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Business News/ Money / Personal Finance/  Mistakes you must avoid for smooth transfer of assets
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Mistakes you must avoid for smooth transfer of assets

Some common pitfalls may hamper seamless succession of your assets

Practical aspects to keep in mind for easing issues over inheritancePremium
Practical aspects to keep in mind for easing issues over inheritance

Let’s say you have created a legacy of assets during your lifetime and are keen that your family inherits these assets smoothly. With this objective, following legal advice, you prepare your will, and name your family members as nominees across asset classes. It would be reasonable for you to assume that the inheritance process will be effortless after your death. However, it may not be so—in spite of your foresight, some common pitfalls may hamper seamless succession of your assets. Here are three key practical aspects worth considering to mitigate the risk of hardship.

Storage of will

Once you prepare the will, you should inform the executors named in the will of its existence and storage location. The place of storage should be such that access to the will (along with amendments) after your demise is not cumbersome. Failing this, executors and family members may not be able to retrieve the will, or they may mistakenly believe that there is no will or may rely on an old will unaware that it has since been superseded.

While a bank locker or personal safe can be a secure location for placing the will, a common mistake is not to direct executors where to find the key or passcode. If the will is placed in the safe custody of a lawyer, then clear written instructions should be given to the lawyer and the executor on handing over of the will upon demise. If the will is executed in duplicate, copies of which are placed in different locations, then it’s prudent to inform the executors to retrieve all such copies to avoid confusion or misuse.

You may also store the will with a trustworthy executor, but ensure that should they die before you, you are able to access your will easily.

Information of assets and liabilities

One of the foremost problems that executors and heirs face when giving effect to the will is the uncertainty about the complete assets and liabilities of the testator. Since there are no official country-wide asset registers, it is difficult for executors to ascertain the full extent of property ownership especially when maintained across different locations /accounts. This difficulty is faced most often in case of real estate, in particular, when land records are not updated–for instance, when a property has been inherited but the formalities have not been completed. Complications also arise when shares and mutual fund units are held in physical form since the physical certificates are capable of being misplaced.

Preparing a will which describes all the assets and liabilities on the date of the will can address this issue to an extent. For subsequent assets and liabilities, either the will should be continuously updated by preparing an amendment (called codicil) or asset registers/balance sheets should be preserved by you or your accountant or wealth advisor. The details of liabilities should also include loans taken or granted, as well as details of periodic repayments. Similarly, two physical files—for originals and copies—containing supporting documentation should be maintained. These registers and files may either be stored along with the will, or covered under a note/letter to family members with the details.

Password registers

Like most individuals in this digital age, you may hold assets in digital form such as personal records like digital photos, content on social media websites, as also subscriptions, domain names, tokens and cryptocurrency. These may be valuable to you monetarily as also sentimentally. Although called ‘assets’, not all of these may be regarded as ‘property’ covered under your will. Some may be mere licences to use certain websites or services which would expire on your death.

India does not have a law governing digital assets and there is currently no unified approach to their ‘inheritance’ or access by heirs. Service providers have their own policy in dealing with digital property upon the death of the account holder. You should examine the policies of the relevant websites and services, based on which you may leave written wishes for your family on how you would want your digital material to be accessed and treated after your demise.

Such steps will assist with smooth inheritance by your heirs and help in memorializing your legacy.

Radhika Gaggar and Shaishavi Kadakia are partners, Cyril Amarchand Mangaldas.

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Published: 16 Feb 2023, 08:19 PM IST
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