Estate Planning PDF

Guide to Estate Planning
Foreword
Dear Reader,
Many individuals after discharging their responsibilities towards dependants, dream of blissful retired
life - and some even plan for it well in time.
But your responsibilities don’t end there.
Long-term wellbeing of your loved ones comes with prudent ‘estate planning’ – and it would be
unwise to ignore it.
Through this Money Simplified guide we attempt to take you through the nitty-gritties of sensible
estate planning.
We recognise that during your golden years you require peace of mind, and want to see your family in
joy and peace. Hence we bring to you a holistic perspective for effective estate planning.
For you to act far-sightedly and convert words of wisdom into concurrent planning, we have
associated with a reputed institution that has over 30 years of experience in writing Wills and estate
planning. After all, every person needs a practicing estate planner who is righteous, highly proficient,
supportive, has the ability to comprehend your needs – truly someone who handholds you.
As Suze Orman says, “Estate planning is an important and everlasting gift you can give your family.
And setting up a smooth inheritance isn't as hard as you might think.”
So, step-up and take control, as you endeavour passing assets to your loved ones judiciously.
At PersonalFN we’re sure it would be a fulfilling exercise.
Read on…
Warm Regards,
Team Personal FN
2 www.PersonalFN.com
Dear Reader,
We hope this guide on Estate planning will help address most of your concerns, dispel various myths
and help you plan the passing on of your hard earned assets to the people you desire either in a
collaborative or confidential manner.
We share with you our experiences over the years where succession has been the focus of death
duties and inheritance tax through the times where evolving social needs have emphasised the need
for reform. Illustratively: women’s rights, parents rights, rights of nominees and the like.
We would be happy to assist you in answering any specific questions you may have and providing
solutions for your personal and/or business succession requirements.
Warm Regards,
Mr Dileep Choksi
Mentor, CCC WillEffect Pvt. Ltd.
Disclaimer
This Guide is for Private Circulation only and is not for sale. The Guide is only for information purposes and Quantum
Information Services Private Limited (PersonalFN) and WillEffect is not providing any professional/investment advice
through it. The Guide does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer
to buy or sell financial products, units or securities. PersonalFN and WillEffect disclaims warranty of any kind, whether
express or implied, as to any matter/content contained in this guide, including without limitation the implied warranties of
merchantability and fitness for a particular purpose. PersonalFN and its subsidiaries / affiliates / sponsors / trustee or their
officers, employees, personnel, directors and WillEffect will not be responsible for any direct/indirect loss or liability
incurred by the user as a consequence of his or any other person on his behalf taking any investment decisions based on the
contents of this guide. Use of this guide is at the user’s own risk. The user must make his own investment decisions based
on his specific investment objective and financial position and using such independent advisors as he believes necessary.
PersonalFN and WillEffect does not warrant completeness or accuracy of any information published in this guide. All
intellectual property rights emerging from this guide are and shall remain with PersonalFN. This guide is for your personal
use and you shall not resell, copy, or redistribute this guide, or use it for any commercial purpose. All names and situations
depicted in the Guide are purely fictional and serve the purpose of illustration only. Any resemblance between the
illustrations and any persons living or dead is purely coincidental.
Index
Section I: Introduction
Why everyone should consider estate planning 06

Myths about estate planning debunked 09
Section II: How one can undertake estate planning
Wills 10
10 Vital points to consider while writing a Will 12
Should you consider writing a Will online? 14
Who should stand as witness to the Will? 15
Who should be the executor of the Will? 15
Registration of Will 16
Trusts 17
Who should consider the option of constituting a private trust? 18
Wills vs. Trusts 18
Why a mere nomination is not enough? 19
Nomination vs. Assignment 20
Transfer of shares in case of a co-operative housing society 21
Estate Planning for HUFs 22
Succession planning for businesses 25
Forced Heirship 28
Section III: Passing online/digital assets to your loved ones 30
Section IV: Selecting the right estate planner
The role of an estate planner 32

Qualities to look out for in an estate planner 32
Section V: How Estate Planning can bring along the needed peace of mind 34
I: Why Everyone Should Consider Estate Planning
“In this world nothing can be said to be certain, except death and taxes.” - Benjamin Franklin
Benjamin Franklin, the renowned polymath, author, political theorist, civic activist, statesman and
diplomat has so aptly quipped. But despite being aware of this inevitable fact, most people avoid
thinking about it, or defer estate planning to another day.
What is estate planning
Estate planning in simple terms refers to the passing assets / investments down from one generation
to another. You decide how much of your estate – be it property(s), car(s), personal accolades,
financial investments, etc. – you want to pass on to whom and how, after your demise.
It is a dynamic process that needs to be reviewed at regular intervals to absorb any changes that
might happen in our life or in the laws of the country.
Why do you need to plan?
Dying intestate (i.e. without a legal Will in place), can leave various complications for your family.
There could be serious disputes amongst family member over your estate that can devastate the
peace and happiness you’ve always sought for your family.
In a ruthless and materialistic world we live in today, people are unfortunately behaving like hounds,
wanting to grab a bigger pie. The tragic sagas, of families being disrupted over money matters is
rather disturbing …and what’s alarming is that such stories are unfolding everyday! A scenario has
evolved where one can’t even evince faith in his/her own family members.
Here’s a tragic saga of Mr Suhas’s family…
Mr Suhas, was a flourishing businessman. As an enterprising individual he earned a healthy sum, but
never planned for his family’s future financial wellbeing. He perhaps, thought that his business would
suffice to all the needs of family members – his two sons Raghu and Shyam, and his wife Sunita (a
housewife).
He envisioned growing his business to a scale where Ragu and Shyam would inherit and run it
successfully and make way for his retirement. In this endeavour he (Mr Suhas) had been taking loans,
but the family was not well apprised about the whereabouts. Then came a time when there was a slip
between the cup and lip. A few of his ventures failed. He began to siphon funds from his successful
venture to unsuccessful ventures in an attempt to bring them around. But that didn’t help either, and
as a consequence his successful business too was overthrown.
The family underwent through hardships. Mr Suhas was shaken and had lost all the confidence. With
banks and other creditor knocking the door for their money, he was under constant pressure. By that
time his children Raghu and Shyam were merely in college; and they not being well apprised, there
was very little they could do. In a matter of a few years succumbing to the constant pressure, Mr
Suhas suffered a massive heart attack and he breathe his last – leaving his family with assets of
course, but even liabilities to handle. It was an irreparable loss to the family. Raghu and Shyam were
almost in their late 20s and mid 20s respectively, a ripe age when this untoward incident happened.
As time passed, there were heated arguments, bickering between the brothers over the property and
the debt to shoulder. The environment in Mr Suhas’s family started getting unsavoury by the day, and
the happiness once fancied, never materialised. It was a sorrowful scene for Mrs Suhas to experience
and see the two brothers fighting like hounds …and even today the situation hasn’t got better
between the two or the family.
“Never say you know a man until you have divided an inheritance with him.” - Johann Kaspar Lavater
Hence in such times, the aforesaid quote of Swiss poet, writer, philosopher, physiognomist and
theologian, Mr Johann Kaspar Lavater seems apt, when even blood relations fail to act rationally.
Therefore although being optimistic is a good thing, it is vital to anticipate even the unexpected and
take necessary steps towards estate planning while we build wealth to sustain ourselves and our
families.
Need to involve your family in financial matters…

