Writing a Will for succession planning is an age-old concept and is very commonly done by individuals for transferring assets to the next generation.
Having a Will enables you to bequeath your assets to legatees (beneficiaries) of your choice and in a manner that you deem appropriate. If an individual passes away without a Will, he is said to have died “intestate”. In such situations, the assets of the deceased are bequeathed to his legal heirs in a manner as stipulated under personal laws.
While a Will is an easy and simple tool for achieving intergenerational transfer of assets, it has been susceptible to challenges over the years. It is, therefore, advisable that individuals intending to write their Will take professional advice, so that the document is well-drafted and does not have ambiguities and room for disputes, after the lifetime of the testator.
One of the first points to consider is the “appointment of an executor” of your Will. Choosing the right executor is a crucial step in the estate planning process, and it requires careful consideration. Upon the demise of the testator, the executor is required to complete the legal and administrative processes before handing over the assets to the legatees of the deceased.
At times, the executor may also be required to manage conflicts that may arise among legatees during the distribution of assets. You may consider appointing family members or a professional corporate entity, providing such services, to act as an executor of your Will.
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Furthermore, it is required under law that there are two independent witnesses to the Will. It is important to note that “independent witnesses” mean individuals who are not a legatee under the Will. The role of independent witnesses comes in handy, if the Will of a deceased is disputed. It is also advisable to obtain a doctor’s certificate confirming that the individual writing the Will is of sound mind and is medically fit to take decisions relating to his property and finances.
While it is not mandatory to get a Will registered, it is recommended that one either gets it registered or notarised. In practice, a registered or notarised Will is widely accepted and recognised by courts, local authorities (like municipal corporations) and even financial institutions.
However, if a Will is challenged upon the demise of the testator, the executors and the legatees will have to defend such actions on merits in a court of law. A professionally and well-drafted Will, where the right “dos and don’ts” are followed, is less likely to be challenged and helps in minimising disputes, upon the demise of the testator.
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Families have increasingly started setting up private trusts, which is a more advanced and structured tool for estate and succession planning. Assets transferred to a private trusts are not required to be probated and less susceptible to challenges. Trusts are favoured by high net worth individuals not just for smooth intergenerational transfer of assets but also for rainy day planning, i.e., to protect the assets from future business and personal uncertainties.
The writer is Managing Director, Warmond Fiduciary Services Limited.
Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to consult your financial advisor before taking any decisions.
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