Why senior citizens should register will for smooth succession of stocks

• A nominee is not the owner; legal heirs inherit shares after the owner's death
• Registering a will can ensure smooth succession and help avoid tax liabilities
• Equal share splits in wills can help children avoid extra tax burdens.

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Wondering if one of your children, as nominee of your share holdings, can continue holding the asset in the event of your death? Today’s Ask Wallet Wise explains how registering your will can save taxes for the children once they inherit the deceased shareholder’s share.

Ask Wallet-Wise initiative offers expert advice on matters related to personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try to get a top financial expert to address.

I am a senior citizen who has invested in shares of various companies and nominated two children. In the event of my death, is there an option for one of my children to continue to invest in one of the stocks and the other child to sell his part of the share?

Expert’s Advice: There is a difference between being a nominee and a legal heir. Nomination is generally done to facilitate the quick transfer of the assets in the name of the nominee. A nominee does not become an owner of the assets after the death of the original owner or shareholder of the asset. The nominee acts as trustee for the legal heirs of the deceased and is answerable to the legal heirs and has to account for the assets received by him as nominee.

For a smooth succession of your assets, it is advised that you make a valid will and get it registered, though registration of a will is not mandatory. Since you wish one of your children to continue to hold the shares after your demise, you can provide for the same in the will, stating that the particular son shall become the full owner of all the shares by paying 50 percent of the market value of the shares inherited to the other son.

Please note, this transaction of getting 50 percent of the market value of the shares inherited will have income tax implications for the son selling 50 percent of the inherited shares. Instead of providing for payment of 50 percent market value of the shares, you can provide that 50 percent shares shall be distributed to each brother and thus avoid the tax liability.