Guidelines on how to manage your estate through wills and probate

Introduction
King Lear of William Shakespeare’s play decided to gift his properties to his three daughters during his lifetime on condition that he would like to hear from their own lips that they loved him the best.
The oldest daughter declared that she loved her father more than words could give out, that he was dear to her than the light of her own eyes and dearer than life and liberty.

Then he demanded what his second daughter had to say. She declared that she found all other other dead in comparison with the pleasure, which she took in the love of her dear king and father.
He then turned to his youngest daughter whom he called his joy. He asked what she had to say thinking no doubt that she would give pleasure to his ears with the same loving speeches that his two elder daughters has just uttered. But to his surprise he could only hear from her that she; loved the majesty king according to her duty neither more nor less.
The youngest daughter then told her father that he had giving her breeding and love him, that she returned those duties back as was most fit and did obey him, love him and most honor. She felt that the handsomeness thing for her to do is to love and be silent.
The King was so angry about the plainness of the third daughter’s speech that he could not decide truth from flattery. In a rage of resentment, he took away the third part of his estate which he had reserved for his third daughter to be shared equally between his first two daughter and their husbands leaving virtually nothing to him for his old age retirement.
King Lear wished that his hearty gift would be answered with deeds of love form his two elder daughter. But within the first month of receiving such fabulous estate, the old king began to find out the difference between their promises and performance.
He now observed that whenever he wanted to talk to his eldest daughter, she would fain sickness or anything to get rid of him. She regarded her ex king to be a useless burden. She therefore refused to obey him by pretending not to hear him. She also had the boldness to say that his staying in the palace with the knights was creating an useless and expensive establishment. His second elder daughter wanted the kind to beg to her by kneeling down on his knees for food, clothing and shelter.
The king now realised his foolishness of gifting his estate based on mere flattery. But it was too late. He soon became stark mad till he died of utter desperation.
This great play ‘King Lear’ teaches a lesson that you must never gift your estate to your sons, relatives, near and dear ones out of love and affection during your lifetime. Ofcourse you can give gifts in the form of cash and jewellery with the hope to see that your married daughter lives happily at the in-laws place. But in this circumstance, the wife must take care not to enter into a gift agreement for gifting her estate to her husband. She should also see to it that she does not have joint bank account with her husband of her estate she received from her parents.
An ideal way to gift your estate whether you are married or single is to bequeath it through wills and Probate. Therefore you shall now have guidelines on how to manage your estate through Wills.
WHAT CONSTITUTE AN ESTATE
First before having guidelines, you should know what constitute an estate. Most people believe that estate consist of land and building owned by landlords. They believe that as a member of a co-operative housing society is merely a shareholder and allottee of that society, the property belongs to the Managing Committee. Therefore the members are not the owners of their flat or condominium property.
Now although it is true that lands and buildings owned by landlords are estate, for all practical purpose all properties owned by individuals, partners and companies are estate of those owners. Thus a flat of a co-operative housing society owned by the members is an estate of that particular members even though that co-operative housing society is managed by the managing committee. This member continues to be the owner of his estate even though he may have kept his flat unoccupied as he could be residing somewhere else in another property. The member also continue to be an estate owned if he has given out his flat to a stranger on eleven months leave and license basis based on a written agreement.
Therefore the estate consist of all assets and liabilities owned by you or jointly with someone else. These assets may be real property , tangible personal assets and intangible personal assets. The Real Properties are land, building and things permanently attached to the land such as trees.
The tangible personal properties and assets are those possessions you can se and touch. This includes jewellery in the forms of gold, silver and diamonds (not imitation jewellery or american diamond jewellery as they have no value in the market), machinery such as typewriter, calculators and computers, motor car, sporting goods, furniture and fixtures and artworks such as paintings and drawings.
The intangible personal assets are those property you cannot see it but you have denoted ownership possession through written agreement paper. These assets includes stock certificate, shares of private and public limited company, saving and fixed deposits account, life insurance policies corporate bonds such as mutual bonds and investment in unit trust, patent and copyright to you through royalty agreement with the publisher without assigning that right to the publisher or any other publisher and the book is under publication, than such an intellectual property becomes your intangible personal property during your lifetime and fifty years after death.
The liabilities of your estate are those you agreed or incurred out of personal agreement or consideration like loans from banks and financial institutes like HDFC Bank, mortgage on land and property and capital and interest amounts due to creditors.
Therefore it is absolutely for the purpose of liability that the proposal made by the other person should be accepted and agreed upon by you. If not, then it does not become a binding contract. Thus when a proposal is made by the managing committee of incurring huge property repairs over Rs. 25,000 on private and secret agreement is not accepted by you, then you have every right not to assent or agree to such a bogus tender by voting against this resolution in writing. Then in such circumstances you estate does not become a part of your liability even though your name has appeared in the outstanding liability account of the society auditor’s report.
Now in such circumstances, it would be better that you deny this liability also through the Will drawn upon by you in the future to give proper information to the beneficiaries who would inherit your estate.
Therefore upon your death, your estate will go to the beneficiaries (they are the persons who are designated to receive income and assets mentioned in your Will). So you shall now have elements of Wills and Probate to help you to take effective decisions for managing your properties or estate effectively. But before you come to know about proper administration of the estate of the deceased, you should know the provisions of the new model bye-laws framed by the Commissioner of Co-operation and Registrar, Co-operative Societies dated 2nd July 2001.

