Will can be drawn up on a plain paper and handwritten

There is no specified format in which a will is to be made.
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First Published: Tue, Jan 01 2013. 05 56 PM IST
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I have three properties and I want to write a will. Please explain what are wills, trusts and power of attorney. Also, what is the difference between a will-based and a trust-based estate plan?
—Gupta
Will: A will is a document executed by a testator (person who makes the will) under which he states as to how and in what proportion he wishes his property to be divided between his heirs or to any other person to whom he wishes to bequeath his property.
The essential conditions of a will are that it must be in writing (subject to certain exceptions); the testator must sign the will; the will must be attested (signed) by two or more witnesses. It must be noted that beneficiaries under a will cannot be attesting witnesses to a will.
There is no specified format in which a will is to be made. It could be drawn up on a plain sheet of paper and handwritten by the testator. As per section 74 of the Indian Succession Act, 1925, no technical terms need to be used. However, the intentions of the testator, including the property to be bequeathed and the beneficiaries to whom such property is to be bequeathed to, must be clearly set out. The will must be signed by the testator or his mark affixed thereto or signed by a person as directed by the testator and in the presence of the testator, all in the presence of at least two witnesses, each of whom must also sign the will.
A testator may appoint an executor under a will. It may be noted that it is advisable to appoint an executor because if, for any reason, the will is challenged, all the property bequeathed under the will shall vest, as such, in the executor until such time the will is probated (the genuineness of the will has been ascertained).
A will is not a compulsorily registerable document under section 17 of the Registration Act, 1908.
Power of attorney: Where the authority of an agent is required to be conferred by a deed, or the circumstances require that an agent be appointed to formally act for the principal in one transaction, or a series of transactions, or to manage the affairs of the principal generally, the necessary authority is conferred by an instrument known as a power of attorney (PoA). The agent would be the PoA holder.
A PoA can either be a general PoA or a specific PoA. A general PoA gives the PoA holder, the power to do several acts enumerated in the said PoA. A specific PoA is executed so as to give the PoA holder the power to do a specific act only.
Trusts: A trust is usually created by appointing a trustee to manage the trust estate (the subject matter of the trust) in favour of and for the benefit of another person called the “beneficiary”.
Private trusts in India (as opposed to public or charitable trusts) are governed by the Indian Trusts Act, 1882.
As per section 5 of the Trusts Act, a trust of immovable property can be created in the following ways; one, non-testamentary instrument (trust deed) duly registered under the Registration Act, 1908, or two, by the will of the author of the trust or trustee.
A trust created inter-vivos (not under a will) is settled by a settler vide a non-testamentary instrument being a trust deed. Section 8 of the Trusts Act states that the subject matter of the trust must be property that can be transferred to the beneficiary. Section 9 of the Trusts Act states that a beneficiary may be any person capable of holding property, which means a trust may be created in favour of any person or body of persons, so long as the purpose is lawful and the capacity to hold property is the requisite qualification for a person to be a beneficiary.
Difference between will-based and trust-based estate plan: Estate planning is essential for the following among other reasons:
* To safeguard your wealth for yourself during your lifetime and for your future generations
* To protect your family and to provide for their needs
* To avoid family disputes
* To name the people to whom you wish to give your assets to
* To effectively plan business succession
An estate plan, could inter alia take on the form of a will, a trust, a gift, through partition, life insurance, or a PoA.
A will is given effect to after a person’s death. A trust, however, could help a person protect and enjoy his assets during his lifetime and thereafter be available for the benefit of his heirs or other beneficiaries.
However, a common apprehension with respect to settling property in a trust during one’s lifetime is:
* Once a trust has been settled, the same cannot be revoked subsequently by the settlor (the person who creates the trust) even if the settlor has a subsequent change of mind/heart during his lifetime. In other words, if you create a trust during your lifetime, you could lose control over your assets. However, this is not true.
Section 78 of the Trusts Act inter alia provides that a trust that has been created by a person during his lifetime can be revoked (a) when all the beneficiaries consent to the same, or (b) when the trust deed expressly allows the author of the trust to revoke the trust.
Section 77 of the Trusts Act inter alia provides that when a trust which is revocable, has been expressly revoked, the trust will be extinguished.
Therefore, a trust can be settled as a revocable trust, and the settlor can retain, in the trust deed, the power to revoke the trust and direct the trustee to re-vest the trust property in the settlor. However, a trust cannot be revoked at the discretion of the settlor. Certain tax and other implications must be considered at the time of settling and revoking a trust.
Queries and views at mintmoney@livemint.com
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First Published: Tue, Jan 01 2013. 05 56 PM IST
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