Seven Mistakes You must Avoid While Writing a Will

This is in continuation to my earlier post and I strongly feel writing a will is the first step in succession planning; the peace of mind is guaranteed knowing that we have settled our affairs and taken care of our loved ones. However, all the efforts could go waste if the will has discrepancies. So below are some of the mistakes one must look to avoid....

1. IMPROPER EXECUTION

Your will needs to be properly executed or it can be a useless piece of paper. Proper execution involves two major steps. First, the person who is making the will needs to sign it. This is a crucial step, as a will can be written on any piece of paper and only the signature gives it authenticity. This needs to be followed by its attestation by two or more witnesses. Your will shall be considered properly attested only if the witnesses sign it in your presence. However, it is not necessary that both the witnesses sign the will at the same time. Also, the witness should have seen you sign the will or you must at least acknowledge in his presence that you have signed it. The Indian Succession Act does not specify any particular form of attestation. However, in most cases, if the will is not executed properly, it may stand null and void.

2. GIFTING PROPERTY TO ATTESTING WITNESS

If you gift property to an attesting witness in the will, the document will remain valid, but the witness will not be able to inherit the property. For instance, if you want to leave a house to your daughter, she or her husband should not attest as witnesses. If they do so, your daughter will not inherit the house. The property will instead pass on to the residuary legatee. The will may identify the person, who in the event any residue property for any reason whatsoever is left, would receive that property. The person identified in such a case is called the residuary beneficiary, or residuary legatee. If no such person is present, the residuary estate will pass to the testator's natural heirs. Of course, the residuary legatee also cannot be the witness.

3. USING NICKNAMES OR INCOMPLETE NAMES

You may love to refer to your son by his nickname, but do not refer this name in your will. Remember, you will not be there to provide explanations when your will comes into effect. So you must be specific regarding names. Suppose your nephew (your sister's son) is to inherit certain funds. You must clearly state your nephew's name as the son of that particular sister. This will help rule out ambiguity, which may arise if you have another nephew by the same name, or if you have two sisters, both having sons.

If you have written incomplete names, the court will use extrinsic evidence to understand what you may have meant. If you have passed on property to a niece named Rani, and you have two such nieces, the court may either divide the property between the two or will try to understand which one you may have referred to. In case of ambiguity, how your will is interpreted will depend on the court.

4. IMPROPER DESCRIPTION OF PROPERTY

You must clearly describe the property to be bequeathed. Where it is quantifiable, specify it. If you want to give Rs 50,000 in cash to your son, mention this amount clearly. A vague sentence like, "I wish to give cash to ...." may be considered ambiguous and, hence, void.

5. PASSING ON PROPERTY TO UNBORN PEOPLE

Unlike trusts, wills have no place for unborn people. Any property bequeathed to a person yet to be born will be considered invalid. However, this does not mean that the property you leave will necessary lapse. Though the person may not exist when the will is drawn, the validity depends on whether he exists when the will becomes operational.

6. NOT UPDATING YOUR WILL

This is one of the most common mistakes people make. They forget to update a will if they acquire a new property or a new member is added to the family. A will is revocable. In fact, even if you state that your will is irrevocable, it remains revocable. This feature enables you to keep updating it. All you need to do to revoke the will is to physically destroy it or create a fresh one. The old document is automatically revoked. The only time that the earlier will is not considered revoked is if its replacement is deemed invalid.

7. NO PROBATE

Probate is the process of certifying a copy of the will by a competent court. It establishes the legal capacity of the person making the will. In Mumbai, Kolkata and Chennai, it is mandatory to have a probate, though in other places, it is not necessary. In cases of immovable property, a probate is required. Even when it comes to bank accounts or other investments, financial institutions usually insist on a probate. So, it is advisable to have one.

Keep reading!! Stay Blessed!!

How to Write Your Will

Remember Parveen Babi; the gorgeous actor of yester years; died a tragic death and her so called relatives fought among themselves for who should get the claim of the dead body from the police to perform the last rites (and subsequently should get the property as well). Well the cremation did happen but the property matter is still pending in the court. The point I want to put across is; most of us have the same primary goal in our lives – to build wealth. But what will happen to this wealth in case you are not around to ensure it goes to your loved ones? All the hard work done by you in your life so far can be wiped clean in an instant, in case of your unfortunate demise if you have not left a will behind. There have been numerous instances of assets being seized by the Government or going into dispute for years, even decades, in the absence of a clear and binding will. This is where estate planning comes into the picture.

Estate planning in simple terms refers to the passing down of assets from one generation to another. Most of us are under the impression that estate planning is only for the very wealthy.  No it’s not. On the contrary the estate planning is essential for all; regardless the size of their portfolio; and it should be done from the very first day you have an asset to bequeath (for example – your very first investment into a mutual fund). This prevents the addition of financial and legal grief to the emotional grief your loved ones will already be facing in case of your absence.

Here are some advantages of estate planning:

Ø  You decide who receives what,

Ø  You decide how and when your beneficiaries will receive their inheritance,

Ø  You decide who will manage your estate in your absence and

Ø  Estate planning saves your family and loved ones from going through the additional burden of reverting to the law to distribute the assets to the legal heirs in case of an intestate (dying without a legal will) demise.

