Avoid these 8 mistakes while writing a will to ensure your assets are passed onto your heirs
The Economic Times 23/04/2018
Where there’s a will, there’s usually someone ready to contest it. Where there’s none, someone is ready to fight over the inheritance anyway. This may be true considering that in 2015-16, nearly 66% of the civil cases being fought in 170 district courts across the country were over land and property matters, with as many as 52.7% cases being fought only among families. According to the survey by Daksh, a Bengaluru-based civil society organisation, people are also ready to spend huge sums and time to fight these cases.
Does this mean that writing a will is an exercise in futility? “No, it is not. While law allows a person to voice concern over a person’s inheritance, if a will is made properly, the objection can be dismissed easily. Moreover, a will considerably reduces the chances of litigation and gives the rightful owners a chance to enjoy their share of inheritance,” says Rohan Mahajan, Founder & CEO, LawRato.com.
A will, does indeed, reduce considerable expense, effort and tedious paperwork, not to mention disputes within the family over movable and immovable assets, after a person’s death. Despite the evident benefits of having a will, people do not prepare one either out of reluctance to deal with their own mortality, or presumptions about the painstaking process it entails.
While the writing of the will itself is a simple task and can be done on a plain piece of paper, it is best to do it under legal supervision. This means that you should either consult a lawyer or prepare an e-will through online will-makers. “This is because, on your own, you are likely to overlook many details that can result in legal battles,” says Mahajan. “Worse,” says Raj Lakhotia, Founder, Dilsewill.com, an online will-maker, “you will find out that the will is invalid or that there is a mistake only when it is challenged in the court.”
In fact, there are various mistakes that one can make, ranging from technicalities involved in the drafting of the will and listing of the details about inheritance, to the manner in which the will should be executed or unsound decisions about distributing or disposing of assets. Each of these can cause significant problems for your heirs. Whether you are drawing up a will on your own or taking legal help, we list eight instances to make you more aware about the process and help you eliminate mistakes and minimise the chances of disputes.
1. Not having a will
THIS IS PROBABLY THE biggest mistake when it comes to estate planning. Nobody quite believes they are going to die or that they need to make a will yet, no matter what their age. However, this is one step that needs to be taken as soon as you hit your 50s, or earlier if you have multiple assets and properties, especially if you anticipate trouble over your inheritance.
“My father was only 55 when he died of a heart attack and he didn’t leave a will. Since he had failed to appoint a nominee for any of the bank accounts, investments or properties, we had to spend a large amount of time and money fighting for our own money,” says 23-year-old Viresh Verma from Delhi. The family ended up spending nearly two years and Rs 16 lakh to claim their property due to the absence of a will and nominations.
More time and higher expenses: The legal heirs will typically have to spend large sums to acquire mandatory documents like a succession certificate or letter of administration in order to transfer titles, cash, investments, assets or properties, not to mention paying the prohibitive lawyers’ fees. A succession certificate is required in the case of a movable property by applying to the high court or magistrate.
The letter of administration is needed in the case of an immovable property and is also issued by the court. While having nominees helps with the immediate transfer of cash and certain movable assets, you still need the legal documents because, technically, a nominee is only a caretaker of assets and will eventually have to pass on these to the legal heirs.
Undesirable distribution of assets: A will enables you to decide which asset you want to give to which heir, in what proportion and, without one, you have no power over who inherits your assets. “If there is no will, your financial plan will be of no use,” says Lakhotia.
“Suppose you wanted your minor daughter to have Rs 1 crore for higher studies. Not leaving a will means this amount may be distributed among, say, five legal heirs, and she will end up with only Rs 20 lakh,” he says.
Adds Jasmeet Singh, Advocate, Delhi High Court: “The whole purpose of making a will is that you want to interfere with the normal line of succession.” Without a will, the court will follow the provisions of the succession law because it doesn’t know how you wanted to distribute your assets.
Succession laws enforced: Without a will, the assets will be distributed as per the provisions of the Succession Act as per your religion. For instance, Hindus, Buddhists, Jains and Sikhs are governed by the Hindu Succession Act, 1956, and Hindu Succession (Amendment) Act 2005.
2. Drafting the will incorrectly
YOU CAN draft the will either on your own, through a lawyer, or via any of the online will-makers. The important thing is to get it right. “I did not know any lawyers, so I researched online and got it done through a will-maker,” says Faridabad-based Shailesh Nigam. If any of the details are not precise or you get them wrong, the will can be easily contested in court.
