“Who Will Cry When You Die?” The Importance of Bank Nominations and Wills in Estate Planning
“Where there’s a will, there’s a fray”: A layman’s guide to estate planning with bank nominations and wills, helping you leave a lasting legacy, while minimizing the potential for family conflicts and
Introduction
When it comes to estate planning, two key tools that individuals can use to ensure that their assets are distributed according to their wishes are “bank nominations” and “wills”. A bank nomination allows individuals to specify who should receive the funds in their bank account or locker in the event of their death, while a will provides a more comprehensive plan for the distribution of assets, including property, investments, and personal belongings. Understanding the differences and benefits of these tools can help individuals make informed decisions about how to manage their estate and avoid potential disputes or conflicts among heirs. In this article, we will explore the basics of bank nominations and wills and the key factors to consider when creating an estate plan. It has been structured in terms of FAQs — frequently asked questions that always troubled you but you never paused to ask.
What is the legal meaning of a “nomination” that one makes in respect of one’s bank account or locker? Is the person the sole inheritor of the said property in the event of the death of the person making this nomination?
A nomination in the context of a bank account or locker refers to the process of appointing someone to receive the funds or assets in the event of the account holder’s death. The person who is nominated is called a nominee.
However, it is important to note that a nomination does not confer ownership of the bank account or locker on the nominee. The nominee is only entitled to receive the funds or assets as a trustee on behalf of the legal heirs of the deceased account holder.
In the event of the account holder’s death, the bank or locker custodian will release the funds or assets to the nominee, who is then required to distribute them to the legal heirs according to the applicable laws of inheritance.
Therefore, if the account holder has made a nomination in respect of their bank account or locker, the nominee will not automatically become the sole inheritor of the property. The legal heirs of the deceased account holder will have the right to claim their share of the assets in accordance with the applicable laws.
Does this nomination get superseded by a subsequent will, if there’s a specific recital to this effect in the will?
Yes, a nomination made in respect of a bank account or locker can be superseded by a subsequent will if there is a specific provision in the will to this effect. In other words, if the account holder makes a will after making a nomination, and the will contains a clause that revokes or modifies the nomination, then the provisions of the will would prevail over the nomination.
It is important to note that the specific language used in the will must clearly revoke or modify the nomination. Mere reference to the bank account or locker in the will may not be enough to revoke or modify the nomination. The account holder must specifically state that the nomination made earlier is being revoked or modified by the will.
In case of any ambiguity or conflict between the nomination and the will, the courts will have to interpret the language used in the will and the nomination to determine the intent of the account holder and resolve the dispute.
How does a bank verify whether a will presented to it after the death of an account holder or locker-holder is genuine and valid?
When a will is presented to a bank after the death of an account holder or locker holder, the bank will typically require some form of verification to ensure that the will is genuine and valid. The specific procedures for verifying the will may vary depending on the policies and procedures of the bank, as well as the applicable laws.
Some of the common steps that a bank may take to verify a will include:
Requesting for the original will: The bank may ask for the original copy of the will, along with any supporting documents such as a death certificate or probate certificate.
Verification of signatures: The bank may verify the signatures of the testator (the person who made the will) and the witnesses to the will to ensure that they are genuine.
Verification of witnesses: The bank may also verify the identity and contact details of the witnesses to the will to ensure that they are credible and reliable.
Consultation with legal experts: The bank may consult legal experts such as lawyers or solicitors to verify the validity of the will, especially if there are any complex legal issues involved.
Compliance with legal requirements: The bank may also ensure that the will complies with all the legal requirements, such as the formalities of execution, capacity of the testator, and absence of coercion or undue influence.
In addition to these steps, the bank may also require additional documents or information as per their internal policies and procedures. The objective is to ensure that the bank is satisfied that the will is genuine and valid before releasing any funds or assets to the beneficiaries.
Do the legal heirs who have been left out require to given due notice by the bank? What if they object?
If the bank has received a valid nomination or will, and the assets are to be distributed to the nominee or the beneficiaries named in the will, the bank may not be required to give notice to the legal heirs who have been left out of the distribution. However, the bank must still follow the due process of law and ensure that the nomination or will is valid and legally enforceable.
If the legal heirs who have been left out come to know about the distribution of the assets, they may object and challenge the validity of the nomination or will in court. In such cases, the bank may be required to hold the distribution of the assets until the matter is resolved by the court.