It is imperative that you involve you family in financial matters. In addition to taking their views on
matters such as planning a vacation, shopping, etc., involve your family members in crucial aspects of
life – such as financial planning and estate planning – and discuss with enough depth and
comprehension.
The following points will help you recognise the eminence of discussing your financial affairs with
family:
 Involving your spouse: In our country, most financial decisions are taken by the bread earner or
the head of the family. In this process, the views of the spouse (usually the wife) are generally not
taken into consideration. This may be because the spouse lacks financial knowledge or interest in
the financial affairs of the family. However, as irrelevant as this may sound to you, it is extremely
important to include your better half while planning or reviewing your financial plans. You might
be surprised at the inputs your spouse may provide while planning your finances. While her views
regarding each goal and how she would prefer them to be realised might be different, her
opinions about various subjects can bring a great deal of clarity and another perceptive to you
while thinking about the long-term financial wellbeing of your family.
 Creating awareness among children: You see, children learn a great deal by observing. Many of you
would agree that today’s generation are very smart and are fast learners. They have the acumen
and inquisitive to learn. Therefore discussing with them will create curiosity in their mind and help
them understand financial matters better.
Schools today are educating teaching children on personal finance; but as a parent it is vital that
you too involve children while taking financial decisions for the family, especially the ones that will
affect them, and instil in them the value of money (no matter what your economic status is) and
morals. As parents, the earlier you create financial awareness and values among your children, the
lesser mistakes they would make as they grow up.
 Make it a team effort: “Together Everyone Accomplish More”…that’s pretty much what team
work can do. So, if you as a family approach financial matters as a team it would bode well for the
long-term financial wellbeing. But enough discipline and efforts from all the family members is
necessary. Therefore discuss and together develop a plan of action; which will increase the
chances of bringing your wishes to fruition than only a single person doing all the brain storming.
Without team work between members, financial wellbeing can be at risk.
 Financial independence: Involving your family in financial matters can help them become
financially independent in the long run. It will help them to appreciate the importance
of budgeting, financial planning and estate planning.
Remember that while you involve your family, pass on all vital information to your family members.
Also, be open and honest regarding the financial history of the family. Let your experiences, whether
favourable or unfavourable be a teaching lesson for them. Let them not be under a fallacy that may
have ramifications. This will avoid the confusion and stress that may occur in the future.
Please note that discussing money matters with family is not a taboo. Thus start sharing all financial
issues with your family before it's too late. Don’t follow what Mr Suhas did, who didn’t share much
details with his family member although he vied to bestow the best.
If you aren’t confident, take help of an expert who stands as guardian, judiciously guiding you and
your family.
Myths about estate planning
People are under a delusion when it comes to estate planning – that’s what our experience reveals..
Here are a few common myths they possess…
 Myth#1: Estate planning is meant only for the wealthy
Fact: It is essential for everyone, and ensures that your hard earned assets are passed on to those
you wish to. So, irrespective of the quantum of wealth owned and the economic strata you come
from, estate planning is essential and it potentially avoids the squabbles and bickering amongst
love ones later and ushers peace of mind and happiness.
 Myth#2: Estate Planning should be thought of only after retirement
Fact: Life is quite unpredictable and hence, the earlier one thinks through and plans, the better it
is. Ideally, one should begin estate planning in the mid-asset accumulation phase, when you are
between 35 to 45 years of age or latest in the protection phase of their economic life cycle, when
you are between 45 to 55 Years.
 Myth#3: My legal heirs will handle it maturely
Fact: It is good to hope that they do, but unfortunately many disputes often happen over money
in today's world. Mr Suhas’s case is an eye-opener. You don’t want the environment in the family
turn unsavoury over estate; do you?
 Myth# 4: I have registered my nominee(s); they will anyways be the beneficiaries of my assets
Fact: This is not always true. A nominee is the trustee of the assets, to whom the mutual fund
company, insurance company, and so on will transfer the funds in case of an unfortunate demise
of the holder of the assets. But this does not mean that the nominee will always be the owner of
the assets. The owner of the assets will be the legal heir as per a Will, or if one has died intestate
(i.e. in the absence of a Will), the transmission would be as per the country's succession laws.
 Myth#5: I don't need to seek legal opinion
Fact: While it is not necessary, it would be prudent to reach out to a trusted lawyer to ensure that
estate planning is done legitimately considering the nitty-gritties involved. Estate planning done in
a systematic way can prevent the addition of financial and legal grief to the emotional grief.
Section II: How Can One Undertake Estate

Planning?
Well, broadly there are two ways – A Will and a Trust. Let us understand each of them in detail…
1. Wills
“Where there’s a Will, there’s a Way.” - an old English proverb
A Will is legal declaration of the intention by the one making it – the testator –with respect to
property that he/she desires to be carried into effect after his death.
There are host of benefits of writing a Will:
 It provides you, the testator, a sense of sense of understanding current financial strength (and
even an opportunity to improvise in the remaining life span, especially if you’ve made a Will in the
initial accumulation phase of your economic life cycle)
 The above also brings in clarity while passing assets amongst loved ones
 Avoids disputes within the family, if explicit and rational distribution is done
 Helps you make provisions for minor children and children with special needs as per your wish
 Disinherit certain relatives who may be troublemakers
 Help you address transfer of online assets
 Help you address transfer of offshore assets
 You can choose your executor
 Specify even funeral wishes
 Prevents financial and legal grief
 Brings in peace of mind and happiness
Hence, a Will can be said to be the corner stone of estate planning.
Who can make a Will and when?
A will can be prepared by anyone who is 18 years of age, of sound mind, and free from any coercion,
fraud and undue influence.
Often we hear: “I am too young to prepare a will” or “I don't need to prepare a will”. But amid a
materialistic world, unwanted complications are common and we’re sure you don’t want to leave
your family with grave inconvenience.
As you know, life is quite unpredictable and uncertain. It is always better to prepare a Will and store it
safely while you are young and/or in pink of financial and physical health. You don't need to wait till
you own lots of wealth to transfer or till you turn 65 to create a Will. You can always revise it as your
assets grow. You see, with old-age comes several physical and mental illnesses. People become
incapacitated or even lose their ability to comprehend. A Will created at such an age, when a person
might not be in his or her right senses might create misunderstandings, doubts and disputes in the
family later. Hence it is advisable to prepare your Will at a relatively young age when you are fit, in
order to avoid conflicts later.
Hence, there’s no specific age when you should make a Will as long you’re a major (18 years of age
and above). But in the following circumstances you must consider making one right away…
 Married or in a relationship:
You are in a bond and nurturing a relationship. As you bestow your better half with all the
goodies, don’t ignore estate planning. This can pervade financial security to your partner,
strengthen the bond between you two and usher peace and happiness.
 Started a family:
When you are married and have children along with dependents to support; the responsibility
rests on your shoulders. Hence as a mature individual, along with financial planning (where the
objective is to achieve vital financial goals viz. children’s education and marriage needs), consider
writing a Will during the accumulation phase of life and keep revisiting the Will to accommodate
any changes. This will avoid the bickering later, what Suhas’s family experienced. Be wise and a
responsible individual thinking about the long-term financial wellbeing of your family.
 A situation of divorce or re-marriage:

In case of a divorce, an existing Will may need to be re-written considering the aspect of alimony.
Likewise for a re-marriage, you may have to amend the existing Will, or write a new one if you
haven’t made so far. For example, a re-married couple could have children from previous
relationship …and you may want to safeguard the interest of your loved ones. Similarly, the way
you would like to deal with matrimonial home or an inherited property; amongst a host of other
finer issues can be taken care of through a well-drafted Will.
 Terminal illness:
God forbid, but if you are diagnosed with a terminal illness and if you haven’t written a Will, it’s
high time you make one before health deteriorates. After all, besides the emotional grief you
don’t want your family to grieve financially and legally; isn’t it?
So, broadly, here are the questions you should have answers for while writing a Will:
- To whom will the assets be passed if I die intestate i.e. without a will?
- Who will look after my child/children if something were to happen to me or my spouse?
- Who should be the guardian to my children if situation warrants?
- Have I apprised my spouse and /or children, or anyone about my assets / investments?
- In case of children living abroad, will they be taxed on the asset passed in the Will?
- In case of an inter-caste marriage, what are my rights in family property?
- What are my and my family’s rights in an ancestral property?