Make sure you enter all the essential personal details, including name, address, place and date, correctly; put in the full name and relationship of beneficiaries; mention the assets precisely; have it done in the presence of two witnesses; and sign it along with the witnesses and their details. “The most important aspect of a will is a valid signature of the person making it. Since a will can be written on a blank paper, the signature is the only authentic detail in it,” says Mahajan.
Made his own will using an online will-maker
Why was the will made?
Didn’t want any dispute in the family over his assets.
What he has done right?
- Has made a will while still young.
- Plans to update with change in assets or circumstances.
- Has appointed a trusted executor.
- Has appointed a guardian for his minor child.
Equally important are the three declarations— that you are revoking all earlier wills, that you are of sound mind, and that you are not making the will under any undue pressure. If a person is very old, it makes sense to attach a doctor’s certificate certifying his mental health and sanity.
You could also register the will, which essentially means going to the sub-registrar or registrar of the district court under whose jurisdiction a major part of the property lies. Though a registered will doesn’t have any particular sanctity, it offers a certain degree of authenticity since it has been approved by a government official.
Remember, that a registered will can be as easily challenged as a non-registered will. “Both my grandfather’s as well as uncle’s wills were registered, but my paternal aunts still contested it over the property that was willed to my father,” says Anshika Mathur from Noida. The case has now continued for seven years and there seems little hope of it being resolved any time soon.
So should one have the will registered or not? “Registering the will minimises the grounds on which a will can be challenged. Since soundness of mind, forged signatures and drafting under coercion are common grounds for challenging a will, a personal visit to the registrar, interaction with him and being photographed, bring down the possibility of it being contested on these grounds,” says Singh. So, it is advisable to get the will registered.
Also Read: Answers to 8 common queries on wills
3. Not being specific & detailed
WRITING A SPARSE, vague will is another error that can be easily contested and exploited. “The will should be extremely detailed to avoid any future confusion and dispute among family members,” says Mahajan.
To make your will precise, ensure that you list all your assets, movable and immovable, in great detail. “Make your will as specific as possible. Mention each and every bank account, locker numbers, or property details,” affirms Singh.
This means that you mention every bank account, with the number, bank name and address. Similarly, for investments and insurance, list the scheme name, number, financial institution, and insurer, along with the addresses. For more than one property, distinguish each one clearly by listing dates of purchase, addresses, taxes paid, etc.
"The most important aspect of a will is the testator’s valid signature. Since a will can be written on a blank paper, signature is the only authentic detail in it."
As for heirs, don’t forget to mention the full name and your relationship with the specified person, as well as the assets you want to pass on to them. Don’t use nicknames or other details about the person that cannot be verified officially. Doing so can create unnecessary confusion.
4. Not updating the will
DON’T THINK your job is over once the will is made. If there is any alteration in the status of either assets or heirs, you should draft another will to incorporate the changes. There is no limit on the number of times you can update the will. Any lifestage development, such as the birth of a child, marriage or divorce, will call for a redistribution of assets. Similarly, if any asset has been sold or new ones bought during the testator’s lifetime, these will have to be removed or included in the list as per the owner’s wishes.
For Nigam, who is self-employed, this is a real possibility because he is only 47 and has two kids, one of whom is a minor. “If there is a change in my assets, which is very likely, I will update the will,” he says.
Updating is not very difficult. All you have to do is to draft a new will, including a declaration that it is your final will and revoking all other previous wills and codicils (this is a document executed by a person who had previously made a will, but wants to modify, delete or revoke it). Put in the changes as desired and have it witnessed and signed as in the case of your earlier will.
You should also register the updated will, rendering the previous one invalid. This doesn’t, of course, mean that the unregistered will shall not be considered by the court, since as per law, the last drawn will is considered whether it is registered or not.
5. Not appointing the right executor
THIS IS A VERY common mistake among those making a will as they either appoint people who are in the same age group or someone who doesn’t have their best interests at heart.
“People tend to appoint as executors relatives, friends or those in the same age bracket, instead of selecting younger people,” says Singh. “Another common mistake is appointing minor children as executors,” says Mahajan.
