SAMPAT METHA & ASSOCIATES Chartered Accountantsestate by Testamentary or intestate succession (Sec 22 of Hindu Adoption and Maintenance Act). Dependents include parents, the widow,

WILL

SAMPAT & METHA Chartered Accountants

CERTAIN TERMS Testator / Testatrix – Person who is making the WILL

Bequeath – Leave or Pass on to someone under a WILL

Executor – Person whom Testator appoints to give effect to the WILL

Beneficiaries / Legatees – Person who will receive the property bequeathed in the WILL

Codicil – Alteration / amendment to the WILL or Codicil [Sec 2(b)]

Probate – authenticated copy of WILL issued by the Court after WILL is proved

Sampat & Mehta, Chartered Accountants - 6 Feb 2016

WHAT IS A WILL

WILL is a: o legal declaration by the Testator

o with respect to his Properties (movable / immovable)

o which he desires to give to any person after his death

As defined in the Indian Succession Act [Sec 2(h)]


WHO CAN MAKE A WILL

WILL can be made by a Person :

o of sound mind

o having age above 18 years

It can be changed by the Testator anytime during his life time


DOMICILE Domicile is used for estate duty, eligibility for

inheritance etc.

It covers physical stay as well as mental element of intention to stay in a particular territory

Domicile can be determined by:

• Lifestyle, Habits, Tastes, Conduct, Action, Ambition, Hopes, Health, Projection of a person

Which suggest the intention of a person to stay long in a particular territory


DOMICILE Domicile of Origin of every legitimate child is the country

where his father was domiciled at the time of his birth (otherwise mother’s domicile). Until new domicile is acquired previous one continues.

domicile of origin adheres to an individual even if he leaves from India with the intention not to return till the person acquires domicile elsewhere.

• Testamentary succession in respect of movable properties is governed by the Domicile of the owner; succession of immovable properties is governed by the law where the immovable property is situated.


INGREDIENTS OF A VALID WILL State full name, present address, age and religion (Substantive rights of the

Testator are tied to the religion)

State full name of the immediate family members (spouse, children)

Expressly declare that WILL is prepared in sound mind, without any undue influence or coercion.

Name the Executors, preferably more than one

Broadly list down existing Properties (movable / immovable)

To declare that it is to operate after the death of the Testator

Make specific bequests; cover the situation if Legatee dies when Testator dies Insert residual clause to cover unspecified or void or lapsed bequests (else go

to the heirs as if there is no WILL – Sec 108)


INGREDIENTS OF A VALID WILL Executor not to take legacy unless he proves the WILL or demonstrate

intention to act as an Executor to carry out directions of the WILL (Sec 141) Vesting of Property delayed beyond lifetime of a person is not valid

Bequeath of share in undivided coparcenary rights (HUF) to be specified, can

go to anyone (Upon death of the Testator legatee and HUF will be co-owners)

Reason of disinheritance to immediate family member must be clearly spelt out

Interpret the WILL to the Testator if written in the language not familiar to him, to make declaration thereof about his understanding

Must be attested by at least two witnesses with their address (even a minor

can attest a WILL as it is not a contract)

Testator should sign on all the pages with date mentioned


OTHER POINTS TO CONSIDER Amend various nomination as per WILL for ease to the legatee

Bequest to an un-born person at the time of Testator’s death is void (Sec 112) Bequests against perpetuity is void (Sec 114), (Maximum period permitted is 18 years after

the death of last person living at the time of Testator’s death)

Onerous bequest – Legatee to accept legacy and the obligation or none

Bequest can be in favour of a Family Trust (existing or created on the date of death of the Testator)

Bequest with control or restriction on enjoyment or disposal rights valid but conditions will be

void and ineffective (Sec 138)

Legatee to maintain dependents of the deceased if they have not received any share in the estate by Testamentary or intestate succession (Sec 22 of Hindu Adoption and Maintenance Act). Dependents include parents, the widow, the son and grand sons, unmarried daughters and grand daughters

The assent of the Executor with WILL annexed is necessary to complete the Legatee’s title to the legacy


MYTHS

It need not be on a stamp paper. Can be hand written, on plain paper

Registration is optional; If litigation is foreseen then do registration

Person attesting as witness need not know the contents of the WILL


PROBATE An Executor gets an authority to act from the WILL but

only after confirmation of legal procedure called Probate which establishes the genuineness of the will

Probate is MANDATORY where the Testator is: – Hindu, Sikh, Jain, Buddhist, Parsi AND – WILL is executed in Calcutta, Chennai and Mumbai OR

• executed outside these cities but relates to immovable property located in these territories

Probate is not mandatory where the testator is Muslim

or Indian Christian even if territory condition is satisfied

It is granted to the Executor


PROBATE To apply at District court or High Court depending upon

the value of the Property

Under ISA right of Executor or Legatee cannot be established in the absence of Probate

Person adversely affected by grant of the Probate can make an application to the Court

For Probate original WILL must be filed with the Court with details of Testator’s death, Value of the assets, Title deeds of immovable property, documents for movable property


ADMINISTRATOR An Administrator is appointed by the Court on an application of

interested person

Administrator is appointed when: o There is no will o The will is invalid o Executor is not named in the will o Executor is unable or unwilling to act

Letter of Administration does not confer any right over the title of the assets, it just decide the right to administer

Executor get an authority to act from Letter of Administration (LoA) issued by the Court


SUCCESSION CERTIFICATE It has limited effect

Does not provide general power of administration of the estate

The Certificate is limited to the collection of debts which were in existence at the lifetime of the deceased and enables the applicant to have the shares transferred to his name if he is otherwise entitled to it

