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What Does the Succession Law Say?
Wills / Trusts

What Does the Succession Law Say?

Throughout your life, you will acquire multiple properties. All of these properties, taken together, comprise your estate. When you pass away, your estate must find new owners. Otherwise, it will be left in an 'ownerless' estate. 

Thus, after you pass away, your estate will pass to new owners. This process is known as Succession or Inheritance. The new owners of your estate are known as your successors. Succession Law is the law that governs this entire process. Succession is different from Inheritance. Inheritance is the process of the heir inheriting his ancestors' Property. Succession governs how the inheritance would take place. Typically, under Indian Succession Law, a succession certificate is required. Succession Certificate is credible proof that the person obtaining the same is the rightful heir. 

 

Types of Succession

Succession is of two types: 

  1. Testamentary Succession. 

  2. Intestate Succession. 

After your death, the succession of your estate will be either testamentary or intestate. It cannot be both at the same time. If you have left behind a Will, the succession of your estate will be testamentary. Otherwise (that is, if you have not left behind a Will), your estate's succession will be intestate. 

 

Testamentary Succession

Testamentary succession is nothing more than executing a will. A will would then govern how your property is distributed among your legal heirs. A will includes the following information: 

a) Who gets your estate 

b) How is your estate distributed among the various heirs? 

Persons named in your will are your legatees. You can choose anyone to be your legatee. It is not required that a legatee is your relative. Wills are recognized under the Indian Succession laws.

The Indian Succession Act, 1925 governs the making and enforcing of Wills. It is the law which governs testamentary succession in India. Indian Succession Act, 1925 applies to everyone, except Muslims. Muslims are governed by their own personal laws. A Will gives you freedom to distribute your property according to your wishes.  However, if you are a Muslim, you cannot bequeath by a Will any more than 1/3 of your estate unless your legal heirs' consent to exceed this cap. There is no such limitation for anyone else.

You can execute your Will in accordance with the Indian Succession Act, 1925, if you are not a Muslim. If you are a Muslim, you have to execute your Will according to the Muslim personal laws. Capture the will in writing and sign it. You can also affix your thumb impression on the Will. Two witnesses need to attest the Will. These witnesses should have seen you sign the Will. A Will can be executed on plain paper. A Will need not be executed on a stamp paper. It is also not necessary to be registered.

Muslims can execute their Wills through a far easier procedure. Your Will need not be signed or written. It can even be oral. There is no need for attesting witnesses. You need to make your intent clear through your Will. However, oral wills are difficult to prove. Hence, It is preferable to capture your will in writing. 

After one passes away, a person should be made responsible to execute the will. Typically, lawyers are given this responsibility.  When another person implements the instructions given in the Will of a deceased, it is called executing the Will. The person who executes the Will is called an executor. Executors take care that the estate is distributed in accordance with the Will. There can be multiple executors. You can choose one person or more than one person to act as executors of your Will.  Remember to take their consent. Choosing an executor should be a careful process. If you don't appoint an executor, or the executors refuse to act as executors after your death, the competent court can appoint some of your legal heirs as the executor[s].

 

Intestate Succession

If you die without leaving a Will, your property would pass on through Intestate succession. Laws governing intestate succession in India are not uniform. You are governed by the personal law of your religion. 

Different laws of intestate succession govern different religions in India. For instance, Hindu Succession Act, 1956 governs the intestate succession for Hindus.  Indian Succession Act, 1925, governs the intestate succession for Christians. Hence, if you are a Hindu, then the Hindu Succession Act, 1956 will apply; if you are a Christian, then the Indian Succession Act, 1925 will apply, etc.

While different laws apply to different religions, the core provisions are uniform across all laws. Certain persons will become the new owners of your estate. These persons are known as your legal heirs.

Each legal heir will inherit a specific share of your estate. The applicable Law of Intestate Succession will hence specify both your legal heirs and the shares of your estate each legal heir is entitled to inherit.

