A probate is a certificate granted by the court in respect of a Will, which proves the validity of the Will and grants rights to the executor to administer the estate of the deceased testator in the manner set out in the Will. Post the demise of the testator, the executors named in the Will can apply to the jurisdictional court to seek a probate to establish the authenticity of the Will.
Continue Reading Probate Requirement in Delhi & Around
Charitable organisations, irrespective of the scale of their activities, seek and accept donations in various forms. Predictably, payment and receipt of donations, susceptible as they may be to misuse, are subject to regulation in India, and there are multiple legal complexities that need to be navigated through in connection with these.
In this article, we identify some questions that donee organisations must consider when accepting charitable donations in order to suitably address various legal issues and formalities applicable.
Continue Reading Receiving charitable donations? What you should think about.
The complex nature of estate and succession planning requires careful assessment of myriad considerations, such as the nature of estate (composition and location), family type (nuclear, joint or hybrid), and potential cost outlay (taxation and stamp duty) in order to achieve the objectives in an efficient manner.
However, while determining the costs associated with planning, an oft-overlooked factor is the court fees that may be payable when the components of the succession plan are set into motion post demise. If not evaluated when devising the estate plan, court fees might come as a rude shock to heirs seeking to implement the succession plan of a deceased family member.
Continue Reading The Estate and Succession Planning Consideration That (Almost) No One Discusses
In these uncertain times of a global pandemic, there is increased interest in succession planning, including through Wills, and understandably so. Yet, there are considerable practical and legal challenges involved in making a Will during social distancing, isolation or quarantine. In this blog post, we discuss these challenges in the Indian context and suggest potential solutions. While it may not be possible to find foolproof solutions, and unfortunately technology is not yet an ally, there are some measures that may help to overcome prevalent complications in creation of Wills.
Continue Reading Wills In The Time Of Corona: Challenges And Solutions
Trusts are recognised internationally as favoured vehicles for estate and succession planning. Although most private asset-holding trusts are created during the lifetime of the creator (settlor), there is another category of trusts called testamentary trusts. As the term suggests, testamentary trusts (also known as ‘Will-trusts’ in certain jurisdictions) are formed through testamentary instruments such as a Will, and which take effect only upon the death of the creator. This post seeks to provide an overview of the Indian law on testamentary trusts, and offer insights into their creation, function and utility.
Continue Reading Testamentary Trusts – Overview And Insights
When one is about to get married, there are myriad thoughts crossing one’s mind all at once – from meticulous planning of the upcoming nuptials, to mundane but practical matters such as updating official documents, to creating social media hashtags. A wedding is after all a momentous occasion in a person’s life, and planning is key. It might be safe to say, however, that the thought of how marriage will impact one’s inheritance rights and succession planning in anticipation are usually not top of the list.
In this blog, we discuss this important but rarely discussed topic – the effect of marriage on inheritance rights and planning in anticipation of marriage. As this is a vast topic and issues vary depending on the facts of each case, we have discussed some of the key issues and limited the discussion in this post to Hindus.
Continue Reading Wedding (Succession) Planning: Analysing Impact of Marriage on Inheritance Rights of Hindus
A Will differs from contracts and other executed documents in one important aspect. Unlike other documents, a Will only takes effect from the death of the person who has made it (called the testator). The testator’s testimony is not available to determine whether the Will is valid and whether it constitutes the testator’s true intentions. Thus, the validation and interpretation of a Will is rather unique for the significance of surrounding circumstances, and the identity and status of parties.
This being the case, it becomes advisable not only to prepare a Will that is clear and legally valid, but also to ensure that if a challenge to the Will is anticipated, suitable safeguards to fortify it have been put in place. In this post, we discuss the legal grounds on which a Will may be challenged, and some of the commonly adopted precautions that testators may put in place to help validate their Wills and to assist in giving effect to their desired intentions.
Grounds for Challenge
After the testator passes away, the Will may be challenged before a Court by any person who claims to have an interest in the testator’s estate. If the Court finds, based on the evidence placed before it, that the challenge is sustainable, it will declare the Will void and set it aside.Continue Reading Fortify Your Will: Safeguards to Ensure that Your Will is Validated
Over the past few years, many Indian business families have established estate planning structures, many of which comprise one or more family trusts. The main driver for these structures would have been tax driven considerations. Under the recent Finance Bill, 2017 (Finance Bill), there was a key amendment proposed to the Income-tax Act, 1961 (IT Act), which if passed would have had a significant impact on existing and future estate planning structures – by way of a ‘gift tax’ in respect of assets received by taxpayers without consideration or for inadequate consideration (Proposed Amendment).
Subsequently, the Proposed Amendment has been further amended by the Finance Act, 2017, as passed by the Parliament on March 30th, 2017 (Finance Act). In this article, we discuss the said amendment to the gift tax regime.
Under the IT Act, gifts received by individuals and Hindu Undivided Families (HUFs), were taxed, subject to tax certain conditions and exceptions. However, other tax payers, such as unlisted companies, partnership firms and limited liability partnerships were not subject to gift tax, except if they receive shares of unlisted companies without consideration or for inadequate consideration. However, certain exceptions, namely receipts from relatives, gifts on occasion of marriage, etc had been retained.
In order to remove this disparity, the Finance Act provided that the ‘gift tax’ regime shall apply equally to all tax payers post April 1st, 2017.Continue Reading Update on Finance Act, 2017: A lucky escape for Trusts
On February 1st, 2017, the Indian Finance Minister, Mr. Arun Jaitley, presented the Government of India’s annual financial statement for 2017-18, commonly referred to as the Union Budget. As is tradition, the Budget was accompanied by proposals to amend the direct tax regime contained in the Indian Income-tax Act, 1961 (IT Act).
Two proposed amendments, in particular, will cause considerable angst to estate practitioners across the country as they are likely to have a significant impact on estate planning structures commonly used in India. Ultimately, it will be Indian families looking at undertaking their succession planning, who will suffer when dealing with the consequences of such amendments.
The first proposed amendment relates to a ‘gift tax’ in respect of assets received by taxpayers (assessees) without consideration or for inadequate consideration. The other pertains to an ‘additional dividend tax’ on dividend income received from companies in which the taxpayer holds shares.
Notably, neither of these proposed amendments introduces a new levy. Instead, they attempt to plug gaps in the IT Act, which presently exclude certain assessees from the ambit of existing taxes. But if these proposed amendments are passed in their current form – as it is likely they will be – they are expected to considerably reduce the fiscal efficiency, and consequently attractiveness, of trusts as estate planning tools.
Continue Reading Union Budget 2017: Impact On Estate Planning In India
Background
In December of 2015, the Delhi High Court in its decision in Sujata Sharma (“Judgement”) laid to rest a long-standing and archaic traditional notion in Indian Hindu succession law (“Succession Law”): this notion effectively prevented a woman member of a Hindu Undivided Family (“HUF”) from acting as the karta (manager/ person-in charge of a HUF). To those unaware of these concepts under Succession Law, a HUF is a construct under Hindu law that comprises of all persons lineally descended from a common ancestor within four generations. Briefly put, a HUF may be considered as a concern that is comprised of stakeholders who share a common lineage and as a concern that holds property and undertakes commerce or other activities, for the benefit of its stakeholders.Continue Reading Modernising the Traditional Hindu family