- Who should I appoint as the executor, or trustee of the Will
- …and many more!
You see, there are disadvantages of not writing a Will:
 Your family may be befuddled as to where and how much assets are left behind, causing panic in
times of grief
 Other family members and/or Court would decide who will look after minor children
 There will be no executor, no guardian …and appointing another person potentially lugs the risk of
delays, additional expenses and even a loss
 There could be bickering in the family over assets, turning the environment unsavoury (much as in
the case of Suhas) and the peace and happiness you always sought may not transpire
 Your children and/ or spouse would be left fighting legal battles
 All you assets will get distributed as per personal laws of your religion and not in accordance to
your wish
 Certain assets that you wanted to keep within the family, maybe sold
 In case of a common disaster, where your whole immediate family passes away; your assets may
get passed on to relatives whom may have never spoken to or you were not in good terms with, as
against considering passing them on for charity
 Transmission of moveable and immoveable can get expensive and time consuming
The aforesaid list is not exhaustive, but we’re sure you can imagine what can become apparent in the
absence of a valid Will. Hence plan ahead and make a Will.
10 Vital points to consider while writing a Will:
Here are 10 certain points which could prove helpful to you while preparing a Will…
1. A Will can be prepared by anyone who is 18 years of age, of sound mind, and free from any
coercion, fraud and undue influence. With old-age comes several physical and mental illnesses.
People become incapacitated or even lose their ability to comprehend. A Will created at such an
age, when a person might not be in his or her right senses might create misunderstandings,
doubts and disputes in the family later. Hence it is advisable to prepare your Will at a relatively
young age when you are fit, in order to avoid conflicts later.
2. You must use the title 'Last Will And Testament Of (state your name here)' to make it clear that
the document is your Will and legal. Moreover state your full name, current address, and the fact
that you are of sound mental health and under no duress from any one to make the Will.
3. Name an executor, a person who will carry on and administer the tenets of the Will. A trust
worthy person should be named as an executor and you must seek their permission before
nominating them. This is because if they refuse to become an executor later, then there might be
no one to execute the Will, leaving it to the court of law to appoint an administrator. Also, it
would be wise to inform the executor and family members about the whereabouts of your Will in
order to avoid confusion later.
4. A will can be hand written or typed out. No stamp paper is necessary. You can write a Will on a
simple A4 size paper, sign and date it with minimum 2 witnesses and keep it in a secure location.
It is not compulsory for one to register a Will with the Registering Authority. But in case any
property or asset is given to any charitable organisation, then registration should be done.
Likewise, in order to avoid frauds and tampering, it is preferable to get the Will registered.
5. If you have bequeathed your assets to any minor children, make sure you appoint a guardian for
the assets till the time the said minors reach an adult age.
6. It is extremely important for a Will to be simple, precise and clear. Otherwise some people
might misconstrue your intentions and your assets might not be transferred to your choice of
beneficiaries.
7. It is possible to make changes or minor alterations in a Will if you wish to do so. However in case
there are too many or major changes, it will be better to make an entirely new Will. Moreover,
you must always date your Will. If more than one Will is made then the one having the latest date
will nullify all other Wills.
8. Each page of the Will should be serially numbered and signed by the Testator (that is the person
making the will) and the Witnesses. This is to prevent the Will being substituted, replaced, or
pages being inserted by people intending to commit fraud. At the end of the Will you (the
Testator) should indicate the total number of pages in the Will. Corrections if any should be
countersigned.
9. While writing a Will along with the laws of the country, one's religion also plays an important
role. Hence you must keep that in mind while making your will. For example, in case of Hindus,
any assets that you have acquired on your own can be bequeathed as per your wishes. However
any property which you have inherited from your father cannot be transferred according to your
whims and fancies, as the laws of inheritance would apply.
10. Although it is possible to draft a Will on your own, it is always better to take the advice of a
trusted lawyer or advocate while writing a Will. This will reduce any chances of
misinterpretation or frauds from relatives and also reduces the probability of the Will being
claimed as invalid in the Court of law.
Remember, this is one of the most important documents you will ever create – detailing the
distribution of the wealth you have worked so hard to build – to your loved ones. So, ensure that it’s
done correctly.
Should you consider writing a Will online?
Today, in an online world we live in, there are host of portals who help you write Wills online in a
quick, convenient and user-friendly way at a reasonable cost ensuring confidentiality.
But who should opt making a Will online?
Well, if you have a simple, small family – husband, wife, one child – and you are not controlling any
business enterprise but earning a salary and wealth through the same; you can consider making a Will
online if there aren’t any complexities involved.
Most online Will writing portals are backed by legal services firms that have emerged in the last few
years in India, and are cost effective. They have also tied up with a few financial service providers for
client access and credibility.
The concept of an online Will is slowly gaining popularity with nuclear families today. In most case the
process too is very simple…
 Make an account with on the service provider’s website;
 Login and furnish necessary information in a prescribed form;
 Legal experts will then scrutinise the form; and
 A Will be drafted and delivered via email (or in some cases, even at your doorstep)
Moreover, you have a provision to revise the online Will (within a prescribed time frame) if you find
it’s not drafted as per your requirement or to account for any change in circumstances. Also, your
online assets as well as intellectual properties can be mentioned in an online Will.
Some Will writing portals also offer add-on services such as: registration of a Will and appointment of
the executor, but it’s not binding on the customers.
If you are looking at making a Will online, www.willeffect.in offers the service in a quick, convenient
user-friendly way at a reasonable cost while ensuring complete confidentiality.
In cases where complexities are involved such as you are a citizen of another country, there is
ancestral wealth involved, assets are substantial, there are several legatees to handle, you are raising
grandchildren or step children, you’ve re-married, you foresee that the Will might be contested, you
have a business enterprise, amongst a host of other aspects; then it is wise to take the offline route
with help of an expert – the estate planner/attorney.
Who should stand as witness to the Will?
In the Will a witness has a role to play. Hence select a witness to your Will carefully. The best practice
would be to have a trusted doctor and/or a lawyer as a witness to sign the Will. It is not mandatory for
a witness to read the contents of a Will before signing it; because he/she only confirms that the Will
has been signed in his/her presence.
But, if there is vagueness in the Will, one may have to go back to the intention of the Will (which the
Court will look at). To handles such eventualities, it may be best to have a close confidant to be the
witness for the Will. However, a beneficiary cannot be a witness, nor should a witness’s spouse be a
beneficiary. However, a beneficiary can be an executor. A will should be attested by a minimum of
two witnesses; there can always be more.
Who should be the executor of the Will?
An executor is one who will carry on and administer the tenets of the Will. It is a responsible role to
play. Hence ideally, as cited earlier, only a trustworthy, meticulous person who has good knowledge
of finance and who can deal with financial assets prudently, should be named as the executor of your
Will.
An executor should ideally:

