Importance of writing a Will – Part 2

Financial Planning | admin | July 27, 2011 at 9:10 am

Is gifting a better option?

It can be argued that instead of going through the rigmarole of making a will and apportioning assets among one's heirs, one can simply gift them during one's lifetime. However, gifting has its own limitations. For one, the process of gifting is irrevocable, that is, once the asset is given, it becomes the property of the receiver. Experts say it is risky for a person to give away all his assets during his lifetime and then be at the mercy of the beneficiaries.

On the other hand, an individual can change his will any number of times, deleting names and adding new ones as per his wish. If there is a minor change, it can be done by filing a codicil instead of rewriting the entire will. A codicil is a supplementary document which specifies the changes in the will. "One of the reasons people postpone making a will is the misconception that it cannot be altered. This is not true; you can make any number of changes," says Ahuja. The latest will supersedes all previous documents.

Appoint a nominee

One seamless option of transferring assets to your heirs is to make them nominees. All financial investments (mutual funds, bank deposits, bonds, etc) offer this facility. However, while a nomination ensures a smooth transfer of assets, it does not make the nominee the sole owner of those assets. The other legal heirs of the individual can stake a claim to those assets.

UNPRIVILEGED WILL: This is a simple will written by an individual. Such a document needs to be signed by the person making the will in the presence of at least two witnesses, who attest the document. These wills can be revoked by writing a new will or destroying the old one.

JOINT WILL: A joint will is written by two or more persons. Any of the testators can revoke the will during his lifetime. This is possible even after the death of the other testator(s).

MUTUAL WILL: This will is usually penned by a couple. The two individuals can will their wealth to the other in case one of them dies. The surviving spouse becomes the sole owner of the couple's wealth.

CONDITIONAL WILL: If the will lays down any stipulations, it is a conditional will. For instance, a will can state that the assets are to be given to the heirs only after they fulfil certain conditions, such as getting married or having children. However, the condition cannot be outside the ambit of the law.

PRIVILEGED WILL: The army personnel, who are in the battlefield or have undertaken an expedition, can write a will without any witnesses. These wills can be handwritten or even penned by another person. Such a will can be revoked by an unprivileged will.

In a case that came up before the Supreme Court in 1983, a life insurance policyholder died without writing a will, leaving behind his mother, wife and son. His wife was the nominee of the insurance policy, but his mother and his son filed petitions, both demanding a one-third share in the insurance amount. The court ruled in their favour, stating that the nomination only indicates that the person is authorised to receive the amount but is not the sole owner of that sum. "Few people are aware of this fact.

Most believe that the nominee will also be owner of the assets," says Veer Sardesai, a Pune-based certified financial planner.

Making a will online

If you are tech savvy, you can get a will made online. A few companies such as Warmond Trustees & Executors and Vakilno1.com offer this service. To make a will online, you need to register with the company and key in your personal and financial information. Once the details are uploaded, the company drafts a will and sends it to you within seven days. Besides making the will, these companies help with the registration and also act as an executor. The cost of this convenience: Rs 10,000.

However, this option works only if you have a simple portfolio and there are no conditions involved in the distribution of assets. "This is because any will with a complex structure requires a one-on-one discussion. So the online format works only for a simple portfolio," says Sandeep Nerlekar, MD and CEO, Warmond Trustees & Executors. In case you want an online will, you need to have a digital signature for signing it. The two witnesses must also have digital signatures. "Not everyone has digital signature and finding witnesses who have them is even more difficult," says Duggal.

If there is no will, the estate of the deceased is distributed in accordance with the law of succession. However, such cases usually end up in court or are settled after acrimonious negotiations between the legal heirs. There is also a cost attached. If you apply for a succession certificate from the court because there's no will, you need to pay up to 3% of the value of the assets. This is why you should settle these issues during your lifetime. "A will is a legal document that clearly demarcates what should go to whom and bypasses all succession laws. It reduces the chances of dispute and lessens emotional distress," says Bali. So, in case you have not thought about succession, it's time to stop procrastinating and start penning your legacy.

Source: Economic Times