Civil Procedure Code (CPC)

Query on will


Can I make a WILL in which I would like to pass on all the assets to my wife till her life time and on her demise the assets are shared amongst my children as detailed in the Will.

D.R.PRASAD GUPTA

 
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ADVOCATE

Dear Guptha,

Yes, You can

 
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Advisory/Advocacy

Yes you can creating a contingent interest in the will.....Do draft it well without ambiguity....

 

 

 

Regards

 

Chetan(dot)7679(at)gmail(dot)com

 
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ha21@rediffmail.com Mumbai : 9820174108

1.  You can execute a Will for your properties in favour of your wife.  You CANNOT execute a will for your wife.


2.  Once a Will has been put to Execution (after death of will-maker),  the said property permanently devolves to your wife.


3.  After point no. 2,  ONLY the wife is entitled to make a will, for the said properties, whose title-ownership is transferred to her, by the deceased's will.


4.  To get around the problem,  all the properties may be transferred to a "Family Trust", after appropraite documentary procedures, after formulating the long-term objects / plans, which may include the financial safety of all the family members, for long-term or permanent objectives.


Keep Smiling .... Hemant Agarwal

 
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Freedom

I agree with Hemants view .

 
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zz

Dear Hemant,

Many ppl here want to know the details of this FAMILT TRUST. How to create it & execute it. what r fine details way forward?

 
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ha21@rediffmail.com Mumbai : 9820174108

Originally posted by : rajiv_lodha
Many ppl here want to know the details of this FAMILT TRUST. How to create it & execute it. what r fine details way forward?

 

SUGGESTION:  You may approach a local lawyer for a one-to-one session on various further possible actions / remedies, since logically it is not possible to have legal solutions in the virtual world of the email / internet, AND specifically more in this Lawyers Club Forum,  which is meant for GENERAL discussions and sharing of ideas.

Keep Smiling .... Hemant Agarwal

 
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Advocate

A will can be made as you plan. Please get it registered with two witnesses.to avoid future difficulties.

 
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Freedom

@ Hemant...... Knowledge is meant to be shared be it virtual or a one to one session . There isno point  storing it . God only knows one day it may come to the benefit of some one .

What is a Trust? A Trust is used as an instrument to hold property for dependents and family members (intended beneficiaries), and alongside reducing the burden of tax. The law governing Trusts in India is codified and contained in the Indian Trust Act, 1882.

 

A Trust is one of the ways through which an individual can plan for his/her Estate*. The other ways of Estate planning are Wills, Insurance, Gift, Power of Attorney, transfer of property and partition. It can be used for family tax planning purpose also.

 

[*Estate is the process through which one arranges legal transfer of assets (in anticipation of death or incapacitation) with an intention to preserve the maximum amount of wealth possible for the intended beneficiaries].

 

Common examples of Trusts are Children specific Trusts - where the Trust corpus is handed over to them upon their attaining a specified age or upon their marriage. Another example is Retirement Trusts – they are set up by employers to provide retirement benefits to employees in the future (such as an EPF Trust).

  

Who can form a Trust? A Trust can be formed –

· By any person competent to contract – (i) above 18 years of age; (ii) of sound mind; (iii) not disqualified from entering into any contract by any law; or

· On behalf of a minor (only with the permission of a principal civil court of original jurisdiction).

     

Requisites to a Trust –

(i) Author of the Trust - someone at whose instance the trust comes into existence (also called as Settlor);

(ii) Purpose to form a Trust – to divest the ownership of the Author/Settlor of the Trust in favour of the Beneficiary/Trustee;

(iii) Trustee - every person capable of holding property can become a Trustee;

(iv) Beneficiary – to whom the Trust income/corpus is intended for;

(v) Subject matter of Trust - any asset capable of being transferred can be a subject matter of a trust.

All these requisites are required for a Trust to legally come into existence.