- Be in touch with the beneficiaries of the testator, keeping them informed
- Preserve all records of estate transaction made and document all the decisions made
- Petition the Court in case Will is unclear regarding particular items
- Keep affairs of the estate confidential
- Avoid conflict of interest
- Meet all required deadlines
So, broadly an executor of your Will should stand for high fiduciary standards, as the estate
beneficiaries can sue to the executor in case of:
- Conflict of interest
- Failure to prudently distribute the assets of an estate
- Dealing with the estate as per his/her own accord, or sells any asset
- Inappropriate decisions
- Loss incurred as result of being irresponsible decisions
- Leaking confidential information
- Irregularity in maintaining records
- Unnecessary delay in settling the estate
- Any other problem
Before you nominate an executor always seek his/her permission. This is because if they refuse to
become an executor later, then there might be no one to execute the Will, leaving it to the court of
law to appoint an administrator.
If you don’t find a competent person as an executor for your Will, professionals such as lawyers,
chartered accountants and other capable professionals can be the executor for a fee. But given that
that no individual is perpetual in existence and may hold a bias, increasingly, people are considering
‘professional executorship and trust companies’, which by law, have perpetual successions and are
independent experts in the domain.
Also, take the opinion of your spouse and children while selecting an executor. Once the executor is
selected, inform him/her and your family members about the whereabouts of your Will in order to
avoid confusion later.
Registration of Will
As cited earlier, it is not mandatory to register a Will. If you wish your Will can be registered with the
registrar/sub-registrar by paying a nominal registration fee.
For registering your Will as a testator, you are required to be personally present at the registrar's
office along with the witnesses. If the registrar/sub-registrar is satisfied with the documents
furnished, an entry will be made in the register with the year, month and date mentioned, and you,
the testator, will be issued a certified copy. If the registrar/sub-registrar refuses to register the Will, as
a testator you can always file a civil suit in a court of law (with jurisdiction) and the Court will pass a
decree of registration of the Will if it is satisfied with the evidence produced. But remember, a suit can
be filed only within 30 days from the date of refusal.
It is vital to note that once you Will is registered, it is in the custody of the registrar. Therefore it
cannot be tampered, mutilated, stolen or destroyed. Now in case you’ve thought of amending your
registered Will, it would be better to re-register the amended Will, although it is not compulsory.
A registered Will cannot provide legal sanctity to Will nor does it give any special status. A Will can
always be challenged in the court of law. However, registration can serve as an evidence of
genuineness of the Will.
Can liabilities be a part of a Will
No. Liabilities cannot be part of a Will.
Including liabilities in a Will would mean you expect your obligations to be met by your successors;
but in reality, not even your loved ones would ever take them up. A Will with a liability can never go
through.
In fact all it can leave back is an unsavoury environment. Hence, while you may indulge in credit,
ensure that you stay within your limits and the long-term financial wellbeing is not jeopardised. After
all, you envision that your loved ones live happily and in peace, isn’t it?
2. Trusts
A trust is an agreement between the settlor and the trustees to transfer the legal ownership of assets
/ property to the trustee with the obligation that the same should be held for the benefit of the
beneficiaries as specified in the trust deed.
A Trust has four components:
1. Author of the Trust/settlor: He’s the one who settles the Trust or in other words is the author of
the Trust
2. Trustee: An individual / entity appointed by the Settlor to administer the Trust and accept the
responsibility to act as Trustee.
3. Beneficiary: The person(s) for whose benefit the Trust is created is called the Beneficiary.
4. Trust-property or Trust money: This the subject matter of the Trust and can comprise of both,
movable and immovable property viz. cash, jewellery, land, investment instruments etc.
For creating a Trust, legally it is necessary for the Settlor i.e. the person who creates a Trust, to ensure
that four conditions are complied with:
 Make an unequivocal declaration binding on him;
 Outline the purpose / objects of the Trust
 Clearly specify the beneficiaries of the Trust; and
 Transfer the identifiable property under an irrevocable arrangement to the beneficiaries
What are the different types of Trusts?
Well, there are various types classified as per the Indian law depending on the purpose they’ve been
formed. So you have…
Public Trust – Such a Trust is constituted wholly or mainly for the public at large. Thus beneficiaries
are incapable of ascertainment. Usually such trusts are in the nature of religious or charitable trust.
Private Trust – A trust is said to be private when it is constituted for the benefit of one or more
individuals who are, or within a given time maybe definitely ascertained. A Private Trust is governed
by the Indian Trust Act, 1882, but if such a Trust is created by will, it shall be subject to the provisions
of the Indian Succession Act, 1925.
Who should consider the option of constituting a private trust?
- If you want to ring-fence the assets from any litigation and avoid the rigmarole later
- Want to ensure that assets are used only for specific purpose
- Distribute asset based on the occurrence of a contingent event at a certain point of time in the life
of the beneficiaries
- If you have minor children and want to ensure that they are looked after well
- Want to ensure prudent tax planning
Hence vide a Private Trust the breadwinner can ensure effective estate planning as envisioned, but for
the same, one needs to ensure that trust is well documented so that the beneficiaries indeed benefit
from what’s bequeathed to them.
Remember, a Trust can be created during the lifetime of the Settlor (for the benefit of loved ones –
who may or may not be necessarily a dependent –and for the Settlor himself as he grows old), or after
the death of the Settlor (to bequeath assets to loved ones).
Wills vs. Trusts
By adopting a Trust route a person can avoid the issues which arise in a Will, such as—authenticity of
the Will, mental soundness of the person making the Will and alleged forgery etc. The grounds on
which a Will can be challenged are numerous. Moreover the probable time to get a probate on a
contested Will could take several years and can be expensive. On the other hand, a Trust deed is
never disclosed to anyone and is highly confidential and there is no need to obtain probate.
Creating a Private Trust resolves most of the problems and can be beneficial in the management and
distribution of assets.
Although the best way to bequeath the assets to the beneficiaries seems to be creating a Private
Trust, it is ideal to have a combination of both—Will and Trust. It will all boil down to the individual,
the extent of his assets, his objectives and constitution of the family.
A Private Trust has its own set of limitations too:
 Cost: The cost paid towards stamp duty in case of transfer of immovable property differs from one
state to the other.
 Trustee: The success of a Trust depends upon the right selection of the Trustees. A wrong
selection can defeat the entire purpose of setting up the Trust in the first place.
Trust Deed: Drafting a Trust Deed is more difficult than writing a Will. If not drafted clearly, a trust
deed is difficult to execute. Also there’s less flexibility to a Trust as against writing a Will.
Why a mere nomination is not enough?
Now that we have understood the benefits of writing a Will and holding a Private Trust, let’s address a
common misconception in estate planning—Nomination.
“I have nominees on all my investments? Do I still need a Will?”
Most individuals assume nominees to be a legal heir. Ironically, that’s not true. A nominee is the
trustee of your assets, to whom the mutual fund company, insurance company and so on will transfer
your funds in case of your unfortunate demise. But this does not mean that the nominee will always
be the owner of your assets. The owner of your assets will be your legal heir as per your Will, or if you
have died intestate (i.e. in the absence of a Will) the transmission would be as per the country's
succession laws.
Let us understand who will be the beneficiary in case of the following assets:
 Financial assets: For most financial assets (such as mutual fund investments, bank accounts and so
on), a nominee is not compulsorily or necessarily the beneficiary, but only a trustee responsible
for distributing the assets to your legal heirs as per the Will or succession laws.
However, for some financial assets such shares, debentures the nominee can be the owner of the
assets after your death and not the legal heirs. The Honourable Bombay High Court in its
judgement in the 2010 Harsha Nitin Kokate case ruled that the nominee and not the legal heirs
would inherit the shares.
Later in 2015, in Salgaonkar-Ghatalia judgement the aforementioned was overruled by Justice