“One must ensure that the executor is the best choice for the time-consuming and complex job. He or she must be trustworthy, know about your wishes, and work according to your will, not his own,” he adds.
To ensure objectivity and avoid any vested interests in execution, you could also have a third-party administrator for your estate, as did Mumbai-based Kapil Srivastav, who has recently had a will drafted for his mother through a lawyer. “We didn’t want any relatives as executors and, for a nominal amount, we have appointed a third-party executor to avoid conflict of interest,” he says.
6. Passing on assets to minor children
IF YOU HAVE minor children to whom you want to pass on your assets, make sure that you appoint a guardian for them during the drafting of the will. If there is no guardian and the minor child gets the assets when you die, the court will typically get involved, especially if the inheritance is significant.
If a guardian is nominated, he can act as a caretaker for the minor’s assets till he becomes an adult. A parent can easily nominate the other parent as a guardian in case he/she passes away. Grandparents or other close relatives can also be appointed as guardians.
Doing so is also important because though minors can be on the title, they cannot conduct business in their own names. “If no guardian has been appointed, and the owner’s signature is required to sell, finance or conduct other business transactions, the court typically gets involved to protect the child’s interests,” says Mahajan.
Nigam clearly understands the significance of this move since one of his children is still a minor. This is the reason he has rightly appointed a guardian for his child.
7. Gifting assets during one’s lifetime
MANY PEOPLE believe that the best way to avoid family disputes over inheritance is to gift away as many assets as possible during their lifetime. “This can be a double-edged sword,” says Singh. “If you gift an asset, say a property, while you are still alive, it will be immune to challenge. At the same time, it can make old people vulnerable because once the property is in the hands of the children, they can ill-treat their parents,” he says. If, instead, it is willed to the child, the balance of power remains with the parents.
If you no longer need a particular asset, gift it by all means, be it an artefact, art work or jewellery. “However before you decide to do so, understand the difference between a gift deed (a legal document used to describe the transfer of gift without exchange of money), and a will. A will, whether it is registered or not, is revocable during the lifetime of the testator. On the other hand, a gift deed, once executed, is irrevocable,” says Mahajan.
"Do not relinquish your rights to your children immediately. Give a small part if you want. If you give away everything, how will you live?"
What this effectively means is that if, after drafting a will, you change your mind about giving a particular asset to any of the beneficiaries, you can easily draft another will incorporating the alteration. “However, law does not allow the donor to make a new gift deed or change his decision once it is executed,” adds Mahajan.
A stark example is that of Vijaypat Singhania, the founder of Raymond company. He gifted all his shares, worth nearly Rs 1,000 crore, to his son, Gautam, and the 78-year-old is now suffering financially. “This is the reason you should not relinquish your rights immediately. Give a small part of your inheritance, if you want. If you give away everything, how will you live?” asks Lakhotia.
As for the tax implication, any gift given to specified relatives is exempt from tax in the hands of the receiver. However, in case of an immovable property given as a gift to specified relatives, it will invite stamp duty.
It is best, therefore, to avoid giving gifts, especially property, during one’s lifetime to children or any other beneficiaries and put it in the will instead.
8. Not planning for disability or terminal illness
NOT MAKING provisions for your own health in the will would certainly qualify as a mistake. Were you to suffer from a terminal illness, disability, or go in a coma, it will not only impact your finances but also your loved ones. While a good solution is to have a basic health insurance and a critical illness cover in place once you are in your 40s, it is equally essential to make certain provisions in your will.
Mention clearly who will take charge of your estate and financial affairs, as well as conduct the day-to-day transactions. If you have minor children, state who will act as a guardian for them. More importantly, don’t fail to appoint someone to take healthcare decisions for you in case you are not in a position to do so yourself. You could even appoint a power of attorney or set up a trust to handle your affairs.
Finally, if you are suffering from a terminal or debilitating illness, you can pen down a living will. As per a recent Supreme Court ruling, you can list in advance, through a living will, the particular line of treatment or withdrawal of treatment, if you so want. In such a case, you appoint an executor to take health-related decisions on your behalf, though the executor has the right to revoke the decision at any time later on.
The process of executing the living will is elaborate and tedious, but it does offer an individual the right to die with dignity. “Though the procedure of making a living will is cumbersome, it enables a person to choose the medical care he would want if he were suffering from a terminal illness or were in coma,” says Mahajan.