One of the most important points within estate planning is making a will. Your will must be legal and valid within India, and fortunately it is much easier to make a legal, valid will in India than in some other countries. 

Ten points to remember while writing a will:

1. You need to be at least 21 years old to write a will. Do use the title ‘Last Will and Testament Of (state your name here)’ to make it clear that the document is your will.

2. State your full name, current address, and state that you are of sound mental state and under   no duress from anyone to make the will. Also name an executor, a person who will carry through the tenets of the will. If you are nominating an outside person to be the executor of your will, you must ask his permission first. If you have minor children, you must also indicate a guardian for them in your absence.

3. Your will should be simple, precise and clear. Otherwise there may be problems for the legal heirs. It is always advisable to consult a trusted advocate when writing your will.

4. A will must always be dated. If more than one wills exist, then the one having the latest date will nullify all other wills.

5. It is better to make a will at a younger age. As and when events or changes in the family necessitate changes the will can be changed.

6. A will can be hand-written or typed out. No stamp paper is necessary. You can write a will on a simple A4 piece of paper, sign and date it with witnesses and keep it in a secure location. It is often recommended to write your will in your own handwriting as this can be verified later if there are any doubts raised by relatives.

7. Each page of the will should be serially numbered and signed by the Testator (that is you) 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.

8. If there are too many changes in the will, it is better to prepare an entirely new will rather than making modifications to an old will.

9. 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 organization, then registration should be done.

10. A will becomes operative only after the demise of the person making the will i.e. the testator. There is no restriction in the way you can deal with any assets even after making a will.

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. It is important to ensure that it is done correctly –take qualified professional assistance as required from a trusted advocate, as with all your financial planning decisions. More on estate planning to follow soon. Till then keep reading. Stay Blessed!!

Plan Your Retirement

While all of us have loved Amitabh Bachchan in Baghban, we wouldn’t wish something like that should happen to anybody in real life. There was time when 60 was the optimum age for retirement. Now the tables have turned and 60 is the new 40. The life expectancy rate of an average individual has increased by 20 years. And with this, the standard of living, earnings, opportunities and whole social and psychological system has improved and increased. 

The question is whether the increased life expectancy rate will bring about a paradigm shift and if yes, how? And, to live a long fruitful life, is health the only imperative or financial security has as much meaning too? Let's compute the retirement age, which is 60 and average life expectancy, which is 75 in urban areas for males and 80 years for females, a good part of life is left to live  doing what you always wanted to do. But is it possible to have a dream life with no money, and when does one start planning to have that kind of a life?

There are many products catering to this need (pensions, fixed deposits, mutual funds, medical insurance, etc) but how to choose what is the best for you since options are many; and all these options should comply with your needs, dreams and goals. If only a few steps are drawn and monitored, this process becomes relatively lucid and effortless.

Start building a retirement corpus

According to experts, you will require at least 70% to 80% of your last drawn salary on an yearly basis to live comfortably for 25-30 years to come after retirement. Agreed, your loans may be paid off, you would be paying lesser income tax and there would not be any expenses for raising a family or any work related expenses either, but cost of living would go up thanks to inflation and having more hours of leisure at your disposal would also require more money to be spent. After retirement your income inflow would stop, however out flow would go up. For example if you spend Rs 25000/ per month for your household expenses, after 15 yrs you would need Rs 79305/- for the same expenses at 8% inflation. Not many would want to compromise on the standard of living hence start building a retirement corpus at the earliest.

If it's worth thinking about, it's worth writing about

Sit with a pen and paper and decide upon what you need in life. It could be a house you want to have at sea face or a farm house with a swanky car and beautiful library at your home. It could be anything. Practice 'to each his own' and jot down things you need and deserve in life. Also, set the time in which you want to achieve your goals. Thinking what you will do in the latter half of your life and actually doing it are two different things. It has to be crystal clear as to how much money you will need each month for day to day use. This might seem a little too early to contemplate but when it comes to life, you can never be too prepared.

Be informed, be powerful

Information is power. Know what is happening in the market. What all schemes are promising and how returns can be capitalized in full capacity. Sit with your financial planner and dedicate time for the life you are going to live one day. 

Monitor the planned graph

This is the critical part. Deciding on how will you achieve that goal or dream of yours. What you need to do to achieve those goals? What kind of investment will help and how much savings is required? A financial planner will be of definite help since he knows the best. A lot many options may be available to you depending upon your financial condition and other factors, to achieve your goals. So what are these options? These questions are to be answered in all sincerity.

Uncertainty - inevitable

No matter how depressing it sounds, always be prepared for the worst. Know that things always don't work according to plan. Have an emergency plan, one that is not drafted when emergency strikes but one that is put through practice in time of need. Chalk out the ways as to how to reduce risks, what measures need to be taken up while being under strenuous and tricky situations and how to cope up with them.

Also, one needs to draw up a plan to seamless transfer your assets to your children or any other beneficiaries once you are not around. Truth is, the old age is a boon in many a ways, only if you are a little prepared and planned monetarily. Happy retirement planning. Stay Blessed!!