The Private Client team at Cyril Amarchand Mangaldas shares their comments and opinions shared in an article in the following Q&A which was published by the Mint Newspaper on 22nd September, 2020 and the online edition of the same can be found here.
One of my uncles is in hospital, getting treatment for covid-19. As his condition is serious, he is planning to make a will. How should he go about making a will that cannot be challenged in the court on the grounds of his mental health?
—Name withheld on request
We assume that you are Hindu by faith and, hence, the Indian Succession Act, 1925 will apply to you. A valid will may be executed by the testator (your uncle) by signing it in the presence of two independent witnesses—other patients or doctors. If your uncle can only handwrite the will as that’s the fastest option, that’s fine but it may be better if he can sign a typed or printed will for legibility. One of the witnesses should definitely be his doctor. Registration is not mandatory, and anyway it would not be possible for your uncle to get this process done right now.
The signature of the doctor should also be accompanied by a medical certificate to state that your uncle was mentally fit and of sound mind. This would go a long way in proving his mental capacity, if the will were to be contested.
We also suggest that your uncle should video record the entire process, as this would involve him reading the will out loud to the camera, and then signing the same in front of the two witnesses. If your uncle’s health does not let him do this, someone else should read the will to him, and he should acknowledge the contents and state in front of the camera that he is executing the will out of his own free will. He can then sign the will, along with the two witnesses (one of whom should be the doctor).
In the context of your uncle’s urgent condition, these steps will help in protecting his estate from challenge. Once he recovers, he is free to amend or replace the will and have it registered.
My father has a life insurance policy in which the nominee is my mother. He has also made a will leaving all his assets in equal proportion between my mother, sister and me. Will the insurance proceeds also be divided between us?
—Name withheld on request
It is important to note the difference between a nominee and a legal heir. Usually, nominations to bank accounts and insurance policies are made to ensure that the estate or any such property is protected till the legal representatives of the deceased take appropriate steps, and also to give such assets a valid discharge in the interim. A nominee, thus, does not become the owner of such money but holds it as a ‘trustee’ for the legal heirs of the deceased person. This position was affirmed by Supreme Court in the case of Aruna Oswal versus Pankaj Oswal and Ors. (2019).
However, with respect to life insurance policies, an exception is made where the nominee is any of the deceased’s family members such as parents, spouse or children. In such a case, family members are beneficially entitled to the life insurance proceeds, to the exclusion of all others, including other legal heirs. Under the Insurance Act, 1938, where the holder of a policy of insurance on his own life nominates his spouse, then the nominee shall be beneficially entitled to the amount payable by the insurer to her or him unless it is proven that the holder of the policy, having regard to the nature of his title to the policy, could not have conferred any such beneficial title on the nominee.
In the present case, as your mother is the beneficial owner of the life insurance policy, she would be regarded as the owner of the insurance proceeds. Therefore, your father’s legal heirs, including you and your sister, do not have right to the said proceeds.
If this is not your father’s intention, we recommend that he should have the nomination forms amended to reflect the names of the intended beneficiaries. He should also amend the will to align the same with the nominations made under the insurance policies to avoid any confusion and conflict in the future.