Chapter 14: Basics of Estate Planning

Estate planning and succession planning are distinct concepts with different objectives. Estate planning focuses on personal assets and their distribution, while succession planning involves planning for the transfer of one's business to the next generation.

Effective estate planning should be done for families with minor children, individuals with high liabilities, owners of properties in multiple states, and individuals owning small businesses. It also applies to estate taxes and addressing uncertainties related to permanent disability.

The two main components of an estate plan are a Will and a Living Will. A Will specifies how an individual's assets will be distributed, while a Living Will states the individual's wishes for end-of-life care.

Under the Hindu Succession Act, the relationship by adoption is treated as equivalent to a relation of full blooThis means that an adopted child is given the same status and inheritance rights as a child born to the adoptive parents. The act recognizes the legal validity of adoption and ensures that adopted children are included in the order of succession and inheritance among the legal heirs.

If a person becomes ill and unable to manage their estate, their attorney or appointed power of attorney holder will take care of the estate on their behalf.

The residue estate consists of personal belongings, unallocated investments, and any other items found at one's home. It also includes investments that are not mentioned in the will or allocated in a trust. Outstanding payments at the time of death and tax liabilities are also part of the residue estate.

Under the Hindu Succession Act, illegitimate relationships with the mother are recognized, but relationships with the father are not recognizeThis means that children born outside of lawful wedlock are considered to be illegitimate children of their mother and are entitled to inherit from her. However, they do not have inheritance rights with respect to the father. The Act acknowledges the importance of maternal relationships in determining succession and inheritance rights.

Mutation of property is carried out to establish the rightful owner of the property for taxation purposes and to maintain records of ownership.

The general rule of succession for Hindu males dying intestate is as follows: First, the property devolves upon the primary heirs specified in Class I of the schedule. If there are no heirs in Class I, then it passes to the heirs specified in Class II. If there are no heirs in any of the two classes, then it devolves upon the agnates of the deceaseFinally, if there are no agnates, it passes to the cognates of the deceaseThis rule establishes the order of priority among the different categories of heirs when there is no will or testamentary disposition.

Cognates under Hindu law are two individuals who are related by blood or adoption but not wholly through males. This means that the relationship can be traced through both male and female lines of descent. Unlike agnates, cognates include relatives who are connected through both males and females.

A trust is a legal arrangement that holds assets on behalf of a beneficiary or beneficiaries. It allows for the management and distribution of assets according to the terms set by the person who creates the trust. Trusts can be used to protect assets, provide for specific beneficiaries, and avoid the probate process.

The land development authority provides the necessary details and documentation required for the mutation process.

The gross estate includes real estate properties, bank accounts, investments, businesses, retirement accounts, life insurance policies, personal belongings, and outstanding payments. It encompasses all items that determine an individual's net worth.

For intestate succession of Hindus, the Hindu Succession Act, 1956 is applicable. This law governs the distribution of assets when a Hindu dies without leaving a valid will.

Periodic review of nominations and beneficiary designations is important to ensure the accuracy and relevance of the designated nominees and legal beneficiaries. It allows individuals to update their estate plan according to any changes in their family structure, such as marriage or birth of children. This review ensures that the assets are transferred smoothly to the intended

Christians follow the Indian Succession Act, 1925 for both testamentary and intestate succession. This law governs the distribution of assets according to the wishes specified in the will and in the absence of a will, it determines the distribution of assets in intestate succession.

According to the Hindu Succession Act, adopted children are counted as heirs. They have inheritance rights and are entitled to a share in the property of the deceased Hindu male. The act recognizes the legal status of adopted children and treats them on par with biological children for succession purposes.

The Indian Succession Act, 1925 primarily deals with testamentary and intestate succession. It is applicable to situations where a will is written, and it governs the distribution of assets according to the wishes specified in the will.

An estate consists of all properties owned or controlled by an individual, including real estate, bank accounts, investments, businesses, and personal belongings.

Jains, Sikhs, and Buddhists follow the Indian Succession Act, 1925 for testamentary succession. For intestate succession, they follow the Hindu Succession Act, 195This means that the distribution of assets in these communities is governed by different laws depending on whether there is a valid will or not.

