http://www.mywealthguide.com/making.htm