We keep on working throughout our life to earn and accumulate more and more assets / Investment but very few of us are serious of the fact about protection of this hard earned wealth.
Here comes a million dollar question! What happens to these investments after the death of the persons who owns / inherit such investment or properties?
How a person can deal with his assets / investments?
The following key points suggest some ways to deal with one’s assets / investments:
- A self-acquired property can be dealt by a person as per his wish.
- It is his/her prerogative to decide about the property during his / her life time.
- During one’s lifetime, a person can sell his / her property at any value, or gift the same to anyone.
- One can enter into some family settlement.
- The person can write a ‘Will’ that after the death; the property will be transferred to the person named therein.
- On the death of the owner, the property will be transmitted either by testamentary or intestate succession.
What is a Will?
A ‘Will’ is the declaration, by the owner of the asset, as to how and to whom, the property be transmitted after his / her death.
Some key facts to be known for a “Will”
- The individual who creates the Will is called the testator or executor and The person in whose favor the Will is created is known as the legatee.
- The Will takes effect only after the death of such owner, and therefore, the person executing the Will can change the “Will” or revoke it any time or any number of times, during his /her lifetime.
- There is no express condition that the testator or executor (the person who executes a Will) must necessarily sign the Will in presence of the attesting witnesses.
- There is no legal obligation to get a Will registered but if the testator or executor desires to do so, he may get it Registered.
- The registration of a Will is not compulsory.
- A Will that is properly signed and clearly expresses the wishes of the testator will be legally valid even if it is not registered with the Registrar.
How the property is transmitted after the death of a person?
After the death of a person, his / her property or assets are transmitted in two ways, viz., Testamentary Succession or Intestate Succession.
Now, lets understand what is Testamentary Succession and Intestate Succession?
- Testamentary succession – one with a will; or
- Intestate succession – one without a will.
- Testamentary Succession: Succession is done through ‘Will’ is called Testamentary Succession. The following are key points to be noted in case of Testamentary Succession :
- After the death, the right of possession and enjoyment of a property / assets / investment can be obtained by the legatee by obtaining a Probate, Letter of Administration or Succession Certificate, from a court of competent jurisdiction, as the case maybe.
2. Intestate Succession: In situations, where the person dies intestate i.e. without creating a Will, then that person’s property is transferred among his / her ‘legal heirs’ by the respective applicable laws of intestate succession.
What is the applicable law?
In India, the law relating to succession is governed by the Indian Succession Act, 1925. Please note the following point in case of succession:
- In case of Hindus, Sikhs, Jains and Buddhists, Indian Succession Act is applicable for ‘testamentary succession’.
- However, for ‘intestate succession’, Hindu Succession Act, 1956 is applicable in case of these religions.
- The Indian Succession Act, 1925 does not apply to Muslims, as their succession is based on their personal laws.
- In case of Christians, Laws relating to testamentary as well as intestate succession is governed as per the Indian Succession Act, 1925.
What happens to the property if there is no Will?
If a person dies without executing any Will, then the property will be devolved amongst his ‘legal heirs’ via Intestate Succession as per the principles of the Hindu Succession Act, 1956.
Who are the Legal Heirs?
Let’s understand about who the Legal Heirs of the deceased.
If a Male Hindu dies intestate:
- The Hindu Succession Act, 1956, says the property of a Hindu Male dying intestate (without Will) will be inherited to ‘Heirs in Class I’.
- The ‘Heirs in Class I’ broadly includes:
- Mother, widow, son(s) and daughter(s) etc.
- It is to be noted that each of them, gets an equal share in the property of the deceased. For example, if Mr ‘X’ dies intestate without leaving a Will, then his mother, widow wife, son and daughter will each get equal share i.e., 1/4th share each.
- There is no such distinction between a married and unmarried daughter and a married daughter inherits equally.
- If any of the legal heirs as mentioned in the Class I’ is not alive then his/her share in the property will go to the legal heirs of that deceased legal heir.
- However, if there is no person alive in ‘Class I’ at the time of death of the deceased, then the property of the deceased will be inherited by ‘Heirs in Class II’.
- The ‘Heirs in Class II’ broadly includes which broadly include the father, brother, sister, sibling’s children, living children’s grandchildren etc. and they are entitled to a share in the property only if there is no ‘Class I Heir’ living.
- Lastly, if there are no Class I or Class II heirs, then the property will be devolved upon the Agnates and the Cognates. Agnates of the deceased are relatives from the parental side while Cognates of the deceased are relatives through maternal side.
When a Hindu female dies intestate, her property would devolve as below:
- First, to husband, sons and daughters (including children of predeceased son or daughter). Divided in equal measures.
- Second, to husband's heirs. If the husband doesn't have any heir, then to mother and father of the deceased female.
- When the parents have expired, then to heirs of the father. If none of the above exists, to heirs of the mother.