It is important to note that the legal heirs who have been left out may have a right to claim a share in the assets if they can establish that they are entitled to it under the applicable laws of inheritance. Therefore, if the bank becomes aware of any potential dispute or claim by the legal heirs, it may be prudent to seek legal advice and take appropriate steps to protect its interests.
In summary, the bank is not required to give notice to the legal heirs who have been left out of the distribution of assets, but it must follow the due process of law and ensure that the distribution is made in accordance with a valid and legally enforceable nomination or will. If there is any dispute or objection raised by the legal heirs, the matter may need to be resolved in court.
What must a person do today, by way of a nomination or a will, to prevent any dispute amongst his legal heirs after his death, in respect of bank accounts and locker?
To prevent any dispute amongst legal heirs in respect of bank accounts and locker after one’s death, a person can take the following steps:
Make a valid and clear nomination: The person can make a nomination in respect of their bank accounts and locker, specifying the nominee who will be entitled to receive the funds or assets in the event of their death. The nomination should be clear, unambiguous, and comply with the formalities prescribed by the bank.
Make a will: The person can make a will that clearly specifies how their assets, including bank accounts and locker, should be distributed after their death. The will should be clear, unambiguous, and comply with the formalities prescribed by the law.
Review and update regularly: It is important to review and update the nomination and will regularly to ensure that they reflect the person’s current wishes and circumstances.
Communicate clearly with family members: The person can communicate their wishes and intentions clearly with their family members and loved ones, to avoid any misunderstandings or disputes after their death.
Seek legal advice: The person can seek legal advice from a qualified and experienced lawyer to ensure that their nomination and will comply with all the legal requirements and are enforceable.
By taking these steps, the person can minimize the risk of any dispute or conflict among legal heirs in respect of bank accounts and locker after their death. It is important to ensure that the nomination and will are valid, clear, and unambiguous, and comply with all the legal requirements.
Should this will be preferably registered under the Registration Act, 1908?
It is not mandatory to register a will under the Registration Act, 1908, but it is advisable to do so as it provides additional legal protection and helps to avoid disputes and challenges to the will.
The process of registering a will with a sub-registrar typically involves the following steps:
Prepare the will: The first step is to prepare the will in accordance with the requirements of the Indian Succession Act, 1925. The will should be typed or written in ink on non-judicial stamp paper of an appropriate value, signed by the testator, and attested by two witnesses.
Visit the sub-registrar’s office: The next step is to visit the sub-registrar’s (usually a tehsildar or a naib tehsildar) office in whose jurisdiction the testator resides, along with the original will, two photocopies of the will, and two witnesses.
Pay the registration fees: The testator or the executor of the will must pay the registration fees, which are usually a small percentage of the value of the property.
Verification of identity and witnesses: The sub-registrar will verify the identity of the testator and the witnesses, and may also ask for additional documents such as proof of address and age.
Registration: Once the verification is complete, the sub-registrar will register the will by making an entry and placing one copy of the duly executed will in the register of wills and providing a registration number.
Receipt of registered will: The testator or the executor will receive one copy of the registered will (already duly executed and attested by two witnesses) with the registration number, stamp, and seal of the sub-registrar.
In summary, it is important to note that while a will is not a compulsorily registrable document under the Registration Act, 1908 or the Indian Succession Act, 1925, it is recommended to do so as it can provide legal validity and can prevent any future disputes or challenges to the will.
What should a person do if they want to maintain the confidentiality of will during their lifetime?
If the testator wants to maintain confidentiality of their will, they can take the following steps:
Keep the original will in a safe place: The testator can keep the original will in a secure location, such as a safe or a bank locker, to ensure that it is not accessed by anyone without their authorization.
Limit the number of copies: The testator can limit the number of copies of the will that are made, and ensure that they are only given to authorized persons.
Appoint a trusted executor: The testator can appoint a trusted executor who will be responsible for carrying out the terms of the will after their death. The executor can be given a copy of the will, but should be required to maintain its confidentiality.
Seek legal advice: The testator can seek legal advice from a qualified and experienced lawyer on how best to maintain the confidentiality of their will.
