A large percentage of property disputes in India stem from inheritance issues. Common knowledge is that writing a Will is important for a smooth transfer of assets to family members, however, a large number of people yet don’t write a Will.
Hardships befall on the legal heir to collate all information of the personal assets (physical and in digital form) of the deceased and it further mounts when there was never a clear demarcation between personal and business assets. There could be outstanding vendor payments / customer receipts which were due in the business, and the legal heirs, albeit not having adequate knowledge about the transactions, could be held responsible due to succeeding the personal assets of the deceased.
Designing a “Disaster Recovery Mechanism” not only ringfences personal assets from business liabilities, but also ensure a peaceful transmission with no dispute amongst the succeeding family members.
Following aspects to be considered while drafting a Will:
👨👩👧👧 Personal and Immediate Family details
🏘💵 Details of all the personal and business assets held by an individual
👨👩🧒 Manner of bequethal of the enlisted assets to beneficiaries
📑 Execution and Registration of Will
⚖️ Obtaining a Probate on Will by the Appointed Executor. The testator has to bear in mind the probate fees
🗓 Latest Will to prevail at the time of transmission of assets
🏦 A Nominee is not the legal heir to the nominated assets.
₹₹ Taxation Aspects: At present, beneficial and tax friendly provisions are available under the Indian domestic tax laws on transmission of assets under a will for the testator as well as for the beneficiaries.
✅️ Moreover, as India presently does not have any inheritance tax / Estate duty provisions, Will becomes the most cost effective and simple route to transmit assets.
⚔️ However, dispute amongst multiple heirs, contesting a Will for unfair distributions implies involvement of Court and delay in implementing the wishes of the deceased.
🔼 Setting up a Private family Trust could be one of the solutions to avoid potential dispute amongst family members and work well for individuals with significant estates. Ofcourse, setting up a Trust, management thereof and understanding the taxation nuances is to be factored in, but may seem more relevant when the Individual envisages a potential dispute and wants to ringfence the beneficiaries of any potential burden of business liabilities or estate tax that may be introduced by the Government in future.