How to Prepare Will: Points & Precautions

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How to Prepare Will: Points & Precautions

 

 

Author

CA. Naresh Jakhotia

 

 

 


CA. NARESH JAKHOTIA

CA Naresh Jakhotia is a practicing Chartered Accountant with more than 20 years of practical experience in the field of Direct Taxes. He is partner of M/s. SSRPN & Co and representing at all CIT (A) as well as before ITAT.

He is regular columnist & author for various articles and columns in the newspaper and professional magazines. He is also a regular speaker in various tax planning seminar & conferences. He is a regular faculty at National Academy of Direct Taxes (NADT) and also in seminar by ICAI, various Industrial & trade Associations. He was the past secretary of Shri Maheshwari Yuwak Sangh and the Treasurer of the leading industrial association of Vidarbha – Vidarbha Industries Association (VIA).

He was the treasurer of the Nagpur Toastmaster Club and member of Direct Tax Committee of the WIRC of ICAI. He was also the Vice President of Orange City Jaycees. He is also the author of the renowned column “The Tax Talk” and in the Central India’s daily newspaper ‘The Hitavada”. Author is also one of the co-promoter of world’s renowned tax portal www.theTAXtalk.com

CA Naresh Jakhotia is also a author of book “The Tax Talk”-  Interesting issues in Income Tax available at Amazon & Flipkart.

Some of the lectures conceptualised & frequently taken by the author includes:

Personal Taxation: Planning & Precaution
Programme designed with an aim to plan the tax affairs for maximum tax benefit with few cautions to be observed.

Chhoti Chhoti Bate in Income Tax
Day to day precautions to be taken from Income Tax Perspective.

Making March Meaningful
Tax Precaution to be taken before March ends.

Role of Documentation & drafting in tax Planning

How to document and draft the optimum tax management

Union Budget Analysis
A session to understand the direct tax impact of proposal in union budget


 

There are only two things that are certain in life – Death & Tax.

Like it or not, these two things need to be admitted gracefully. A will is simply a legal document in which the person declares as to who will manage your estate after you die. Asking the person to prepare the will is often considered as if you are telling the person that his end is near. We all think & believe that it is too early to think about preparing a will. Unwillingness to accept death as part of life is the main reason for not making a will.  This pandemic & its impact has made us realize the fact that life is unpredictable and uncertain & it is sensible to prepare, earlier the better. Further, old-age comes with several physical and mental illnesses making a person incapable of doing the documentation in the desired way. Court statistics prove that will prepared at an old age often generates doubts & disputes later.

Advantage of making a will:

There are the numerous benefits of making a will & serious consequences to follow if the will is not prepared. Let us know about it:

  1. Avoiding the long & time consuming process of Transfer:
    Will can ensure hassle free passing of the wealth to the legal heir without any complexities. Without a will, the process could be longer, tedious & little expensive. In absence of will, legal heirs are often required to approach the court for succession certificate which is not only time consuming but also involves a lot of paperwork.
  2. Ensuring distribution by Choice:
    Laws of inheritance and succession are complicated and diverse in nature, and are different in case of Hindus, Muslims, Christian, etc. Admittedly, there is higher inconvenience to the family members if no will exists. In the absence of a will, property normally gets distributed equally amongst heirs according to the succession laws in case of Hindu deceased. For example, in one of the cases, the son was suffering from life time imprisonment and absence of will resulted in the transfer of property to him rather than his grand son or daughter in law. Without will, estate is passed on according to the succession laws applicable to the religion of the person dying. By will, one can plan as to whom the property should be given through will.
  1. Distribution according to the need & contribution of the person:
    Every family structure is diverse and so is the contribution & dependability of the family members. Need & requirements of the wealth distribution amongst the family members is also different. Unequal distribution of assets is not possible without making a will. For example, a person can peacefully pass on the businesses to one who is taking care of business rather than leaving it on to a legal heir to negotiate & resolve. Distribution to friends, servants, etc after death is possible only if it is mentioned in the will.
  2. Equitable & Logical Distribution of wealth as against Equal Distribution:
    Will can take care of “who, what, when, why” of the assets distribution. Person making the will knows what belongs to whom, his contribution, conditions, attachment, nature in the family. Subsequent family disputes & conflicts could be avoided by making the will with suitable explanations.
  3. Attaching an obligation to the Assets given:
    By making “will”, one does not only distribute wealth; it can also attach obligations & responsibilities as well, like who will take care of the children, spouse etc. ‘Will’ enables a person to draft a clause in a way so as to take care of minor or even married daughter, grandson etc by providing funds with terms & conditions attached thereto. Will enables a person to take care of the legal heir in the most appropriate way.
  4. Tax Planning through will:
    Through proper drafting of a “will”, a person can very strongly & powerfully plan & manage subsequent tax impacts in the hands of the legal heir. Will is not only the tool for wealth distribution but can also be a muscular tool for succession planning & tax planning. Normally, authentic/ registered will is never questioned by the taxmen. There is no impact of clubbing provision if the assets are passed through will.
  5. Ensuring emotional & physical bonding amongst Family Members:
    Often disputes amongst the family members, in absence of will, results not only in loss of time, money, energy but also results in more strained relations amongst the legal heir. Creating a document called “WILL” could not only save a lot of trouble and headache subsequently but also provide peace & harmony in the family..