In summary, a registered will does not need to become a public document during the lifetime of the testator, and steps can be taken to maintain its confidentiality. The testator can keep the original will in a secure location, limit the number of copies, appoint a trusted executor, and seek legal advice on maintaining confidentiality.
What is a “probate” or a “letter of administration” in the context of wills and succession?
A probate is a legal document that is issued by a court, which certifies that a deceased person’s will is valid and that the executor named in the will has the authority to administer the deceased person’s estate. The probate process involves the court reviewing the will, ensuring that it meets legal requirements and that the deceased person’s assets are distributed according to their wishes.
A letter of administration, on the other hand, is a legal document issued by a court that grants authority to a person (known as the administrator) to administer the estate of a person who died without leaving a valid will, or where the will does not name an executor or the executor is unable to act.
In other words, a probate is required when a deceased person has left a valid will, while a letter of administration is required when there is no valid will or the will does not name an executor or the executor is unable to act. The probate or letter of administration is necessary to ensure that the deceased person’s assets are distributed in accordance with their wishes or with the law, as the case may be.
The probate or letter of administration process involves filing an application with the court, which includes details of the deceased person’s assets and debts, and providing notice to all interested parties, including beneficiaries, creditors, and legal heirs. The court will then review the application, and if satisfied, will issue a probate or letter of administration.
Once the probate or letter of administration is issued, the executor or administrator is responsible for managing the deceased person’s estate, which includes gathering and valuing assets, paying debts and taxes, and distributing assets to the beneficiaries or legal heirs in accordance with the will or the law, as the case may be.
What is a “succession certificate”?
A succession certificate is a legal document that is issued by a court in India, which allows the heirs of a deceased person to claim assets that were held in the name of the deceased person. The certificate is issued by a court of law to the legal heirs of the deceased person, and it is usually required when the deceased person has not left a valid will, or when the will does not cover all of their assets.
A succession certificate can be obtained by filing an application with the court that has jurisdiction over the deceased person’s place of residence at the time of their death. The application should include details of the deceased person’s assets, along with proof of the relationship between the applicant and the deceased person.
Once the court is satisfied with the application, it will issue a succession certificate to the applicant. The certificate will specify the names of the legal heirs of the deceased person, and it will allow them to claim the deceased person’s assets, such as bank accounts, shares, and other movable property.
It is important to note that a succession certificate is not required for assets that are held jointly, such as joint bank accounts, joint property, or insurance policies with a nominee. In these cases, the surviving joint holder or the nominee can claim the assets without a succession certificate.
A succession certificate is an important document that can help legal heirs to claim their rightful share of the deceased person’s assets. It is also helpful in preventing disputes among the heirs over the distribution of assets.
What is a “legal heir” certificate?
A legal heir certificate is a document that is issued by a government authority in India, which certifies the relationship of a person to the deceased. It is used to establish the legal heirs of a deceased person for the purpose of claiming benefits such as pension, insurance, gratuity, and other government schemes.
The legal heir certificate is issued by the local revenue authority or tehsildar, and it is issued based on the information provided by the applicant. The applicant needs to provide documents such as the death certificate of the deceased person, proof of their relationship to the deceased person, and other relevant documents as per the requirements of the authority.
The legal heir certificate usually includes the names of the legal heirs of the deceased person, along with their relationship to the deceased person. It is an important document for legal heirs to establish their right to the property of the deceased person.
It is important to note that a legal heir certificate does not confer ownership of the deceased person’s property. It is only used as evidence to establish the relationship between the legal heirs and the deceased person for the purpose of claiming benefits or inheriting property.
In some cases, a legal heir certificate may not be necessary if the heirs are already established through a will or other legal document. However, in cases where there is no will or other legal document, a legal heir certificate can help to avoid disputes among the legal heirs over the inheritance of property.
What is a codicil?
A codicil is a legal document that is used to make minor changes to an existing will. It is a supplement or an addition to a will, and it is used to modify or add provisions to the will without having to create a new will altogether.
A codicil must comply with the same legal requirements as a will, and it must be signed and witnessed by at least two witnesses. It is important to note that a codicil can only make minor changes to a will, such as adding or revoking a small bequest, changing the name of an executor, or making minor changes to the distribution of assets.
If a person wants to make major changes to their will, such as changing the distribution of their assets or adding or removing beneficiaries, it is usually better to create a new will altogether rather than using a codicil.
