Look Beyond Bank Fixed Deposits

According to Hindu Succession Law ( which is also valid for Sikh, Jain, Budhist ), if a person dies intestate i.e. without making a WILL, his/her property will be distributed among spouse and offspring equally. So, if husband dies all his property will not go to his wife. So, you must make a WILL if you want to bequeath all your property to your wife. It should be noted that nominee is just trustee of property and not owner and it is duty of nominee to handover the property to legal heir.

• WILL is a legal declaration of the intention of the testator with respect to distribution of his property which he desires to be carried out after his death. Testator is  the person making WILL to transfer his property.
• Only the property accumulated by the testator can be transferred by WILL. Ancestral property i.e. property existing in family for at least two generations is transferred as per succession act of respective religion.
• WILL has to be executed by testator by signing it. It can be made on plain paper. But signing should be attested by at least two witnesses. Testator can change the WILL as many times as he wishes in his life time - only the last WILL be effective.
• If a testator intends to make few changes to WILL without changing the entire WILL, he can do so by making a Codicil to the WILL.Codicil can  be executed in the similar way as the WILL.
• WILL can be made both for movable and immovable property.
• By means of WILL, one can appoint in writing a guardian for minor children, greater provision for a handicapped child, widowed daughter or invalid parent - it can also be used for making provision for faithful servant, for creating trust or for making donations.
• WILL can be registered with sub-registrar, although registration is not compulsory.  A WILL can be sealed and kept in safe custody. But if WILL is registered it cannot be ordinarily be tampered with, destroyed, mutilated, lost or stolen.
• On the death of testator, heir of the deceased testator will have to apply for Probate to court. The court will ask other heirs of the deceased if they have any objections to the WILL. If there are no objections, he court will grant probate and also appoint Executor to supervise distribution of property as per WILL. Probate is a copy of WILL, certified by the court and is conclusive evidence that WILL is genuine.
• Supreme Court has held that petition for probate must be fixed within three years from the date of the testator.
• The executor is the most important person in the WILL. An executor has the duty to collect and realize the estate of the deceased, pay his debts and distribute the legacies as mentioned in the WILL.

On Aug 13, Prime Minister announced new tax system in India which is one of the world's most advance tax system. Most important aspect of this system is contactless system of assessment and appeal. Let us consider some of the most important features of this system :-

• In 98 % of cases Income tax department now accepts whatever information you provide in your tax return as true and does assessment on that informatioin.
• Only 2 % cases are taken for detail scrutiny. This is also selected by computer if it find discrepenny in information provided by you and information that department may had.
• Whole assessment in such cases will be controlled by Delhi data office. Assessment will be completed in three steps. On being allocated by Delhi office, one officer will ask information from you. On the basis of information provided by you he will calculate your tax liability. Then it will go to another officer - again allocated by Delhi office - who will  verify the information and calculation. After that third officer again allocated by Delhi office will pass the finail order.
• Beauty of the whole system is that neither the tax payer will know who is his assessing officer and from which city he is operating neither any of the officer associated with assessment will know who the tax payer is and where he resides. Neither three of the officers will know about each other. Every step will be decided by computers.
• Let us understand it by example. Information provided by a tax payer of Patna can go to officer in Chhennai for assessment, then to a officer in Delhi for review and finally officer in Mumbai for final order. Not any one of four persons will know who are the other three and  from which city they are operating.
• Not only the assessment but also the appeals will be online and faceless.
• Your identity will be DIN (document identification number ). You will receive information from income tax department mentioning DIN and you will have to reply quoting DIN. All information you will have to upload online there will be no postal or individual delivery. If you receive any communication from income tax department without DIN, you can simply ignore it.
• It means that there will be no territorial jurisdiction now, so there is no need of going to income tax office of your town. For a tax payer residing in Ludhiana going to Ludhiana income tax office will be useless as an officer in Hyderabad may be looking into his matter but he will not get any information about the officer.
• This will also limit the role of middleman as the role will be limited to giving technical advice. Dalal will have no role. All information you will receive by email or by logging into website of income tax department.

                 A number of transaction are now being reported to department which will be reflected in your Form 26 AS. In near future Income tax department software will calculate tax for you based on information already contained in fom 26 AS and information provided by you about your income. This will reduce tax evasion and tax disputes and also reduce the role of tax man and tax middleman -  if you know Internet you can calculate and file income tax return yourself.