Full blood relationship under Hindu law refers to two persons who are descended from a common ancestor by the same wife. In other words, when both parents are the same, the children are related by full blooThis type of relationship is important in determining the order of succession and inheritance rights among the legal heirs.

Granting a no-objection certificate or sanctioning the building plan ensures that the property can be sold without objections and also helps in recording the mutation in the revenue department.

Estate planning is for anyone, regardless of their wealth or family situation. It is not limited to the wealthy or individuals with specific circumstances.

When a person dies without leaving a Will (intestate), the distribution of assets is governed by the Indian Succession Act 192According to the Hindu Succession Act, 1956, the legal heirs in Class 1 include sons, daughters, mother, widow, etAll brothers and sisters have equal rights to inherit from the estate.

When a person dies intestate, the property devolves upon the heirs as per the applicable laws of inheritance. The distribution of assets is determined by the laws of inheritance applicable to the deceased's religion or community. It varies for different religious groups, such as Hindus, Buddhists, Jains, Sikhs, Christians, Parsis, and Jews. Muslims follow inheritance laws based on religious texts, with different laws for Shias and Sunnis.

The estate debt includes housing loans, car loans, credit card payments, outstanding payments at the time of death, tax liabilities, and any legal cases. It encompasses all debts and obligations owed by the deceased.

The succession of property of a Hindu who dies intestate is governed by the Hindu Succession Act, 195This law determines the distribution of assets when a Hindu passes away without leaving a valid will. It lays down rules and provisions for the inheritance of property among the legal heirs of the deceased.

The process of mutation is generally handled by the state governments in accordance with the specified laws.

If there are co-owners of the property, the mutation alone cannot allow one person to claim the property. Co-ownership rights need to be considered.

Uterine blood relationship, as defined by the Hindu Succession Act, refers to two persons who are descendants from a common ancestor by different husbands. In other words, when the mother of two persons is the same but the father is different, they are related to each other by uterine blood relationship. It is important to note that uterine brothers and sisters are excluded from inheritance among Class I or Class II heirs under the schedule of the Act.

A Will can be used to appoint a guardian for minors or children with special needs by specifying the person who will take on the role and how the assets will be managed until the minors come of age. This ensures that the children's well-being and inheritance are protected according to the individual's wishes.

A Will specifies who will inherit one's assets and how they will be distributeIt ensures that an individual's assets are distributed according to their wishes after their demise. Additionally, a Will can also designate a guardian for minors or children with special needs and outline how the assets will be managed until they come of age.

A Living Will is an advance directive that states an individual's wishes for end-of-life care. It is primarily written for physicians to guide them in providing medical treatment when the individual is terminally ill, seriously injured, in a coma, in the late stages of dementia, or near the end of life. It communicates the person's decisions regarding medical interventions, life-sustaining treatments, and other care preferences during such situations.

In the Hindu Succession Act, Class I heirs inherit simultaneously and to the exclusion of all other heirs. This means that among the specified relatives in Class I of the schedule, they have priority in the order of succession and inherit the property before any other category of heirs. Class I heirs include primary relatives such as the intestate widow, surviving sons and daughters, and the mother of the deceased.

The objectives of estate planning include the distribution and preservation of one's legacy, appointment of a guardian for minors, addressing concerns arising from disability, ensuring availability of funds to pay liabilities, and specific asset distributions. It also covers the protection and care of special needs children, financial security for minor children, and streamlining the collection and distribution of assets.

Every individual needs to have an estate plan, regardless of whether they have a succession plan for their business. Estate planning is important for anyone who holds property and wishes to ensure the specific transfer of assets and financial security for their family. It is not limited to individuals with specific circumstances or assets.

A Power of Attorney is a legal arrangement that designates someone to manage an individual's finances in case they become incapacitated or are unable to do so. It allows for the smooth management of financial affairs and ensures that someone is authorized to make financial decisions on the individual's behalf. NRIs often use Power of Attorney to designate someone in India to manage their assets.

Section 11 of the Hindu Succession Act states that the distribution of property among heirs in Class II is determined based on the preferential order specified in the Act. It ensures that the heirs in Class II inherit in a specific sequence or order, with those in the first entry having priority over those in the second entry, and so on. This preferential order ensures a structured distribution of property among the Class II heirs, prioritizing certain relatives over others.

