Photo: iStock
Photo: iStock

Ever thought about what will happen to your loved ones in your absence?

Update KYC status of assets, nominations, beneficiary information and Will regularly

Ever wondered, after your demise, how will your loved ones feel sitting for hours together in a court to claim something that is rightfully theirs? Completing a financial plan analysis is not the end of service a client needs. Estate planning, especially for business families, widowed wives, differently abled children, divorced couples, becomes very complicated with the changes in relationships and circumstances in one’s life.

When someone dies without a valid Will, they are known as intestate, and their estate must be shared out according to the rules of intestacy. Imagine your accumulated wealth like property, assets, cash and more not being claimed or unlawfully being claimed by someone who is not the desired beneficiary.

Read: Caring for family after you are no more

While discussing about the finances of a live-in couple, the woman thought she would inherit the estate of her partner who was 25 years older than her. She was in for a rude shock when we mentioned that unless the same is mentioned in writing through a valid Will by her partner, she will not be entitled to anything (there goes the most enticing part of a James Bond thriller). The court has formed a presumption of marriage on the basis of Section 114 of the Indian Evidence Act stating that if a couple is having a long-term co-habitating relationship of 7-10 years, they are presumed to be married. Further, this woman was pregnant and carrying the child of her partner. What would happen to the child on the death of the male partner (he was the wealthy one). Would the assets go to class 1 legal heir, who will be the child, and the mother will get nothing, by nature of the relationship? Married partners or civil partners inherit under the rules of intestacy only if they are actually married or in a civil partnership at the time of death. So, if you are a live-in couple staying together, divorced, or if your civil partnership has been legally ended, you can’t inherit under the rules of intestacy. Let’s say she did not look happy when they left the office.

Read: Why it’s essential to make a Will

When an elderly client of ours died suddenly due to an illness, there were questions from his children and their spouses on who gets what. While he had made a Will, it was not updated and there were many residual assets that needed to be attended to for distribution as per his choice. We had to ascertain the following: 1) Segregate assets as moveable and immoveable; 2) Which country is the diseased domiciled in at the time of dying, since the distribution of the moveable property is as per the law of the country in which the deceased is domiciled in.

Note that the Act does not apply to Muslims. In this case, the Muslim law and the decisions of the Shariah court will apply.

Often, it is advised to make the spouse the executor of assets for the other spouse. We were discussing the role of an executor with one of our client’s wife, who had been brought up in a village, while her husband was a well-educated software engineer. When we informed her that she was in charge of filing a petition with the courts to admit the Will, collate the assets, meet banks, and creditors, pay valid claim and settle loans, pay off taxes and legal costs and distribute the assets according to her husband’s wish in case of his death, she refused upfront. We had to suggest to the husband (although she was the beneficiary) to make another executor which was his sister.

Read: Inheriting a property is not enough, proper transfer of its title in your name is a must

A husband and wife completed their financial plan with us. According to all the updated information in the financial plan document, the wife was the nominee; however, we were not aware there was a Will made by the husband, where he mentioned the beneficiary of all assets to be his brother. According to law, a nominee is a trustee and not the owner of the assets. In other words, she is only a caretaker of your assets. The nominee will only hold your asset as a trustee and will be legally bound to transfer it to the legal heirs. After a couple of discussions with the couple, we suggested they make a Will. We came to know about the already existing Will in which the wife was not the beneficiary. We informed the wife of this piece of information. So much for: “for better or worse till death do us apart!"

If every individual follows some basic hygiene steps like update asset nominations, update KYC status across all financial and non-financial assets, ensure that beneficiary information is updated, update the Will on a regular basis, know the location of the Will, it would make circumstances much easier.

Read: Having joint holders can make transfer of MFs, stocks simpler

The beneficiary would not need to face long court proceedings and financial trauma in addition to the emotional trauma upon their loved one’s demise.

Dilshad Billimoria is director, Dilzer Consultants Pvt. Ltd, and a Sebi-registered advisor

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