Gautam Patel of the Bombay High Court and upheld the view that rights of the heirs override
those of the nominee.
One way to address this ambiguity and avoid the court battle which can at times become messy is
to appoint the intended beneficiaries as nominee. It is also advisable to pen down a clear and
unambiguous Will, which shall automatically supersede everything else as per the honourable
court’s latest judgement.
 Insurance: Earlier, the nominee was not necessarily the beneficiary of the policy and had to
distribute the insurance claims of life insurance policies to the legal heirs. However, the new
Insurance Laws (Amendment) Act, 2015 has addressed this efficaciously. There is a separate
category now called 'beneficial nominee'. If you nominate someone as your beneficial nominee,
such nominee, does not have to share insurance money with other legal heir. A policyholder can
appoint multiple 'beneficial nominee' mentioning their share.
It is also possible to appoint 'collector nominee' who will simply receive money from insurance
company and facilitate the transmission to legal heir which may happen based on succession laws.
New rules have also made it clear that a nominee has a right to claim money even at maturity in
case insured person survived the term of insurance but died before claiming the maturity benefits.
What's more, earlier, original nomination used to stand cancel on assignment of policy as
collateral to a loan. However, new rules say that insurer will pay-off the creditor first, but will have
to directly transfer the rest of the amount to the nominee appointed by the policyholder. The new
rules have not only made nomination more effective but also made the process of nomination
more meaningful.
 Property: In case of a property, the nominee may not be the ultimate beneficiary of the assets but
he / she may be required to pass them to the legal heirs. In instances where the nominee is
unwilling to pass the asset(s) to the legal heirs in good faith, can be taken to the court. The legal
heirs then would need to substantiate their claims by producing a succession certificate or a
probated/registered Will.
Hence in order to transmit your assets to your loved ones smoothly, you may nominate your intended
beneficiaries as nominees to avoid confusion and also make a Will and state the name of your
beneficiaries for every asset in a clear manner in your Will. Hence in the Will include the details of all
your assets explicitly for a hassle-free transmission of your wealth to your loved ones after your
death. In the absence of this, someone else might lay claims on your assets and your family might
have to go through lengthy and complex legal procedures to obtain what’s rightfully theirs and thus
may result in a lot of squabbling and bickering at the time of distribution of assets.
Simply nominating a person while creating an asset, does not necessarily make him/her the beneficial
owner of the asset after you are gone. Every asset is governed by different laws which might change
over time. Thus estate planning needs to be undertaken to ensure the easy transmission of your
wealth.
Nomination vs. Assignment
In case of a life insurance policy, the new Insurance Laws (Amendment) Act, 2015, makes nominees —
restricted to immediate family members such as spouse, parents and children — as the beneficiary so
that the insurance money can go to the intended recipient. Nomination is a right given to the
policyholder to appoint person(s) to receive the money in case of a demise of the holder. One can
appoint multiple individuals as nominees and can also specify their shares of the policy proceeds in
percentage terms.
However, in case of an assignment of a life insurance policy, the nomination automatically stands
cancelled.
An assignment of the policy automatically transfers the right of the policyholder (assignor) and his/her
nominee to receive the sum assured on death of the policyholder or on maturity of the policy to the
assignee. Assignment must be in writing and a notice to that effect must be given to the insurer. But
the catch is that once the assignment has been done, it cannot be revoked. After assignment, the
assignee will be eligible to receive the proceeds from the policy, and not you, even if you survive the
tenure, (unlike nomination).
The assignment of life insurance policies can also be used as collateral while taking a loan. If an
insurance policy is assigned to the lending bank and the policy holder expires during the tenure, the
insurance company shall pay the outstanding loan amount to the bank and the remainder (if any) will
be paid to the legal heirs of the policy holder. In this case, if the holder survives the tenure, the bank
will reassign the policy back to him/her.
3. Transfer of shares in case of a co-operative housing society
Practically majority of the disputes in co-operative housing society relate to the issue of succession to
the shares and interest of the deceased member in capital/property of the society.
In case of a joint ownership property (say between the husband and the wife), the society issues a
share certificate in joint name. As per existing bye-laws, the person whose name does not stand first
in the share certificate becomes an 'Associate Member'. In case of death of the person named first in
the share certificate, the Associate Member retains the right on his/her flat since his/her name exists
in the Sale Deed of the flat as a joint buyer.
When flats are bought jointly, the joint owner can make a Will bequeathing his/her part of the flat to
the other joint owner. Thus, in case of death of anyone of them, the one surviving joint owner will get
an absolute right on the jointly owned flat (provided, the due process of the law is followed).
The standard bye-laws of co-operative housing societies provide procedures under bye-law 34 and 35
in case of transferring of the property to the nominee (in case nomination is made) or the legal heirs
(in case no nomination is made).
In case the nomination is made, the nominee has to apply for membership and for transfer of shares
and give some declarations as provided under bye-law 34 to the honourable secretary of the society.
In case there is no nomination or if the nominee does not come forward, the legal heirs may have to
come forward and follow the procedure as per bye law 35. In such a case the following procedure will
be followed:
- A no objection certificate (NOC) from the legal heirs affirming the nomination of the heir/s needs
to the society;
- Public notice inviting claim or objections to the transfer of shares to be given by the society. The
expenses need to be borne and paid by the applicants;
- Application for membership by the selected legal heir/s;
- Indemnity bond to be given by such applying legal heir/s; and
- Other declarations as per the Bye-law 35.
In case where the application is rejected, the reasons of refusal need to be conveyed by the
honourable secretary with reasons thereto within 15 days of such decision. In all the applications
must be disposed of within three months of their receipt, failing which the applicant will be ‘deemed’
member. Such applicant shall approach the deputy registrar for necessary order for ‘deemed
membership’.
4. Estate planning for HUFs
“When everything goes to hell, the people who stand by you without flinching — they are your family.”
- Jim Butcher
India is one of the few countries in the world that is blessed with rich tradition and joint family
system. The importance of joint family is well understood by the Indians, as it helps pass on the values
and culture from one generation to another. A family that lives together with members including
grandparents, parents, uncles, aunts and their children, share the merits of patience, discipline, habits
and respect for elders.
The Hindu Undivided Family (HUF) concept is a kind of “Joint Hindu Family” which enjoys a separate
tax status under the provisions of Section 2(31) of the Income-tax Act, 1961.
The HUF is automatically constituted under the Hindu law by a Hindu male living together with his
wife and children and is even extended to their wives and their children. It can be created by
members of a family, wherein the members are lineal ascendants or descendants. The concept of HUF
is not only applicable to Hindus, but even those professing Sikhism, Jainism or Buddhism.
The affairs of the HUF are managed by the senior-most member of the family, who is known as the
Karta (manager) of the HUF. A typical HUF consists of a Karta, wife, his sons, grandsons, great-
grandsons and daughters. The daughter(s) on marriage continue to be the coparceners in her father's
HUF, but are considered to be members in the husband’s HUF post-marriage. The male members are
by and large called the coparceners of the HUF. A HUF can consist of just two members, one of whom
is a coparcener. It may also have several branches or sub-branches. The married male members (i.e.
the coparcener or the Son) of the HUF having their own families will form a branch of the HUF.
Likewise, when the grandsons have families, they too will be sub-branches of the HUF.
To enjoy a proper status and rights of a HUF, one should manifest it in a particular name and get a
Permanent Account Number (PAN) and open a bank account. If you have an income-generating asset
such as an ancestral property or a business that yields income for their entire family, you can easily
get it recorded under the tax laws and even claim tax benefits under various sections of the Income-
tax Act, 1961. It is noteworthy that a HUF can also pay salaries to its members in case they are jointly
managing a business, and can even provide loans to its coparceners and members for various
purposes.
Now, before we go ahead with estate planning for HUF, let’s understand the rights of Coparceners
and members of HUF…
- Once a property is assigned to a HUF, all coparceners have an equal right to it. Even the Karta
cannot transfer the property unless he gets consent from all coparceners.
- All coparceners can at any time, demand partition of an ancestral property assigned to a HUF by
way of distribution of HUF property among the coparceners.
- While each coparcener would be entitled to a share of the property, the members would be
entitled to receive maintenance from the HUF.
- If a coparcener decides to separate himself from the HUF, the others being his father or brothers
may continue to be coparceners to the extent of their share. In case he has a family, then he will
become the head of a new joint family. If he obtains any property on partition with his father and
brothers, that property will become the ancestral property of his branch.
- The interest of coparcener in property on death shall transfer by testamentary or intestate