For instance, consider a married Hindu male. If you are a Hindu married male, ordinarily, your wife, sons, daughters, and mother are your legal heirs. They will each take an equal share of your estate. If you pass away leaving behind,a son, daughter and a wife, each of them will be entitled to an equal share. If your daughter is already deceased and is survived by her daughter, then your grand-daughter would also have a right in the property through her deceased mother. 

 

Hindu Law of Succession

The Hindu Law of Succession is contained in the following three sources: 

  1. The Indian Succession Act, 1925, which governs the testamentary succession of the estate of a Hindu. 

  2. The Hindu Succession Act, 1956, which governs the intestate succession of the estate of a Hindu. 

  3. The succession of Hindu Joint Family Property, in almost the whole of India except some eastern regions, continues to be governed by ancient religious rules. This is quite a small portion of the Hindu Law of Succession. 

Succession in Hindu Law makes a distinction between two types of Property: (1) Joint Family Property and (2) Self-Acquired Property. In almost all parts of India except portions of the eastern region, the rules of succession governing Joint Family Property, and Self-Acquired Property, are different.  

The Hindu Succession Amendment Act of 2005 has now started giving daughters also succession rights. 

 

The Indian Succession Act, 1925

The Indian Succession Act 1925, is one of the oldest Indian statutes governing succession. It governs intestate succession for Christians, Parsis, and some other religions. 

However, the Indian Succession Act is special for two other reasons. 

  1. It is the uniform law that governs testamentary succession for all religions except Islam. Hence, unless you are a Muslim, the entire process of preparing and executing a will, beginning from you authoring it to your wishes in it being carried out, will be governed by the Indian Succession Act, 1925. 

  2. Even in cases of intestate succession controlled by other religious laws, the Indian Succession Act has a role to play in some respects. For instance, the Act contains the procedure for appointing administrators for your estate. Administrators are responsible for distributing your estate to your legal heirs. Another important function is, succession certificates are issued under the Indian Succession Act. A Succession Certificate issued to a particular person will establish that they are entitled to succeed as a part of your estate.

Intestate Succession or Succession without a WILL: Things you should know
Wills / Trusts

Intestate Succession or Succession without a WILL: Things you should know

Intestate succession means a succession without a will. A will generally dictates how a person plans to transfer his assets or properties after his death to his/her heirs. A person dies intestate when he has not bequeathed his properties according to a will. Succession can either be testate or intestate. 

Meaning of Testate Succession

In some cases, a person leaves behind a Will, which specifies property distribution after their death. In such cases, the Will controls succession.

When succession takes place in this manner, it is known as testamentary succession. 

Meaning of Intestate Succession

In other cases, a person does not leave behind a will. In such cases, intestate succession law controls succession. Thus, the persons who become entitled to the deceased's properties are the deceased's, legal heirs. In India, the succession law applicable to a deceased's estate depends on their religion. Hindus, Muslims, Christians, Parsis, etc., have different succession laws. When succession takes place in this manner, it is known as intestate succession.  

Intestate Succession under Hindu Law

If the deceased is a Hindu, Hindu Succession law will govern the succession. The Hindu Law of Intestate Succession is in the Hindu Succession Act, 1956. 

Two Types of Property

Under Hindu Law, the property is of two types: 

  1. Joint Family Property: The Hindu Joint Family is an ancient social structure prevailing in Indian society. In Hindu Law, specific properties are considered Joint Family Property. Generally, all property inherited from one's father, paternal grandfather, and paternal great-grandfather are considered Joint Family Property. 

  2. Self-Acquired Property: All other properties are considered the Self-Acquired Property of the respective person. The most unambiguous indication of Self-Acquired Property is that it is acquired with the money of one's efforts.

This distinction is important because, depending on where you reside, different rules govern the succession of Joint Family Property and Self-Acquired Property. 

The succession of Joint Family Property

Depending on where you reside, you will be governed either by Dayabhaga Law or Mitakshara Law. Generally, Hindus living in West Bengal, Orissa, and parts of Assam, are governed by Mitakshara Law, and Mitakshara Law governs all other Hindus. Both of these refer to old schools of religious Hindu law that prevailed in these respective geographical regions. Once upon a time, these schools of law governed the substantial part of Hindu succession. Today, there are of minimal significance. Legally, its only importance in the present is determining the order of intestate succession.  