Sections 8 to 13 of the Hindu Succession Act, 1956 lay down the general rules for succession when a Hindu male dies intestate. These sections provide guidelines on how the property of the deceased Hindu male should be distributed among the legal heirs based on their relationship to the deceased and their position in the order of succession.

According to Section 10 of the Hindu Succession Act, the distribution of property among heirs in Class I of the schedule is determined based on rules. The rules specify how the property is to be divided among the different categories of heirs, such as the intestate widow(s), surviving sons and daughters, and heirs in the branch of each predeceased son or daughter. These rules ensure a fair and systematic distribution of the property among the Class I heirs.

The present owner of the property is required to clear all the dues pertaining to the property before the mutation can take place.

The value of mutation is not determined by the market value of the property but rather by the co-ownership agreement in case of multiple owners.

Section 9 of the Hindu Succession Act deals with the order of succession among the heirs specified in the schedule of the Act. This section states that among the heirs in Class I of the schedule, they shall take priority simultaneously and to the exclusion of all other heirs. It establishes the preferential order of succession among the legal heirs and ensures that those in Class I inherit before those in Class II and subsequent categories.

When a person dies intestate, the legal heirs need to apply to the civil court to obtain a succession certificate. The certificate is issued in accordance with the laws of succession applicable to the deceased, and it establishes the legal heirs' right to inherit and manage the deceased's assets.

Succession planning for a business should be considered if there is a desire to transfer the business to the next generation, regardless of its profitability or success. It is important to determine if family members have an interest in joining the business and if their vision aligns with the overall business vision. If there is no suitable successor, options like selling the business can be explored.

Estate planning deals with the accumulation, conservation, and distribution of an estate, as well as the protection of assets after one's lifetime and the formation of trusts for special situations.

The law of inheritance for Christians, Parsis, and Jews is governed by the Indian Succession Act 192It outlines the rules and procedures for the distribution of assets among legal heirs from these communities.

Nomination and beneficiary designations are important for the smooth transfer of financial assets after one's demise. Appointing nominees ensures that the assets are held by them as custodians until they are transferred to the rightful legal heirs. In assets such as life insurance, beneficial nominees can be appointed to receive the insurance proceeds upon the policyholder's death. Regularly reviewing and updating nominations and beneficiary designations is crucial, especially in situations like marriage or when the legal beneficiaries change.

The main objective of mutation is to collect revenue from the person in possession of the property for tax purposes.

The purpose of a succession certificate is to establish the legal heirs' right to inherit the assets of the deceaseIt provides official recognition and documentation of their entitlement, allowing them to manage and distribute the assets as per the applicable laws of succession.

Agnates under Hindu law are two individuals who are related by blood or adoption wholly through males. This means that the relationship is traced only through the male line of descent. The concept of agnates is important when determining the succession of property and inheritance rights under Hindu law.

The mutation process involves the alteration or substitution of a person's name in revenue records to establish the rightful owner of the property.

Yes, a succession plan is necessary if a person dies intestate. It ensures that the assets are distributed according to the individual's wishes and minimizes potential disputes among legal heirs. A succession plan provides clarity and guidance for the management and transfer of assets, even in the absence of a will.

Mutation is not considered as evidence to confer title of the property. The title should be based on legal ownership, not mutation entries.

When a person dies, their assets are inherited by the legal heirs according to the applicable laws.

Half-blood relationship under Hindu law is defined as two persons who have descended from a common ancestor but by different wives. In other words, when two persons have the same father but different mothers, they are related to each other by half-blood relationship. This distinction is relevant in determining the order of succession and inheritance rights among the legal heirs.

The difference between a trust and a testamentary trust lies in their creation. A trust can be created separately from a will, while a testamentary trust is created within a will. A testamentary trust becomes effective upon the individual's demise and is subject to the probate process, while a trust can be established and managed outside of probate.

Estate planning is required by individuals to address various visions and concerns, such as property distribution, determining shares, managing care in case of disability, addressing liabilities, ensuring financial security for family members, and providing for charitable contributions.

Dying intestate means that a person has not made a testamentary disposition (will) for a particular asset, or the disposition under the will is not capable of taking effect due to invalid or illegal bequests. It refers to the situation when a person has not made proper arrangements for the distribution of their assets upon death.