succession and not by survivorship.
- The discrimination between son and daughter has been removed vide amendment to Section 6 of
Hindu Succession Act 1956 w.e.f. September 9, 2005 which provides that all daughters of a
coparcener who were unmarried as on the date of the amendment would be by birth regarded as
coparceners in the same manner as the sons in the family. Consequently, she would have the
same rights and be subject to same liabilities as the son. Hence, unmarried daughters as well as
daughters married after the date of the amendment are regarded as coparceners and thus eligible
to demand partition of an HUF, and receive equal share in the HUF property. It is noteworthy that
this right is not extended further to next generations of such daughter. Further a woman can even
claim to be the Karta of the HUF (vide a recent judgement of the Delhi High Court) if she is the
eldest coparcener in the HUF.
Properties or Assets that can be classified as the assets of a HUF are:
- Ancestral property or assets inherited from father, grandfather or great grandfather
- Any property or assets received on partition of a larger HUF of which the coparcener was a
member in the past
- Property or assets acquired with the aid of joint family property
- Separate property or assets of a coparcener, blended with the family property
- Any assets or property received as a gift by the HUF from close relatives or friends
- Assets bequeathed by a Will that specifically favours the HUF
It is noteworthy that the term ‘Coparcenary Property or Joint Family Property’ is wider in connotation
than the term ‘ancestral property’. While an ‘ancestral property’ is the one inherited from father,
grandfather or great grandfather, in which the share is allotted on partition; ‘coparcenary property or
joint family property’ is the one acquired by the coparceners with joint efforts – so for example, father
and sons would be joint family and hold coparcenary property.
There may be an instance where a single male member in the family having no ancestral or
coparcenary property, receives gift from relatives or friends of members of family. If the single male
member of such family decides to add this gifted property into joint family property, then such
property would neither be ancestral nor coparcenary property but certainly be a HUF property.
While there can be a gift or a Will for the benefit of a HUF, it is immaterial whether the giver is male
or female, whether he or she is a member of the family or an outsider. What matters is the gifted
property is for the benefit of the whole family. The Karta of the HUF can make a gift of an ancestral
immoveable property within a reasonable limit keeping in view the total extant of the property. The
Karta can even gift his self-acquired property to the branch HUF of his Son, through a Will, which will
then become the ancestral property of the son’s HUF.
What happens in case of Death of the Karta?
The Karta manages the family property, which is regarded as the joint property of all the coparceners.
On the death of the Karta, his HUF can continue and the next senior-most coparcener of the family
shall be the Karta. If under given circumstances, senior-most coparcener is not in a position to
discharge his obligation, then the next senior coparcener can be the Karta of HUF with the mutual
consent. Hence with mutual consent, the HUF can also appoint any coparcener as the manager. The
assessing income tax officer should also be intimated about the death of the Karta and the
appointment of the new Karta.
In case of death of a coparcener, his interest in the property of a Joint Hindu family shall devolve by
testamentary or intestate succession, as the case may be, and not by survivorship.
Section 6 of the Hindu Succession Act, 1956, as amended by the Hindu Succession (Amendment) Act,
2005, states that a coparcener is entitled to bequeath his share in a joint Hindu family property to any
person of his choice, in any ratio, by executing a Will or intestate succession. A coparcener can
bequeath only his share in the HUF property and not the entire property of the HUF.
The share in property can be bequeathed to his son and/or to his grandsons and/or to his great
grandsons or any person of his choice. In case the coparcener does not execute any Will, the property
will devolve as per the rules of intestate succession applicable to Hindus under the Hindu Succession
Act, 1956, as stated below:
a) The daughter is allotted the same share as is allotted to a son;
b) The share of the pre-deceased son or a pre-deceased daughter, as they would have got had they
been alive at the time of partition, shall be allotted to the surviving child of such pre-deceased son
or of such pre-deceased daughter; and
c) The share of the pre-deceased child of a pre-deceased son or of a predeceased daughter, as such
child would have got had he or she been alive at the time of the partition, shall be allotted to the
child of such pre-deceased child of the pre-deceased son or a pre-deceased daughter, as the case
may be.
These guidelines will help you to take right decisions while transferring assets and properties of a
HUF. While doing this, don’t forget that the will must be in writing, signed by the testator in the
presence of two or more witnesses, who should also sign as witnesses on the Will. It is noteworthy
that any part of the property can’t be bequeathed to the signing witness.
5. Succession planning for businesses
“Succession planning helps build the bench strength of an organization to ensure the long-
term health, growth and stability.” – Teala Wilson
Have you ever thought...
Who will take the charge of your business after you hang your boots?
What will happen to your business in case of any unforeseen event happening to you?
In whose hands will you leave behind the dynasty that you have built up over all these years …and will
they be faithful?
If your answer is No, and if you are still wondering, it may be time to think seriously about your
successor.
You cannot decide about your successor in a day’s time. It may take years of planning, as you need to
groom the next generation to take up the assigned business role and ensure a smooth transition of
ownership and management of your business to the next generation.
That brings us to tell you an important aspect of estate planning, which is: Succession Planning.
Succession planning has not been a common term in India; but is slowly getting popular among family
owned businesses in India. Being one of the fastest growing economies in the world, the growing
competition has made it necessary for promoters to seriously think about their successor well in time.
In today’s competing world, business needs to be passed on to the right hands, someone who’s
talented of course but even responsible.
However in India, where the majority of businesses are in the dominant control of the families, and in
case of demise of the head, the eldest son becomes takes over the reins of the business, mostly in
absence of a legal Will of the erstwhile head.
Moreover, due to extended or joint family system in India, all members of the family contribute and
play a vital role in the growth of the family business. There have been many cases in the past, where
poor or no succession planning has led to disputes amongst family members over demand of legal
ownership rights and division of family assets, including business. Hence succession planning has
become a must for the sustainability of the business, and every business owner should start with the
succession planning as early as possible.
How to begin your succession planning?
Being a complex process, succession planning involves lot of effort, time and patience. Despite putting
in all your thoughts and expertise while passing on the legacy of your business to the successor, who
may be your eldest or favourite son, there may be some issues which need to be addressed in order
to efficiently plan your succession.
What if your succession in ownership and management is not as desired by all stakeholders?
What if your children aren't the best choice of people to run the business?
How about giving control to more capable and experienced non-family managers who are better
suited to the job?
You need to think through such questions very deeply, for prudent succession planning. In today’s
business world, you need to keep all stake holders satisfied, including the shareholders, creditors,
employees and even the customers. Your decision will not only affect the future of your business, but
also impact the livelihood of your employees, your creditors, including you and your family. Poor
succession planning can lead to long-term failure of the business. Hence succession planning should
be well thought out for long-term sustainability of your business. If need be, it can even involve
attracting the best talent, retaining them and moreover grooming them to take up the assigned
responsibilities.
You need to build up a step-by-step succession strategy, and that may include:
1. Identifying your successor: As a promoter or owner of the business, you may wish to grow your
business for the long-term and secure the earnings for the benefit of your family and your stake
holders. You want your business to continue to operate with the right spirit even after your death.
Hence you need to carefully evaluate all the available options, so that you leave behind your
business in the right hands. The objective here should be to choose the right candidate who is
capable, committed and is willing to take up the responsibility. In case your elder son wants to
pursue some other career or is not interested in heading the business, then do not hesitate in
assigning the responsibility to the next potential candidate, may it be an owner or a non-owner.
Take the case of Tata Group, where Mr Cyrus Mistry was appointed as a successor to Mr Ratan
Tata through a long-drawn process. Similarly Mr Vishal Sikka was appointed to head Infosys after
retirement of its founder Mr Narayan Murthy.
In absence of a successor, you can even think about transferring your business to a family trust,
wherein you may even provide that your family members should continue to participate in the
profits of the business.
2. Grooming your successor: As it is not always easy for the business owners and promoters to give
up the control of the business, the idea of succession planning does not go well with many. After
all, it requires loosening grip on business at their end. Therefore even after succession planning,
many business owners still prefer to be in commanding position. It is thus advisable to define
definite time frame for your retirement and think about succession planning well in time in order
to groom the potential successor to understand his responsibilities and head the business
efficiently. The successor should be introduced to each and every aspect of the business and
should also be involved in all important business meetings and decision making. In case the
business is spread overseas, different potential candidates can be groomed to take up the
responsibility of heading the overseas branch, while maintaining coordination and control from
the top.
3. Being open and transparent: It is necessary to be open and clear while communicating the idea
and thoughts about your succession planning and the successor to all stake holders and family
members. This will help you figure out any resistance well in time. It is possible that one child is
interested in running the business and has the acumen thereto, while the other child or children
may not. Thus constantly communicate with children to assess what they desire and what they’d
like to do in life. Many a times, lack of communication amongst the family members, especially in
case of family managed business, results in unnecessary disputes leading to disintegration of
family business. Also, the opinions of family members in succession planning should be well
acknowledged. Therefore forming a family constitution for smooth functioning of business may
help strengthen the bonding and understanding among family members and can even address any
conflicts.
4. Writing a proper Will: The chances of disputes and succession related issues are manageable in
case of the first level of inheritance of the family business, say between a father and his sons.
However, the problems arise when the family business is jointly managed by the father and his
brothers and the next generation of each of the brothers start joining the business. There may be
some kids in the next generation who may not be willing to, or may be too young to join the family
business. So how would one split up the business in this case? In absence of proper succession
planning, several family businesses undergo partition or disputes at this stage. The owners of the
family businesses should thus get a legal Will and testament prepared to avoid any disputes
amongst the family members.
The owners in consultation with the family members should timely write a Will declaring their
wishes on inheritance in the Will and even appoint an Executor of the Will. Large family businesses
take professional help to write the family constitution and also put in place right legal structures
to avoid any legal disputes by any family members. To avoid any misuse of shareholding, some
family businesses also take steps like keeping their shareholdings in a Trust, instead of holding the
shares in individual names; so that other family members may have the right of first refusal in the
event of sale of shares by any family members. Some even look for a mixed structure of Will as
well as Trust for succession planning. Any such disputes and conflicts can be avoided by seeking a
proper professional help while succession planning.
5. Mentoring your successor: For the long-term sustainability of the business, it is necessary that the
successor understands the business and his responsibilities. The successor should be familiar with
the culture, value, and vision of the company. Due to lack of expertise, young generation seek the
guidance of the senior members in the family who can share their experience in running the
businesses. The predecessor should thus be available during the first few months or years when
called for and be ready to guide the successor during business dilemmas and key decision making.
The way Infosys founder, Mr Narayan Murthy had to come out of his retirement as a mentor to the
company. Overtime complete control of the business should be passed on to the successor.
Although it may be a complex task, proper succession planning can ensure long-term sustainability of
family owned businesses that are an important and integrated part of the Indian economy. Seeking
the help of professionals may be helpful in strategic and efficient succession planning.
6. Forced Heirship
Let us understand the concept of forced heirship with a help of a simple snippets:
- Mr Vivek Shah (65), a Hindu, residing in Maharashtra, has decided to pen down his Will. He plans
to distribute his assets between his wife, children, and “YouWeCan”—a Cancer charity in India. His
children decided to challenge the Will, as they believed it’s illegal for their father to bequeath his
assets outside the family.
- Mr Shabbir Ahmed (60), a Muslim, residing in Hyderabad, has decided to donate 100% of his
estate to “HelpAge India”— a leading non-profit organisation caring for disadvantaged elderly
senior citizens. His spouse and children were shocked and they believe he cannot do so!
- Mr Jack Pinto (75), a Christian, residing in Goa, has decided to break away from family customs
and traditions and bestow his estate to his close friend Mr Jason Pinto.
Is it mandatory for Vivek, Shabbir and Jack to bequeath their estate to family members? Or can it be
given to charity/trust/social-global cause or to anyone else? Does the law allow them to do so?
The Indian Succession system is complex, confusing to the layman, and often, cumbersome. There
isn’t a uniform civil code applicable to the whole of India, due to which religion plays an important
role in deciding the right of inheritance.
Before we address the dilemmas of the Shah, Ahmed, and Pinto families, let us first understand the
concept of ‘Forced Heirship’.
Forced Heirship is a rule of law wherein an individual is not free to dictate who will inherit the estate
on his death. It automatically confers power on certain individuals to bequeath certain portion of the
deceased’s estate.
These individuals are known as ‘protected heirs’ and typically include the surviving spouse, children,
and/or other relatives of the deceased.
The rationale behind Forced Heirship is family protection. There may be a possibility that the
deceased, who was the primary bread-winner, had a few dependants. The Forced Heirship rule does
not permit an individual to Will away his estate without providing for his dependants.
On the other hand, these restrictive rules apply irrespective of the terms of the deceased’s Will, and
there may be a situation where the stated wishes of the deceased may not be carried out by
dissatisfied protected heirs.
However, one should note that, the Forced Heirship provisions typically apply only to a portion of the
deceased’s estate and the balance may be distributed at the discretion of the testator.
So, is Forced Heirship applicable in India?
Hindus follow the Hindu Succession Act, 1956. Muslims follow Islamic Law on Succession—Sharia Law.
There is a Parsi Law, a Christian Law, and a Special Marriage Act for spouses following different
religious faiths, etc. Regardless, all Wills, except Wills written by Muslims are governed under the
Indian Succession Act, 1925 for the purpose of execution, probate, etc. of Wills.
The exception to the above rule is the state of Goa, where the Portuguese Uniform Civil Code applies,
making it mandatory for all religions to follow a common law regarding marriages, divorces, and
adoptions.
So, if you are a Hindu, Parsi, or a Christian, who aren’t residing in Goa, you have the freedom to Will
away your estate as per your wish, even against family wishes and social customs and traditions,
which means, the rules of Forced Heirship don’t apply to these individuals.
However if you are a Muslim, the Islamic Law on Succession—Sharia Law, permits you to Will away
only 1/3rd of your property while 2/3rd is retained by the family, irrespective of a Will to the contrary.
This restriction can be waived by all members of the family, in favour of the testator, permitting him
to Will away his property as per his desire.
So, coming back to our snippets, the Hindu Succession Act permits Mr Vivek Shah to Will away his
property to anyone or any charity that he pleases. It is the Executors job to obtain the probate to
avoid any complications. (A probate is obtained from a court with the necessary jurisdiction proving
that it is the last and final Will of the deceased written on a particular date)
On the other hand, Mr Shabbir Ahmed and Mr Jack Pinto cannot give away their entire estate to
charity or to a friend as the rules of Forced Heirship becomes applicable.
“How do I distribute my assets?” is a question that every head of household has to answer. Succession
planning is never easy. And in a country like India, where archaic social customs and traditions are still
prevalent, discussing succession planning is still considered taboo, yet it is important that the first step
needs to be taken to have a peaceful hand over of one’s estate to the next generation.
Section III: Passing Online/Digital Assets