Section 6 of the Hindu Succession Act governs the Mitakshara Joint Family Property's succession. When a coparcener dies, their share in the Joint Family Property passes to the legal heirs according to the rules contained in this Section. The process is as follows: 

  1. You divide the whole joint family property amongst the deceased and their legal heirs. Usually, the deceased, their wife, their children (both sons and daughters), and their parents get equal shares.

  2. The share the deceased person receives becomes his self-acquired property. This share passes to the deceased's legal heirs according to the rules governing Self-Acquired Property's succession (see below).

The succession of Self-Acquired Property

The rules governing the succession of Self-Acquired Property of the deceased varies based on the gender of the deceased. However, the same rules apply to all Hindus regardless of whether Dayabhaga Law or Mitakshara Law governs them. 

For male Hindus, there are four categories of legal heirs: Class I heirs, Class II heirs, agnates, and cognates. The Schedule of the Hindu Succession Act, 1956 specifies Class I heirs and Class II heirs. An agnate is a person who is (i) neither a Class I heir nor a Class II heir, but (ii) is a descendant of the deceased through a pure male line. A cognate is a person who is (i) neither a Class I heir nor a Class II heir, but (ii) is a descendant of the deceased through a line consisting of both males and females. The order of intestate succession in self-acquired property is as follows:

  1. Class I Heirs: If any Class I heir[s] exist, they get the deceased's whole Self-Acquired Property. If more than one such heir exists, they both get equal shares. The deceased's wife, sons, daughters, and mother are notable Class I heirs. However, the father of the deceased is not a Class I heir. 

  2. Class II Heirs: If not a single Class I heir exists, the whole Self-Acquired Property of the deceased goes to the Class II heirs. The deceased's father, brothers, and sisters are notable Class II heirs. If the father is alive, he takes the whole property. If he isn't alive, then the brothers and sisters take the property in equal shares. 

  3. Agnates: If there are no Class I and Class II heirs, the deceased's agnates take the whole of the Self-Acquired Property. 

  4. Cognates: If there are no Class I and Class II heirs, the deceased's cognates take the whole of the Self-Acquired Property. 

A different set of rules applies to female Hindus. For female Hindus, the order of intestate succession for legal heirs is: (i) sons, daughters, and husband; (ii) heirs of the husband; (iii) parents; (iv) heirs of the father; and (vi) heirs of the mother. Each category is preferred to the later ones, in that order of preference. All heirs of the same class get equal shares of the property. 

Position of Illegitimate Children

The intestate succession of an illegitimate child is only through his mother. An illegitimate child's share in intestate succession is restricted to his mother and not his father.  

Gift Deed: All you should know.
Wills / Trusts

Gift Deed: All you should know.

You want to gift your near and dear ones some property? You can do so by drafting a gift deed! A gift deed is a legal instrument for transferring moveable and immoveable property. The transfer of property by a gift deed is voluntary and without any consideration. A gift is generally made based on love and affection, for example, the gift of ancestral property by a grandfather to grandchildren. Section 122 of the Transfer of Property Act, 1822 governs a gift deed. Under Section 117 of the Registration Act, it is compulsory to register the same if you gift an immovable property. 

How to Draft a Gift Deed?

A gift deed should include the following information: 

  • Date and place where you will execute the gift deed. 

  • Names of the donor and donee.

  • Address of the donor and donee. 

  • What is the relationship between them?

  • What is the property being gifted?

  • Signatures of two witnesses. 

  • Signatures of the donor and the donee. 

 

How to Draft a Gift Deed of Immovable Property?

A Gift Deed is mandatory for a gift of immovable property to be effective. It would help if you keep the following in mind while drafting a gift deed of immovable property:

  1. It should be in writing. 

  2. The donor must sign it. 

  3. Two independent witnesses should attest it. Hence, the witnesses must not be the donor, or the beneficiary, of the gift. 

