Where there is a Will...

Written by Saikat Neogi | Updated: Aug 26 2014, 15:25pm hrs
We work hard to accumulate wealth, but its equally important to write a proper will bequeathing the legacy to our loved ones. This not only

ensures smooth inheritance of property, but also irons

out the possibility of an unwanted dispute among family members.

The prerequisites for a will to be enforceable: the individual should be of sound mind and the will must be signed with two people as witnesses.

First and foremost, the will must be simple, and the order of preference for distribution of property among legatees should be: spouse, children, brothers or sisters and other relatives. If there are any

additions to the family or a change in the number of

key legatees after the will

has been made, it must

be modified.

Types of wills

A will written by an individual other than a defence personnel is called an unprivileged will. All unprivileged wills have to be signed by the person making the will in

the presence of at least

two witnesses.

In case of a conditional will, one can put certain conditions and the will becomes valid if all the conditions outlined are fulfilled in terms of age, marital status, etc.

A joint will is written by more than one person, and the surviving testator can

revoke the will during his lifetime, even after the death of the other.

Nomination for financial products

Simply filling out the nomination column in your insurance policies, stocks, mutual funds, bank deposits and other financial products does not mean the nominee will get the money easily in case of any eventuality. In fact, a nominee is merely a trustee who is supposed to be the caretaker of the money or any financial asset. For the nominee to get the money/asset easily, the owner of the financial products or the asset would have to write a will and, then, the nominee will become the legal heir.

An individual must ensure that the name, age, address and his relationship with the nominee is clearly mentioned at the time of filling out the proposal form for any financial product. If the nominee is a minor, the parents must mention the name of a person who is a major, who would be the appointee till the minor attains 18 years of age.

Also, if a will is not signed, the legal heirs of the financial assets will be decided as per the succession laws of the country and they will have to give affidavits stating that the nominee mentioned in the financial products will get all the proceeds of the deceased.

Analysts say the most common problem with nomination crops up in insurance products, where the contract is for a long time. In fact, Section 39 of the Insurance Act, 1938, clearly states that a holder of a life insurance policy may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money will be paid in the event of his death. It also underlines that where any nominee is a minor, the policyholder should appoint any person to receive the money secured by the policy in the event of his death till the person attains majority.

Analysts say policyholders often do not mention the name of the nominee, as a result of which unclaimed money with insurers is piling up.

In case of stocks and bonds, the nominee gets the money if the shareholder dies and the legal heir cannot claim the money unless it is clearly specified in the will signed by the deceased. For long-term financial products like Public Provident Fund (PPF), pension products and equity-linked savings schemes, nomination should be done at the point of investing. If there is any change in nomination, the investor must give it in writing to the bank, insurance company or the asset management company and ensure that the new nominee's name is recorded.

According to Section 3 of the Public Provident Fund Act,1968, where there is no nomination in force at the time of death of the subscriber, the amount standing to the credit of the deceased after making adjustments, if any, in respect of interest on loans taken by the subscriber will be paid to the legal heirs of the deceased. This will be done by filing Form G, where the money will be paid to the legal heirs on production of a letter of indemnity, an affidavit, a letter of disclaimer on affidavit and a certificate of death of subscriber on stamped papers.

Similarly, if one has not mentioned a nominee in a bank savings account, current account, recurring deposit or fixed deposit, he can file Form DA 1 for nomination under section 45ZA of the Banking Regulation Act, 1949. If the account holder or the fixed deposit holder wishes to cancel the nomination, he can do so by filing form DA-2.

One can nominate, modify, and cancel nomination as many times one wants. However, account holders must note that this facility is only available for individual account holders and not for companies or trusts. For joint bank accounts, if one dies before mentioning the nomination, the other account holder can file the nomination.