It is important to keep a codicil with the original will, as it is considered a part of the will and will be read together with the original will. If a person creates multiple codicils, it is important to ensure that they are all kept together with the original will to avoid confusion and disputes among the beneficiaries.
If a person leaves two valid wills, which one will be given effect to by the courts?
If a person leaves two valid wills, the courts will typically give effect to the most recent will. This is because the most recent will is presumed to reflect the testator’s current intentions and wishes.
However, if there is a dispute over which will should be given effect to, the courts will examine the circumstances surrounding the creation of each will to determine which one reflects the testator’s true intentions. This may involve examining evidence such as the testator’s mental capacity at the time of making the will, the circumstances surrounding the creation of the will, and any evidence of undue influence or coercion.
Ultimately, the courts will seek to give effect to the will that reflects the testator’s true intentions, even if it is not the most recent will. Therefore, it is important for individuals to make sure that their wills are clear, unambiguous, and reflect their current wishes to minimize the risk of disputes over their estate after their death.
What happens when the karta of an HUF (Hindu Undivided family) dies?
When the karta of an HUF (Hindu Undivided Family) dies, the next senior most male member in the family typically becomes the new karta. This person will then assume the role of managing the affairs of the HUF and making decisions on behalf of the family.
The HUF is a unique form of business organization that is recognized under Indian law. It is essentially a family business that is owned and controlled by the members of a Hindu family. The karta is the head of the family and is responsible for managing the affairs of the HUF, making important business decisions, and representing the family in legal matters.
When a karta dies, it is important to ensure that the succession process is handled carefully and in accordance with the provisions of the Hindu Succession Act, 1956. The new karta will need to take steps to manage the assets and liabilities of the HUF, ensure that taxes are paid on time, and ensure that the family’s legal and financial interests are protected. This may involve obtaining legal advice, consulting with financial advisors, and taking other steps to manage the affairs of the family.
If the new karta is a minor male, can the mother as a natural guardian, act as his representative to act as karta of the HUF, till the karta gains majority?
Yes, if the new karta is a minor male, then his mother (or another legal guardian) can act as his representative to manage the affairs of the HUF until the karta reaches majority. Under Hindu law, the mother is considered to be the natural guardian of a minor child, and is responsible for his or her care and welfare.
However, the mother (or other legal guardian) would not become the karta of the HUF herself, as this position is reserved for the senior most male member of the family. Instead, she would act as the legal representative of the minor karta, managing the affairs of the HUF on his behalf until he reaches the age of majority.
During this time, the mother (or other legal guardian) would have the same duties and responsibilities as the karta, and would be responsible for managing the assets and liabilities of the HUF, making important business decisions, and representing the family in legal matters. It is important for the mother (or other legal guardian) to act in the best interests of the minor karta and the HUF, and to seek professional advice and assistance as needed to ensure that the affairs of the family are managed properly.
Gifting your assets during your lifetime?
It is common for senior citizens, especially in India, to consider gifting their assets to their loved ones as a way to provide for them and also to minimize potential disputes and litigation between their heirs, after their demise. However, this strategy can have unintended consequences, especially if the recipient of the gift faces financial or legal problems in the future. Moreover, gifting away assets can lead to family disputes and conflicts during the lifetime of the donor, particularly if some family members feel that they have been unfairly excluded. To avoid these potential pitfalls, I would advise senior citizens to consider using wills and nominations to distribute their assets, rather than gifting them away during their lifetime. This approach can help to ensure that their assets are distributed according to their wishes and minimize the potential for conflicts and disputes among family members.
Concluding remarks
In conclusion, creating a comprehensive estate plan that includes both bank nominations and a will is an important step in ensuring that your assets are distributed according to your wishes after your death. While it may be uncomfortable to think about your own mortality, taking the time to plan ahead can help to avoid disputes and conflicts among your heirs and provide peace of mind for you and your loved ones. Whether you are young or old, it is never too early or too late to start thinking about estate planning and taking steps to protect your assets and your legacy.
If you have not yet created a will or bank nomination, I shall urge you to take action and speak with a qualified estate planning attorney or financial advisor. They can help you understand the basic differences between these tools and guide you through the process of creating a plan that is tailored to your unique needs and goals. By taking the time to plan ahead now, you can ensure that your assets are distributed according to your wishes and leave a lasting legacy for future generations.