• Nominee is not the legal heir - Nominee is just the trustee and not the owner of the property. In fact he is the caretaker of property of deceased and it is his responsibility to transfer the asset to legal owner.
• Legal heir can be decided by will if deceased  has left a will. But if owner of property dies without making a will ( i.e. in-estate ), then legal heirs are decided by respective succession law - Hindu, Muslim or Parsi.
• In case of banks, they pay amount standing in the name of deceased to nominee. But in case of locker, as per RBI guidelines bank are duty bound to make the inventory of contents of locker before handing it over to  nominee.
• This doesn't mean that nominee is the legal heir - if nominee does not handover cash or contents of locker to legal heir then civil and criminal prosecution can be started against him. 
• It should also be very clear that nominee caanot decide who the legal heirs are - it is decided by succession law or will.
• However in case of transfer of shares of companies, nominee is the legal heir.
• In case of residential property also, nominee is not the legal heir. He is just the trustee.
•   In case of insurance policy, nominee is the legal heir if he is parent, spouse or children of deceased - but if the nominee is a person other than mentioned above, he will not be the legal heir. So in such cases nominee is just the caretaker/ trustee and will transfer the proceeds of insurance policy to legal heirs.
• So, there is the catch - if you want that after your death, your property goes to a person desired by you then it is not just sufficient to nominate him in your bank accounts etc but you will have to make a will in the name of that person.

Now let us consider some lesser known facts of Hindu Succession Act - 

• If widow of a son remarries, she cannot inherit property of her husband's father / mother..
• Converts cannot be disqualified from ancestral property but convert's descendents are disqualified from inheriting property.
• No person shall be disqualified from inheriting property on ground of disease, defect or deformity.
• If a person committs murders, he is disqualified from inheritance.
• Hindu Succession Act does not applies to Sheduled Tribes unless govt. notifies.
• All the heirs of the property in the same class inherit property simultaneously and equally.
• Adopted sons are also considered equal legal heir.
• If there are more than one widows all of them will inherit property.
• Widow is entitled to property even if she remarries.
• An heir in the higher category excludes all heirs in lower category.
• If a male dies, sons, daughters and widow shall inherit property simultaneously and equally.
• In the absence of legal heir, property goes to government.e's much to see here. So, take your time, look around, and learn all there is to know about us. We hope you enjoy our site and take a moment to drop us a line.

 Singhania, owner of Raymond has filed a property dispute case against his son Gautam. Senior Singhania has handed over his Rs  1000 crore property to his son, is now living in a rented house without a car. Similar is the case of hockey wizard Major Dhyan Chand, Mina Kumari, Michael Jackson, Karl Marx. These are famous personalities we know who had died in financial distress, there are many more common people whom we donot know. 

• There is no study to know what happens to retired employees at fag end of life with regard to their finances. Problem is more serious now as there is no assured pension know. So there are few things you should remember while managing your finances -
• First, invest your income in asset classes that give higher return than inflation. Investing in houses is poor investment - as rental income is not more than 3 % of amount invested to buy a house. True, the value of house specially land appreciates but it is emotionally very tuff decision to sell them if need arise.
• Similarly, your investment in agriculture land is also not a wise decision - daily we hear news of farmers committing suicides because losses from agricultral activities. Also investment in Gold is no guarantee of beating inflation. In fact during last five years, GOLD has given negative return.
• So, investing wisely is very important. But for wise investment decisions, it is necessary that all your dealings are transparent - -  means you are not hiding anything from taxman and authorities. Because investment in Benami properties will not benefit you, when you need them most. You buy property, land in names of relatives, buy shares and gold in names of friends, servants but in days of distress, in old days when you are not physically strong to enforce your diktat, they may ditch you. 
• For this reason, do not believe too much in your son or daughter and never give the ownership of your property in their name in your lifetime. May be they have good intentions, but circumstances may be such that they cannot help you. If your son or  daughter are in foreign countries, they cannot come to your rescue in emergency.Also their spouses may  not be favourably disposed towards you. Most recent case is dispute in Singhania - Raymond family. So why to take risk, keep control of your finances in your hands, leave property for your heirs by will.
• Also you should control your expenses - there are two types of expenses - expenses on life style i.e. luxury expenses and expenses that increase your future earnings. I am not questioning second type of expenses. But expenses on luxuries should be kept under check. Only you know what expenses are necessary for your life - calculate how much you need in nest 30 years after retirement. This should be kept separate and invested wisely - rest is for luxury.
• Now life expectancy has increased - for risk free life, first provide for 30 years after retirement. It means 30 times your annual expenses. Not only this, calculate how much you will need in next five years and keep them in savings banks and bank fixed deposits. Rest amount ( for next 25 years ) should be in inflation beating instruments. If you have invested in land or building you should have courage to sell them after 5, 10, or 20 years. It is always better to engage a financial adviser at the earliest. 
• SO TAKE A BREAK TO MANAGE YOUR FINANCES, BECAUSE YOUR SELF-ESTEEM WILL NOT ALLOW YOU TO BE DEPENDENT ON OTHERS.