  4. Stamp duty is payable on gifts of immovable property. The Gift Deed must be executed on stamp paper of the same value as the stamp duty payable. The exact stamp duty payable varies from state to state. It is usually 2-5% of the market value of the property. Some states offer stamp duty concessions for gifts to blood relatives. 

  5. Finally, the duly executed and stamped Gift Deed must be registered with the local Sub-Registrar of Assurances. Some states charge a registration fee, which varies from a few hundred to 1-2% of the property's market value. 

A good Gift Deed of Immovable Property should contain at least the following elements in its content: 

  1. You should describe the property you are gifting. Typically, a statement of the plot number, the locality/street, the local post office, the panchayat or urban authority, the block, the sub-district, the district, the state, and the PIN Code, will be sufficient to identify any property in India uniquely. 

  2. It may be prudent also to specify the boundaries and size of the property and the survey number of the property in the state's land records. These details can be obtained from the land records of the state in which the property is situated. 

  3. A statement of the nature of the donor's title over the property. How the donor acquired title over the property must be mentioned. The best practice is to identify the Deed by which the donor came to be the owner of the property by its registration number, year of execution, and the office where it was registered.   

  4. The fair-market value of the property should be explicitly mentioned. This is necessary to calculate the stamp duty payable on the gift. 

  5. An explicit statement that the transfer of the property has been made, for no consideration and freely and voluntarily. 

  6. A statement of acceptance by the beneficiary of the gift. This is essential because a gift doesn't take effect unless the beneficiary accepts it. 

How to Draft a Gift Deed of Movable Property

A Gift Deed is not mandatory for a gift of movable property. However, you can draft a Gift Deed for gifts of movable property too. If a Gift Deed is executed, it must be executed in exactly the same way as, the process for executing a Gift Deed of Immovable Property as explained above. 

A good Gift Deed of movable Property should contain at least the following elements in its content: 

  1.  Try to identify the property by some unique identification associated with it. For instance, a car can be uniquely identified by its motor vehicle registration details; the machinery can be uniquely identified by its invoice number and supplier details, etc. 

  2. A statement of the nature of the donor's title over the property. 

  3. Mention the fair market value of the property.

  4. An explicit statement that the transfer of the property has been made, for no consideration and freely and voluntarily. 

  5. A statement of acceptance by the beneficiary of the gift. A gift doesn't take effect unless the beneficiary accepts it. 

  6. Date, place, and time of execution.

How to Draft a Gift Deed of Money?

No stamp duty is payable on a gift of money. A Gift Deed of Money is not required to be registered. If the parties wish to, then they can register it, but this is not mandatory. Hence, a Gift Deed of Money can very well be executed on plain paper and signed by the parties. You can also execute it by an exchange of letters between the parties containing a clear offer followed by an unconditional acceptance of that offer. 

A good Gift Deed of Immovable Property should contain at least the following elements in its content: 

  1. The amount of money being gifted

  2. Identify the money being gifted by the currency note numbers, cheque numbers, bank transfer numbers, etc.  

  3. An explicit statement that the transfer has been made for no consideration. 

Documents Required for Registration of Gift Deed

  1. The duly executed, and stamped, Gift Deed must be presented to the office of the local Sub-Registrar of Assurances for registration. 

  2. Some states may require the advocate, or registered deed-writer, who drafted the Gift Deed to affix a declaration, and their registration number, on the Deed. 

  3. A true certified copy of the Gift Deed. This copy will be retained by the registering authority. The Registration Rules of the state in which the Deed is being registered will specify the procedure for making a true certified copy of the Deed. 

  4. Proof of payment of the registration fees payable, if any. 

  5. Identity, and Address, Proofs of all the parties and the attesting witnesses. 

What is the Difference Between A Gift Deed and a Property Sale?

Once a property is transferred to you as a gift, you are its owner. The gifted property can be sold. But, a gift deed is different from a property sale. A property sale involves the payment of some money for the transfer of property. A gift deed is voluntary and without any payment of money. Hence, once you have validly registered the gift deed and are the property owner, you can sell the gifted property for consideration. 

Drafting a gift deed for an immovable property may involve many legal implications, such as tax considerations. Prefer hiring a lawyer to draft a gift deed for immovable property.