It serves as a supportive document


INTESTATE SUCCESSION - MALE Rules of intestate succession is applicable when person

dies without leaving a valid WILL – Section 8 to 13 of Hindu Succession Act

Property of Male dying intestate devolve: o Firstly, upon the preferential heirs being the relatives as

specified in Class I of the Schedule

o Secondly, upon the preferential heirs being the relatives as specified in Class II of the Schedule

o Thirdly, upon his relatives being the agnates (related by blood or adoption wholly through the males) – Sec 12

o Fourthly, upon his relatives being the cognates (related by blood or adoption but not totally through males) – Sec 13


CALSS I HEIRS


Son, Daughter, Widow, Mother Widow of a predeceased son

Son of a predeceased son Daughter of a predeceased son

Widow of a predeceased son of a predeceased son

Son of a predeceased son of a predeceased son Daughter of a predeceased son of a predeceased son

Daughter of a predeceased daughter Son of a predeceased daughter

CLASS I HEIRS


Son of a predeceased daughter of a predeceased daughter

Daughter of a predeceased daughter of a predeceased daughter

Daughter of a predeceased son of a predeceased daughter Daughter of a predeceased daughter of a predeceased son

CALSS II HEIRS


Father Son’s daughter’s son Son’s daughter’s daughter

Brother (full blood or half blood) Sister (full blood or half blood)

Daughter’s son’s son

Daughter’s son’s daughter Daughter’s daughter’s son

Daughter’s daughter’s daughter

Brother’s son (full / half blood) (uterine blood excluded) Brother’s daughter (full / half blood) (uterine blood excluded)

Sister’s son (full / half blood) (uterine blood excluded) Sister’s daughter (full / half blood) (uterine blood excluded)

CALSS II HEIRS


Father’s father Father’s mother

Father’s widow Brother’s widow

Father’s brother / sister

Mother’s brother / sister

Mother’s father / mother

All heirs in Class II take cumulative and not simultaneously (they succeed in the order of Entry I to IX

INTESTATE SUCCESSION - FEMALE Property of Female dying intestate devolve :

o Firstly, upon the sons and daughters (including the children of any predeceased children) and husband

o Secondly, upon the heirs of her husband (as if husband’s property and he died intestate)

o Thirdly, upon her parents o Fourthly, upon the heirs of her father ((as if father’s property and he died intestate) o Fifthly, upon the heirs of her mother The heirs in the preceding entry take the property simultaneously and in exclusion to all others. Exception – Proviso to Sec 15(2) of HSA: Property inherited from husband or father-in-law will not devolve upon her father or his heirs but goes to heirs of the husband Property inherited from parents will not devolve upon her heirs of husband but goes to heirs of the parent Property acquired by WILL or under a gift is not covered in the above exception


GENERAL EXCEPTION If a relative converts from Hindu, he / she is eligible for

inheritance

The descendants of relative are disqualified from receiving the inheritance unless they have converted into Hindu before the death of the relative

Person whose marriage is solemnized under the Special Marriage Act provisions of ISA shall apply (not applicable to person who is Hindu, Jain, Sikhs, Buddhist marries to another Hindu, Jain, Sikhs, Buddhist)


WILL v/s NOMINATION WILL takes precedence over Nomination

Nomination: o does not confer any ownership rights upon the nominee nor

does it creates any legal right in his favour

o does not transfer beneficial interest to the nominee

o is only a legal relationship and not a permanent transfer of interest in favour of the nominee

Nominee is just a trustee of the property

Supreme Court / High Court on Nomination o The nomination only indicates the hands which is authorized to

receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount however can be claimed by the heirs of the assured in accordance with the law of succession governing them


WILL v/s NOMINATION o Nominee must return the payment to those in whose favour the

law creates a beneficial interest.

o The provision for transferring a share and interest to a nominee or to the heir or legal representatives as will be decided by the Society is only a meant to provide for interregnum between the death and the full administration of the estate and not for the purpose of conferring any permanent right on such a person to a property forming part of the estate of the deceased.

Departure under the Companies Act …. o Any nomination made in respect of securities / deposit of a

Company, if made in the prescribed manner, shall, on the death of the shareholder / debenture holder, prevail over any law or testamentary disposition (ie WILL) – Sec 72(3) of the Companies Act, 2013. [Bombay HC (Kokate’s case) decided in favour of the Nominee with clear distinction under Insurance Act, Maharashtra Co-operative Societies Act]


WILL v/s NOMINATION Shares held in a Company – In favour of legal heir

(Bombay High Court – Jayanand Jayant Salgaonkar) o The word ‘vest’ in the Companies Act / Depositories Act is not

with the intention to vest the rights in the nominee to the exclusion of the lawful successors of the shareholder

o Relied on various SC rulings on insurance policies

o Nominee upon the death of the shareholder comes to hold the shares in fiduciary capacity. Nominee will be answerable to all the claimants under succession laws.

o Kokate’s judgment is not correct as it does not answer: o Whether nomination paper is capable of being modified by a Codicil?

o How would one obtain a probate for a nomination?

o Who would be the witness to a nomination as required by law for a Will?


WILL AND INCOME TAX Assets received under WILL of any person is exempt

from tax

Section 168 – assessment on the Executors from the date of the death of the deceased up to the date of complete distribution of the estate to the beneficiaries (in case of more than one Executors assessment on Executors as an Association of Persons – AoP)


ADDRESS

Office: B-501/502, 11 Sarvoday

Western Express Highway

Bandra East

Mumbai – 400 051, India

Telephone: +91 22 2658 3000

URL: www.sampatmehta.com

http://www.sampatmehta.com/

Documents

SAMPAT METHA & ASSOCIATES Chartered Accountantsestate by Testamentary or intestate succession (Sec 22 of Hindu Adoption and Maintenance Act). Dependents include parents, the widow,