Estate Planning

Estate Planning is all about making sure during your lifetime who is going to deal with what assets of yours after you are no more. You also pan for expenses related to death, burial and after death procedures and rituals.

Pandit J Nehru wanted his ashes to be spread across India. Mr. Dhirubai Ambani who created Reliance empire worth Rs 75000 crores (2002)from Rs 15000(1973) did not reveal his Will made the children fight in public for quite a long time. On death of Priyamvada Birla, The Will produced by Lodhas (2004) shook the Birlas by surprise.

Do not go with the impression that Estate Planning is only for the wealthy and not for common man. Read the days newspaper and you wil have upteen stories of heirs fighting over deceased person's properties big or small often landing into murder, long hospitalisation with or without court cases and estranged relationships. Quite often ladies are on the receiving end of all negative impacts. so it is in the best interest of the society to have the tradition of estate planning for all.

If you read old testament, you will find the father blesses the children and give assets to them before death.

What are the tools available for estate planning?

1. Nomination - Investments, Bank Accounts, etc
2. Trusts - Create a legal entity which will pursue your interests and use the assets for that purposes only
3. Power of Attorney - Engage somebody to execute your purposes during your life time, in case you become invalid
4. WILL - write a will appropriately witnessed and registered keep it safe custody; The executor will get it probated after your death and administer the assets as directed in the Will.
5. Insurane Policies - policy cannot be attached if it was acquired under the Married Women’s Property Act 1874 or if it is legally assigned in favour of someone.
6. Gifts - during your lifetime itself distribute gifts : Gifts attract gift tax if value is Rs50,000 or above, though you know for sure who got waht assets.
7. HUF - In the case of an HUF, the assets belong to members collectively

What should be the contents of the Will?

A will is a written, and legally enforceable expression or declaration of a person’s wishes concerning the disposition of his or her property on death.

1. Introductory clause
   Identity of testator is revealed here
2. Direction of payments
   Expenses met from the estate are clearly mentioned
3. Disposition
   The treatment of Personal assets,Passing of money to specific persons/charity and the
   Residual assets are dealt with
4. Appointment clause
   Executants of the Will, Trustees, appointment of guardians to minors are spelt out
5. Tax clause
6. Simultaneous death clause
7. Execution and attestation clause
8. Witness clause

The Will may be registered at the Registrar/Sub Registrar office and the testator can get copy during the life time and others after his life time.

It is not mandatory that a WILL is registered.

After the death of the testator, the Will is got probated by the Executor. If the Will which is required to be probated, under the Act, if not probated, has no legal sanctity and binding force.
Principal Court of Original Jurisdiction as per the local City Civil Court Act is the place where one has to get it probated. The High Court also enjoys concurrent jurisdiction to grant probate of the Will.

According to Section 222 of the Indian Succession Act, 1926, Probate shall be granted only to an Executor appointed by the Will. The appointment may be expressed or by necessary implication. In the absence of the Executor being named in the Will, the Legatees or the Beneficiaries under the Will could also seek probate of the Will.

• According to Section 2 of the Indian Succession Act, 1925, Probate means "the copy of a Will certified under the seal of a court of competent jurisdiction with a grant of administration of the estate of the testator". It is nothing but a decree passed by a competent court declaring the legality/correctness and genuineness of the Will of the deceased.
• Under Section 219 of the Indian Succession Act, 1925, if the deceased has died intestate and was not a person belonging to any of the classes referred to in Section 218 (i.e, Hindu, Mohammedan, Buddhist, Sikh or Jaina or an exempted person), those who are connected with him either by marriage or by consanguinity are entitled to obtain Letters of Administration of his estate and effects in the order and according to the rules framed in this section.
• Under Section 212(2) of the Indian Succession Act, 1925, Hindus, Muslims, etc. are not bound to apply for letters of administration (Probate). It is optional and not mandatory for these persons to seek probate of the Will.
• Probate of a Will when granted, establishes the genuineness of Will from the death of the testator and renders valid all intermediate acts of the Executor as such

When to Probate?

There is no limitation for grant of letters of administration or probate. Where the estate is in the possession of administrator there is no question of the Probate Court delivering the possession to him but the probate will be decisive only with regard to the genuineness of the Will propounded and the right of the executor to represent the estate.

Documents Required for Probating the WILL

(a)Original Will of the deceased.
(b) Title Deeds pertaining to the immovable property mentioned in the Will, if any.
(c)Documents pertaining to the movables, mentioned in the Will, if any.

Procedure

A petition has to be filed before the Principal Court of Original Jurisdiction or before the Hon'ble High Court under Section 374 of the Indian Succession Act. The Court in question will issue the court notices at the initial stage and a paper publication will be caused besides a Gazette publication as well. In case such a petition is contested, it will be converted into a regular suit and upon contest the same will be disposed off, by delivering the judgment and decree, in accordance with law

Taxes on Estate?

• Estate duty was introduced in 1953 and was abolished way back in 1985, when V P Singh was the finance minister. It is not payable on deaths occurring after March 16, 1985.
• Data collated for 2005 by PricewaterhouseCoopers for 50 countries shows Japan with a top rate of 70%. South Korea’s rate is 50% followed by the US (46%), and France and UK with 40% each. On the other hand, many countries, including India, do not levy estate tax. According to the PwC study, the 24 countries with no estate tax include China, Russia, Australia and Malaysia.