To Loved Ones...
As you know, the entire world has gone online today. The internet has made our lives easy to a
considerable extent and thus many remain glued to it for long hours.
Today, we can perform a variety of activity – banking, investing, trading, portfolio monitoring,
blogging, and so on – online sitting in the comfort of a place we choose - be it: home, hotels, resto-
bars, coffee shop, etc. Besides, we interact with and send data to anyone across the world through
emails, messengers, and internet calls etc. Social networking websites keep many entertained,
providing a platform to connect and share their lives with friends, relatives and others with similar
interests.
But while we try to stay connected, a lot of important data – vital files and passwords – are stored, as
‘online property’. So, have you ever thought what will happen to all your online property after your
demise?
Everyone thinks about leaving behind their physical assets such as land, jewellery and house among
others for their loved ones. But not many think about making provisions for transfer of online assets
viz. email data, photos, videos, passwords and so on, which may be essential.
Passing online assets needs to be dealt with seriously! If vital information on assets online is not
accounted for in your estate plan, it can be a herculean task for your loved ones to get hold of your
digital property later. For example, there could be important files saved on a cloud server or in a file
available on your email account, which your loved ones may not have access to. And mind you, email
account service providers won’t be answerable to your request, unless your close ones produce
adequate evidence to prove their relation with you.
So, here’s what you could do for the smooth transmission of online assets…
 As you appoint a beneficiary nominee for claiming money in your bank account, nominate
someone for claiming your digital assets.
 If you want someone to have to have access to his/her email accounts, online accounts, etc.,
explicitly mention that in the Will.
 Store usernames and passwords in an encoded format online. Besides, preferably write down user
ids and passwords on a piece of paper or a book, and keep it safely in a trusted bank locker.
However, you need to be very careful with such confidential information as both storage methods,
whether online or offline, are subject to a risk of theft.
 All email account providers and social networking sites may have different provisions. Hence, it
would be better that you contact the company directly, to find out what steps can be taken to
avoid problems for your loved ones later.
 Take the help of a trusted lawyer who has expertise in planning the transfer of such online assets.
Section IV: Selecting the Right Estate Planner
One of the things we often miss in succession planning is that it should be gradual and thoughtful, with
lots of sharing of information and knowledge and perspective, so that it's almost a non-event when it
happens. - Anne M. Mulcahy
The role of an estate planner in estate planning
An estate planner plays a very important role in estate planning.
It doesn’t really matter how old your estate planner is, where his office is, the gender, his/her
provenance; if he/she meets the desirable qualities. The qualities of an estate planner cannot be
judged in a single meeting, but spread over several initial meetings. During these meetings, you ought
to deeply engage with the estate planner, asking pertinent questions such as:
- Principal area of practice
- Apart from Will writing, do they help instituting a Trust
- The years of experience and how has the journey been thus far
- The fees involved – fixed or on time basis
- Which services do the fees include
- Do they provide a review and maintenance (to account for any changes in law or your personal
circumstances, as the testator)
- …and many more!
Also, study a few testimonials and get a sense of the service. Do enough research and reference
checks; talk to people who’ve hired his/her services, but beware of one size fits all approach.
Amid the conversation, it’s equally your responsibility as the testator, to disclose material information
to the estate attorney. If you keep secrets, there are chances that your family will face problems later.
You also got to assess if the estate planner is showing keen interest in having you as a client. It’s
important that you discover the comfort factor with your estate planner, because after all, it is a long-
term relationship.
Qualities to look out for in an estate planner
You may have recognised by now that an estate planner carries substantial responsibilities. Hence
here are the qualities to lookout for in an estate planner…
 Righteous: The paramount quality required in an estate planner is that he/she should be a person
with absolute integrity and ethics. He ought to be morally upright and never ever compromise
safeguarding and serving your interest as client. This can help you evince trust and build a long-
term relationship.
 Highly proficient: He should display an advance degree of competence in estate planning laws and
practice diligently, without even the slightest ambiguity during the documentation. But for this, as
mentioned earlier, even you as a testator must not keep secrets, instead disclose all material
information to the estate planner.
Moreover, the driving force of good estate planner should not be monetary, but the compassion
with he/she practices the profession.
 Personality: Yes, apart from being righteous and highly proficient, an estate planner with a
pleasant personality can conceivably bring the needed comfort factor. After all, you would be
discussing personal issues, and thus a pleasant personality can abet you to ask relevant questions
and share details without hesitation, as against a person who is standoffish (where chances of
communication being impeded are high).
 Ability to comprehend the needs of the testator: A good estate planner will always give you a
patient hearing. He would display sensitivity and the ability to comprehend wisely to render a
prudent advice. Collaboration and communication are therefore a key aspect, and hence you too
as a testator should speak up to get the right service for the fees you pay.
After sales service and parity
As a testator, do not consider making a Will or instituting a Trust as an end. It is just the beginning of
your long-term relationship with the estate planner. There may be several changes that may have
occurred and you may need to incorporate them. Hence connect with him from time to time and
abreast him with the developments; this will help you take timely actions.
Hence one needs to assess the after sales service the estate planner offers, and whether he renders
that with enough parity. Again here, reference checks and reviews are good way to go about, but
evaluate what’s serves the best for you.
Section V: How Estate Planning Can Bring Along