  Registration of ‘Wills’:

Registration of a Will is not at all compulsory. However, if the Will is registered, it is more strong & authentic evidence as to its genuineness. “Will”can be registered with the registrar/ sub-registrar by paying a nominal registration fee. It requires the person to visit the registrar’s office along with 2 witnesses who are trustworthy.

‘Probate’ and its importance:

Non registration of “Will” often results in a questioning of its authenticity. When the will is not registered or questioned, normally a document called “Probate of Will” is required from Court. Probate is the copy of the will given to the executor with a certificate under the seal of the court and signed by one of the registrars certifying that the will has been proved. Probate is a way to certify that the Will is authentic. The application for probate has to be made along with a copy of the last Will and testament of the deceased to a court of competent jurisdiction. To avoid the probable requirements of probate, it is advisable that the will be registered with the registrar.

Considering the nominal cost, consequences & time involved, it is advisable to make the will and register it too. Let us know about the process of making the will.

Points to be kept in mind while preparing the will:

There is no legal or defined format for making a “Will”. It’s not necessary to make the will on stamp paper. One can make it even on plain paper. Preferably, thick paper should be used and should not be folded. It is extremely important to keep it simple, precise and clear. It could be printed or handwritten. Normally, the printed version is preferred as it is more legible and clear in reading. Will can be changed as many times as required. It is possible to change the will even if it is registered. If minor changes are there it can be done by executing a codicil. A codicil is a written statement which supplements or modifies an already existing will. It must be executed in the same manner as that of the original will. If substantial changes are required then it is advisable to execute a fresh new document mentioning it as the last will.

The person making the will must clearly mention the date of creation. The last will supersede all earlier ones. It should be titled as the “Last Will”. The will should appoint an executor. Executor is a person who will carry on the tenets of the will. A trustworthy person with his prior permission should be named as an executor. Prior permission will safeguard against subsequent refusal by him.

How to make a Will:

Here is a 5 Step guide for making the will as under:

Step 1 : Make a Declaration in the beginning :

The will should begin with a simple declaration about the person making it, name, address, age, etc and with a confirmation that you are in your senses.

Step 2 : Details of Properties & Documents:

The will should incorporate the details of all the assets, properties, investments, etc as owned by you on the date of making the will. It may also incorporate the details as to where these documents, records, assets, are kept. If any asset is held not fully but in sharing or co-ownership, this fact should also be mentioned. For few assets like Gold, Silver, etc, the manner of its acquisition, at the time of marriage, inheritance, etc, can also be specified for emotional & identification purposes.

Step 3 : Manner of Distribution of the Assets/ Properties:

Manner of the distribution of assets can be incorporated in the will. If asset is proposed to be given to a minor then a trustworthy custodian till minor attains an adult age should be appointed. If there is any liability also, it may also be mentioned and the mode/obligation of its repayment can also be discussed in the will.

Step 4 : Signing the Will:

After the will is prepared, all the pages must be serially numbered & signed, preferably in presence of at least two independent witnesses. Advisably witnesses should be younger than the person making the will & should not be the beneficiaries of the will. Witnesses undertake that you have signed the will in their presence. The date and place must also be indicated clearly at the bottom of the will.

Step 5 : Storing the Will:

Will takes effect only after the death of a person. It is advisable that a signed and sealed copy of ‘will’ is kept in such a way that it can be accessed and implemented after the death of the person. For this, the intimation of will and its place of storage may normally be communicated to close relatives or friends who can ensure that the wealth of the person is distributed according to the desire of the person making the will.

Nomination cannot replace Will

Most financial instruments like FDR, bank savings / Current accounts, PPF, Insurance policies etc have the option of Nomination over it. Having a nominee over such financial instruments will facilitate the transfer of the assets without the need for a succession certificate. Question is raised as to whether will is required even if a nominee is mentioned in the financial instruments? Strictly speaking, a Nominee is neither a legal heir nor owner of the asset but merely a caretaker. The person takes the assets in his custody and then transfers it to the legal heirs of the original owner. A nominee is someone who takes care of the asset after the death of the actual owner until it is transferred to the right legal heir.

Although it is possible to draft a will on your own, it is always better to take the advice of a trusted professional while writing a will. This will reduce probable chance of error & misinterpretation & the probability of the will being claimed as invalid in the court of law. Considering the nominal cost involved and the long enduring benefit, everyone must prepare a will for the peace and harmony in the family.

[Readers may forward their feedback & queries at nareshjakhotia@gmail.com. Other articles & response to queries are available at www.theTAXtalk.com ]

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