Here are a few steps you must take to ensure that your will delivers as per you wish
All those stories that tell us how thousands of crores of rupees are lying in various accounts or how a family spent many years in poverty as they were unaware of the assets they owned after the death of the head of the family should make us write a will.
Writing a will following the due process is half the work done. There are a few more things one should be doing after writing a will to ensure that all assets go to the persons of one’s choice after his death. Let’s look at a few important things one should do after writing a will.
Keep it safe and inform your executors about it
This may sound very basic but it is essential. You need not tell your family members about the contents of the will. But they must be aware of the document.
“Inform the executor of the will and your family members about the will and where it is kept. This will ensure that the executor acts on the will after the testator’s death. If he does not then the family members will ask him to do so, only if they are aware of the existence of the will,” says Pankaj Mathpal, founder and managing director of Mumbai based Optima Money Managers.
If your executor is a firm, then there is a high possibility that they do offer safekeeping services as well. Pankaj Mathpal says that bank lockers are a good place to keep the documents. Alternatively, he says that the will can be registered. This ensures that a copy of the will is always available with the office of the sub-registrar.
Update large asset purchases
Each will should have a residual clause. It states that all assets not mentioned in the will should go to one particular beneficiary. It is supposed to take care of trifles. This may include small investments, artifacts, collections arising out of hobbies, personal belongings of the testator and even goods in transit held by the testator.
However, there are cases, wherein after writing a will, testator (person writing the will) acquires a large asset with some intention—to enjoy the same in his lifetime and then bequeath it to a person of his choice. If such an asset is not mentioned in the will then it will go to the beneficiary as per residual clause.
“If you want to give such an asset bought after you have made your will to a person of your choice, it is better to amend your will,” says Raghvendra Nath, managing director, Ladderup Wealth Management.
Pankaj Mathpal told us a story wherein a couple bought a large piece of land. This purchase was one of the largest investment they did and hence was jointly owned. However, the buyers did not update their wills to that effect. It is essential to update the will to ensure that the land goes to the beneficiary of choice, and not as per the residual clause.
“There is no worry if the assets are sold and money received as that would reflect in bank balance or some financial asset which would already have a designated beneficiary predetermined as per the will,” says Rajat Datta, Founder & Initiator, Inheritance Needs Services, a Mumbai based firm specialising in inheritance services.
As a destination is important to a journey, financial goals are important to a financial plan. In a will, testator primarily lists those goals that he thinks important and must be accomplished even if he is not around. A will lists the assets earmarked for such goals. For example, one may earmark a bank fixed deposit for his daughter’s education. If the daughter’s education is over using some other means of funding then the will can be tweaked to fund some other purpose with that bank fixed deposit.
Sometimes, testator comes across new financial goals that he did not envisage in his first will. For example, as one grows older, he may turn more spiritual and may want to keep some money for a charity that he did not think earlier. Such a provision can be made by writing a new will or a codicil. If one does not write a new will, then such a wish cannot be implemented after his death.
An estate planner not quoted in the story told us about a dispute going on in a family. The head of the family who was a successful businessman wanted to give a large sum to a charitable cause. However, he did not mention the same in his last will nor updated his will. After his death, the wife and younger son of the businessman wanted to give the money for the charitable cause. However, the elder son and the daughter went to court against it as it was not part of the last will.
Entries and exits
Most of our financial goals are linked to our family members. Be it daughter’s education or her marriage or handing over one’s business reign to her—all these financial goals involve family members. With new entries into the family by way of childbirth, adoption and marriage, new financial goals are created and one would like to fund these goals. One can accordingly make changes in his will. For example, birth of a grandchild may create goals such as education and marriage of the grandchild.
Death of a family member also warrant changes in the way the assets need to be disposed of. For example, one may have given an equal share of the property to both of his sons. But, the untimely death of one of them may make him provide more for maintenance for the survivors of his deceased son.
“If the beneficiary dies before the testator then the testator needs to check whether the will provides for appropriate clauses to address such an eventuality or replacing existing beneficiary with another beneficiary on the demise of the initial beneficiary. If not then an addendum (codicil) of the will needs to be made to name the new beneficiary,” says Rajat Datta.
For the uninitiated, a codicil is an addition or supplement that explains, modifies, or revokes a will or part thereof.
Many times individuals appoint an individual in the extended family who is not a beneficiary of your assets as executor of the will. If such a person dies in your lifetime, then a new executor needs to be appointed by using a codicil.
“This is because if all the executors have died as on demise of the testator then, there is a process of Letter of Administration that will have to be followed by the beneficiaries. This process is time-consuming and costly,” explains Rajat Datta.
Letter of Administration is issued by a competent court in case a person dies before writing a will, to the heirs after following the process. It enables the legal heir to inherit, administer and transfer the assets of the deceased person.
Nominate it right
Each new investment comes with the provision of nomination. Even all your old assets have nominees. A will may have directions overriding your nominations. The law is very clear that the will prevails over nominations, as nominees are custodians of the asset and not beneficiaries.
However, not many understand it. If an asset has one person’s name as the nominee but given to someone else in the will, then there is a possibility of litigation because of misconceptions. To avoid such a situation, it is better to mention the names of the nominees as mentioned in the will. Or better still, have second names in investments in accordance with the will.
Over the lifetime of the testator, the will may be required to change. “While small changes can be incorporated using codicil, if there are major changes it is better to rewrite the will all over again,” says Anju Gandhi, partner with SNG & Partners a legal firm.
Though codicil holds good in the court of law, follow the process, use the right format, mention the objectives and reasons behind the change in clear words, and more importantly, get two witnesses to sign it. If you are changing the Will, do not forget to videograph the process.
“If the will is registered, then even the codicil needs to be registered. Codicil should have the mention of previous will and be dated and signed with two witnesses. Also, the codicil should mention which particular paragraph or asset is undergoing change. Further, witness of the codicil may not be the same witness who signed the will,” adds Rajat Datta.If you have written a will, then you have taken the step in the right direction. But do not sleep over it. Keep reviewing your will from time to time. It will ensure that it will deliver as per your wishes.You can now invest in mutual funds with moneycontrol. Download moneycontrol transact app. A dedicated app to explore, research and buy mutual funds.