the Needed Peace of Mind
Estate planning is an important and everlasting gift you can give your family. And setting up a smooth
inheritance isn't as hard as you might think. - Suze Orman
Indeed, effective estate planning can be an everlasting gift for your family. So aptly said by American
author, financial advisor, motivational speaker, and Television host Suze Orman.
Almost everyone can benefit from effective estate planning irrespective of the wealth created. Here
are a few vital benefits of estate planning…
 Prevents financial and legal grief to your loved ones: In times when you’re family may be run
down emotionally, financial and legal grief is the last thing you want them to undergo. With
prudent estate planning long-term financial interest of your loved ones can be ensured, and legal
rigmarole can be minimised. Death is certain, yet uncertain as regards the time is concerned.
Nonetheless prudent financial and estate planning can protect the long-term financial well-being
of our family.
 Avoids complications, disagreement, bitterness and drift in the family: Your legal heirs may be
inexperienced in managing the bequest. This can complicate relationships and lead to squabbling
and bickering within the family. But drawing an estate plan prudently can help you manage these
atrocities. For example, you may leave your assets under a Trust if you have children or young
children who have a poor sense of judgement when it comes to making financial decisions and
legalities.
 Ensures that physical, financial and online assets are passed on to your loved ones: Estate
planning ensures that your assets – physical, financial and online – are inherited by the people to
whom you want them to be transferred after your demise. The law might not take into account
your personal relationships or preferences while distributing your assets if you die intestate. It is
possible that law disposes your estate even among distant relatives who might not be your first
choice of beneficiaries.
 Can provide for, or address to a family member or a loved with special needs: Through an estate
plan, besides leaving behind a corpus for an individual with special needs, one can further go on to
designate a guardian for them.
 Estate planning can also help pass accolades bestowed on you to a specific individual. Say, you
are defence personnel and wish to give your war medal, which has some sentimental value to
your younger daughter who has interest in war history; this is possible through prudent estate
planning. But in the absence of proper estate planning, it may or may not be granted to the person
of your choice.
 Helps to prepare for contingencies: With systematic estate planning, you can even determine
who will handle all your financial affairs, in case you were to become incapacitated tomorrow.
Similarly, you can also specify a person (whom you trust) who would take all medical and health
related decisions for you. You can also list down a person(s) to take care of your estate
and manage your finances after your demise, for the benefit of the remaining family members.
 Estate planning helps the beneficiary reduce tax outgo on account of inheritance: Yes, this is
possible, but one ought to do it prudently. For instance, instead of passing on assets after demise,
you may gift them to your loved ones while you are alive; because if left to the prevailing intestacy
rules, there is a chance that a higher amount of tax would be applicable on your property and
other assets. You can also make separate arrangements for tax payments. For example, you can
provide for tax liabilities separately from your residuary estate, if you don't want to reduce the
inheritance value of assets by way of taxes.
Understand this, continuing to pretend that your life will never end will not do any good to you or to
your family. If you have not yet acted upon planning for your estate, thinking that there is yet ample
of time remaining to decide about all this, it's high time you considered it seriously. Let not
procrastination be the reason of agony for your loved ones. The aforementioned benefits (and many
more) are some valid reasons why you should engage in estate planning.
Please remember, estate planning is an on-going dynamic process. Once an estate plan is made, you
need to review it over time frames to capture any changes in situation that may have occurred
thereby safeguarding long-term financial wellbeing of loved ones. Seek the legal opinion of a trusted
lawyer to ensure that estate planning is done legitimately
We hope this Guide has been a useful read for you.
If you have any queries, please feel free to write to us at info@personalfn.com or simply contact us.
Contact us
Mumbai
Quantum Information Services P. Ltd.
101 Raheja Chambers, 213, Free Press Journal Marg,
Nariman Point, Mumbai 400021.
Tel: +91-22-6136 1200
Email: info@personalfn.com

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Guide to Estate Planning

But your responsibilities don’t end there.

At PersonalFN we’re sure it would be a fulfilling exercise.

Mentor, CCC WillEffect Pvt. Ltd.

Why everyone should consider estate planning 06

Section II: How one can undertake estate planning

Section III: Passing online/digital assets to your loved ones 30

Section IV: Selecting the right estate planner

The role of an estate planner 32

I: Why Everyone Should Consider Estate Planning

What is estate planning

Why do you need to plan?

Here’s a tragic saga of Mr Suhas’s family…

Need to involve your family in financial matters…

Myths about estate planning

 Myth#1: Estate planning is meant only for the wealthy

 Myth#2: Estate Planning should be thought of only after retirement

 Myth#3: My legal heirs will handle it maturely

 Myth#5: I don't need to seek legal opinion

Section II: How Can One Undertake Estate

“Where there’s a Will, there’s a Way.” - an old English proverb

There are host of benefits of writing a Will:

Hence, a Will can be said to be the corner stone of estate planning.

Who can make a Will and when?

 A situation of divorce or re-marriage:

- What are my and my family’s rights in an ancestral property?

You see, there are disadvantages of not writing a Will:

10 Vital points to consider while writing a Will:

Should you consider writing a Will online?

But who should opt making a Will online?

Who should stand as witness to the Will?

Who should be the executor of the Will?

An executor should ideally:

Can liabilities be a part of a Will

No. Liabilities cannot be part of a Will.

A Trust has four components:

 Make an unequivocal declaration binding on him;

 Outline the purpose / objects of the Trust

 Clearly specify the beneficiaries of the Trust; and

 Transfer the identifiable property under an irrevocable arrangement to the beneficiaries

What are the different types of Trusts?

Who should consider the option of constituting a private trust?

- Want to ensure prudent tax planning

Wills vs. Trusts

A Private Trust has its own set of limitations too:

Why a mere nomination is not enough?

“I have nominees on all my investments? Do I still need a Will?”

Later in 2015, in Salgaonkar-Ghatalia judgement the aforementioned was overruled by Justice

Nomination vs. Assignment

3. Transfer of shares in case of a co-operative housing society

- Application for membership by the selected legal heir/s;

- Indemnity bond to be given by such applying legal heir/s; and

- Other declarations as per the Bye-law 35.

4. Estate planning for HUFs

- The interest of coparcener in property on death shall transfer by testamentary or intestate

Properties or Assets that can be classified as the assets of a HUF are:

- Ancestral property or assets inherited from father, grandfather or great grandfather

- Property or assets acquired with the aid of joint family property

- Separate property or assets of a coparcener, blended with the family property

- Assets bequeathed by a Will that specifically favours the HUF

What happens in case of Death of the Karta?

a) The daughter is allotted the same share as is allotted to a son;

5. Succession planning for businesses