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Writing a Will is the final step of a Good Financial Plan because it allows you to leave a legacy behind and ensures that the right people can reap the benefits of your hard work.
What is a Will?
A Will is a legal document that states exactly how you want to distribute your assets after your death. A Will enables you to do the following:
Correct Division of Assets as per your wishes
Provisions for continuity of your business
Appointing trustees and guardians for minor children
A Will not only allows you to include your loved ones but also exclude certain people that might not be deserving of your legacy. If you hold any assets and want to leave something to someone who is not your natural heir, then you MUST make a will.
What happens if you do not make a Will?
If you die without making a Will, your assets by default will be divided and distributed according to the succession laws, which are based on the religion you practice. However, the default option might not be the best choice for your specific situation or circumstances. The assets could fall into the wrong hands, or certain people you might want to benefit could be excluded. Considering that you spent your whole life building your assets, it is probably a good idea to retain complete control of who gets it in the end. In which case, making a Will becomes necessary.
There can be horrendous problems faced by surviving relatives if someone dies without leaving a valid Will. It leads to unnecessary worry and stress, family arguments, maybe severe financial strain to individual members, unnecessary legal complications and costs and can even lead to family members suing each other. A clear and well-written Will helps in avoiding any bickering amongst the heirs.
Common excuses for not making a Will:
“I am too young.” - Anybody who says they are too young is only accounting for natural death that comes with age, but what about an accidental death? You cannot predict what happens in life. Many people think that making a Will is something that is to be done towards the end of your life. But it is a part of the standard wealth planning process across all age groups.
“My spouse gets everything anyway” - What if you outlive your spouse or both of you pass away together?
“It’s complicated” - If making a Will is complicated, imagine the complications that come along with not making one?
Some Important Points:
Many investors argue that they have nominations in most of their assets. But there is a widespread misconception that a nominee is the final beneficiary of an asset. A nominee is just a trustee or caretaker of your assets, not the owner. He/she is only appointed to transfer your asset, to the correct legal heirs, after your death. The Will is a ‘supreme’ document. In case a nominee is challenged in court, the Will or succession laws have the power to override a nominee. Which means your nominee might not necessarily end up getting your asset. It is therefore critical to ensure that an individual, despite making nominations, also creates a will.
Many times only the head of the family thinks about preparing the Will. But if your family wealth is spread across members, ensure that all asset holders in your family have a Will.
For families with minor children, making a Will is an absolute must. If in an unfortunate circumstance, both parents die without a Will, there is no person entrusted to ensure that your children and assets are looked after, until they come of age. A Will allows you to appoint trustees or guardians for young children.
Any Will made by a testator stands revoked if he/she gets married. Meaning all Wills written before a person's marriage are invalid. You need to rewrite your Will after you get married for it to be legally binding.
How to make a Will?
Since your Will is perhaps the most important document you Will sign, I would advise you to sit on it when you have a clear schedule and mind. Start by listing down all your assets, including any land, real estate, bank deposits, shares, life insurance, gold, personal heirlooms, and other investments. Ensure that you also note down your outstanding liabilities and how you would like to settle them.
Make a few essential decisions:
Decide your beneficiaries
Decide guardians for minor children
Decide succession plans for your business, partnerships, HUF, etc.
Select two witnesses. The attesting witness and their spouse should not be a beneficiary under the terms of your Will; it can sometimes make a Will invalid. Choose a witness who has nothing to gain from your death.
Appoint an executor. Your executors should typically be younger than you and preferably not beneficiaries of the Will. Try and pick a neutral/fair party who knows the family dynamics. It can be any trusted person, such as a family friend, doctor, CA, lawyer, etc.
Get an appropriate lawyer to draft it. Unless it’s a straightforward case, don’t try to do it yourself. There’s a risk that the tiniest mistake could render your Will invalid. So hire a lawyer who specialises in family law, succession/estate planning, who can ensure that your will is legally binding and can stand the test of time.
The Will can be revoked, modified or substituted by the person executing it at any point during his/her lifetime.
Points to consider after making a Will:
Write/print your Will on a good quality A4 thick white paper or green ledger paper, so it doesn’t get spoilt over time. Store it in a full-sized envelope, without folds.
According to the Indian laws, it is not compulsory to register it or write it on stamp paper. However, if you register, it simply puts an end to any doubts raised over its authenticity. The Will is registered at your area's Sub Registrar’s office.
For the Will to be valid, both the witnesses must be physically present together when you sign it. Your witnesses need to see you sign the Will for them to testify in court if required, that the will was indeed prepared by you, in a sound state of mind, without coercion.
You can make one copy of the same but store them separately. Do not make many copies of your Will, to avoid confusion. The copies must be notarized.
The Will must be stored safely in your bank, in a safe deposit box. The beneficiaries and executors must be informed as to where you have stored your will.
As your circumstances and assets change, you need to review your Will every 3-4 years and keep it up to date. If you make a second, third or fourth Will ensure that you make a declaration in it revoking all previous Wills made by you.
Making an efficient succession plan for a future beyond you, will not only help put your mind at ease today but will also ensure the best outcome for your loved ones and your legacy.
Click here if you are serious about getting your estate planning papers in order. Our legal team will actively help you complete this vital life task.
Disclaimer: This article is not legal advice. Please consult your lawyers before making any decisions regarding your estate planning.