Will & Estate Planning
The Hindu Succession Act, 1956 provides for the devolution of the property of a Hindu on his death. A Hindu can WILL his property and then the property would devolve according to the will. In case of a Muslim, the property of the deceased would devolve as per the law of succession laid down in Muslim Law. In case of Christians and Parsis, in case they have not left a WILL, the succession would be governed by the Indian Succession Act, 1925.
What property can be acquired by way of inheritance?
Any person, whether resident or not and whether citizen of India or not is eligible to receive any property by inheritance. However, for transfer or holding of the said property, one has to comply with exchange control regulation in India.
A WILL is a legal document, which expresses a person’s wishes as to the distribution of one’s property upon death. A man who makes a WILL is called a testator.
Until the person dies, the WILL is only an expression of his intention. Therefore, it can be changed as many times as one wishes.
A person may dispose off any of his property during one’s lifetime, even if the property is mentioned in the WILL. The WILL only applies to those assets, right and interest which are owned at the time of death plus any future or contingent interests.
The property of the deceased is called the estate. A person who inherits all or part of an estate under a WILL is called a beneficiary.
What Happens If One Dies Without a WILL?
If one dies without a WILL, one is said to die intestate and then his property will be inherited by his heirs in accordance with the law of succession as applicable to that person.
Administration of Will (Probate, Letter of Administration and Succession certificate):
After the death of the testator, the grant of probate by Court establishes the executors right to represent the estate. Probate is the official evidence of the executor’s right to dispose off the property as per the terms of the WILL. Under the Indian Succession Act, 1925, a probate can be granted only to an executor appointed under a WILL.
A probate is mandatory when the WILL pertains to immovable properties situated in Mumbai, Calcutta or Chennai.
Letter of Administration is a certificate granted by the competent court to an administrator authorising him to administer the estate of the deceased in accordance with the WILL where there exists a WILL and in accordance with law where the deceased has died intestate. In the event a WILL does not name any executor, an application can be filed in the court for grant of Letter of Administration for the property.
In cases where grant of probate or letter of administration is not compulsory, Succession Certificate can be granted by the court to realize the debts and securities of the deceased and to give valid discharge. However he is required to dispose of the amount so realized in accordance with the rights of the person entitled thereto.
Nomination has become a normal feature for various assets like bank deposits, shares L.I.C. Policies, Accident Insurance Policies, P.P.F. Flat in Society, or other assets. In the eyes of law, the position of a nominee is that of a trustee. The nominee need not necessarily be the beneficiary of the WILL. In such a case, the nominee will be holding the said assets as a trustee for the beneficiary. He is legally bound to transfer the nominated property to the beneficiary of the WILL or if there is no WILL, the legal heirs. In short, the provisions of WILL in so far as they relate to the subsequent devolution of the property will prevail over the nomination made by the deceased during his lifetime. Nomination coupled with a WILL in favor of nominee, where the nominee is intended to be made the beneficiary, can avoid disputes and make the distribution process smooth, efficient and effective.
The effect of the nomination is only to facilitate collection of the amount due to the estate of the deceased without the production of a succession certificate or proof of title.
Where the assets are held with the joint names, the interest of the deceased in that asset devolves on his legal heirs. The rules of succession will supersede the survivor ship, and though the respective authority transfers/recognizes the assets in the name of the surviving joint holder by deleting the name of the deceased, still it does not adversely affect the rights of the legal heirs to demand ones interest in the assets of the deceased from the surviving joint holder.
It is always advisable to make a WILL and to file appropriate nominations and applications for joining second name to various assets, in order to avoid the necessity of obtaining Probate or Letters of Administration or Succession Certificate for the sake of expediently dealing with the property of the deceased.
Repatriation of the legacies / inheritance
NRIs / PIOs can repatriate Sale / maturity proceeds of assets acquired by them by way of inheritance after meeting or providing for all statutory, taxation and other liabilities of the estate.
Taxability of amounts received on inheritance
The Assets received on inheritance is now not taxable. The income up to the date of death would be taxable in the hands of the deceased. The tax would, however, be leviable and recoverable from the legal representatives of the deceased in a like manner and to the same extent as the deceased.
The incomes that accrue after the date of death would be taxable in the hands of the legal heirs in their individual capacity. If, however, the legal heirs cannot be determined with certainty, the income shall be chargeable in the hands of the executor / executors.
The legal heirs are not liable for any tax or other liability of the deceased if it is more than the value of assets.