Following are the types of Trusts and their tax implications, explained in a simplified manner:

  

Family Trusts

Share of Beneficiaries is unknown;                             -> Share of Beneficiaries is unknown;

Trustees decide the Beneficiaries’ share in the Trust;    -> Author(s) decide the beneficiaries’ share;

Trust does not distribute income;                              -> Trust distributes income;

          

Tax Implications - Will and trust

  

What is the process of creating a Trust? Following are the steps to create a Trust in India.

  

STEP-1: prepare a family Trust Deed – A Trust Deed includes name of the Author, Trustees, Beneficiaries, purpose of the Trust, administration of the Trust, and other important clauses.

STEP-2:

Transfer of Immovable Property to Trust - A registered (in writing) document is necessary to set up a trust if immovable property is being transferred to it. The trust deed should be made on stamp paper and registered with the Registrar of Assurances (under the Registration Act). The written document should contain complete descriptttion of the property so as to clearly identify the property; the title of property should be clear (free from mortgage and litigation) in order to be transferable to the Trust.

    

Transfer of Movable Property to Trust – For movable property, no written document or registration is necessary. A movable property can be transferred to a Trust by mere change of ownership of the property (by physically handing over the possession of the property) to the Trustee, with a direction that the property be held under Trust for the benefit of the Beneficiaries. For example, handing over the fixed deposit certificate of a bank to the Trust.

  

STEP-3: Once a Trust is set up, the settlor (for example, the parent) can contribute more funds to it as and when he/she wants to. Even the trustees (both parents) and also friends and relatives can gift funds to the trust. You can contribute more funds to it as and when you want to and there is no limit specified to it.

Note: The trust stands dissolved once the corpus has been distributed

  

 

A written trust-deed is always desirable even if not required statutorily as it is an evidence of existence of a Trust, specifies the Trust-objectives, helps to control, regulate and manage the working and operations of the Trust, and lays down the procedure for appointment, rights, duties and removal of the Trustees.

   

 

Gift, Will or Trust – Which one to choose? Gift, Will and Trust are unique instruments through which you can pass on assets to your loved ones. A Gift is used when you want to gift (assets) to your loved ones while you are alive; a Will is used to transfer the ownership of assets to the Beneficiaries after you are no more; A Trust is used when you would like to transfer ownership of assets to the Beneficiaries at a specific date in the future.

 

A Will has its own pros & cons – the con being that the execution of the Will is time consuming and can be contested in a court. However, a Will can be changed (modified) any number of times during your life, unlike a Trust Deed which cannot be revoked once made; that means it would be difficult to re-claim assets that have already moved to the Trust in case you need them back in the future. Also, in a Trust, there is the possibility of the Trustees turning unfaithful. Therefore, it is important to appoint Trustees who are trustworthy. In case of Gifting, although it is much easier to just gift the assets to your loved ones, any income arising from such gifts will be clubbed with your income and taxed as per your income tax slab rate.

  

In India, although there is no inheritance tax, which takes some appeal off from forming a Trust (as a Trust reduces your tax liability but does not make you completely tax exempt), a person in the higher income tax slab can create a Trust if he/she is looking to transfer assets to their loved ones in distant time. This way, it helps one have control of their assets, create wealth for the Beneficiaries and also aid in saving taxes.

   


Total likes : 1 times

 
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ha21@rediffmail.com Mumbai : 9820174108

Originally posted by : stanley

@ Hemant...... Knowledge is meant to be shared be it virtual or a one to one session . There is no point  storing it . God only knows one day it may come to the benefit of some one .
   

 

Thank you for your uninvited sermon.


I have already shared my knowledge, in my earlier post on 22nd, with the most logical solution that would be useful, for the person who put in this query.  Other forum members have harped only on the Will component, which is not maintainable under the law & is misleading.


The information about the Trust you posted in, is THEORY.
For specific individual & professional needs, the preamble of the Family Trust, has to be sensitively prepared appropriately AND THIS CANNOT BE DONE BASED ON THEORY.or by spoon-feeding on the Internet, which would be highly improper and misleading.  It is best to approach a local lawyer, who has experience in such matters.  It is not every Advocates' cup of tea to formulate a Family Trust, having far reaching consequences.


Keep Smiling .... Hemant Agarwal

 
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