Co-operative Society provisions concerning transfer of the property of the deceased.
Under Section 34 of the bye-laws of the Co-operative Housing Society Ltd Flat owner/Plot Purchased Type, The transfer of shares and interest of the deceased member shall be transferred to the nominee in the capital property of the society. This section further states that the nominee shall file an indemnity bond in the prescribed Appendix No. 15 and 18.
Section 35 provides that where a member of the society dies without making a nomination or no nominee comes forward for the transfer, the society shall invite within one month ( from the information of his death) claims or objections to the proposed transfer of share and interest of the deceased member through exhibition in the notice board of the society and also publishing such notice in atleast two local newspaper.

The provision further states that after making such inquiries, the committee shall decide as to the person who in its opinion is the new or legal representative of the deceased member. Such a person will be eligible to be member of the society provided he gives an Indemnity Bond along with his application prescribed in Appendix 16, 17 and 19 of the new model bye-laws.
Appendix No.17 asks for some private and secret information from the heir like age, occupation, monthly income and so on which is no business of the society to ask for such private and secretive information.
Now a person may not have nominated a person for various reasons like dispute, divorce, separation and so on. This does not mean that a person who has not nominated anyone cannot make a Will. Now even if he has not made a Will, the Letter of Administration from the High Court. Therefore the entire provisions No. 34 and 35 is in direct contravention to the provisions of the Indian Succession Act.
The real and proper thing for the society to do is to accept probate or letter of administration of the deceased person and then transfer his or her estate to the beneficiaries as per the decision of the High Court. This would be a correct position in law. Therefore section 34 and 35 should be amended and obtaining indemnity bond should be omitted.
You shall now have information about managing the estate through Will.

What is a will and what precautions you should take in drawing up a will.
Every rational person desires that the estate he has owned after years of hard toil and intellectual effort goes to the right type of people of his choice after his death. He further wants that the rightful person called beneficiaries acquires his estate with the least cost when they inherit such estate. He also desires that the two main things, which constitute respect to a dead person mainly his or her reputation and estate must be fulfilled. An effective tax planning further provides that every Testator or Testatrix (man or woman owner of estate who makes a Will and Codicil) and beneficiaries are entitled to get the maximum benefit of all tax exemptions and incentives so as to legitimately pay the least amount of tax as provided by the law.
There are many ways of doing this effective estate planning. And most effective component of an estate plan is the Will.
Basically a Will is a legal document signed by you and witnessed by two persons who also signs on the same page after you have signed the document giving explicit directions as to who or what is to get whatever specific assets of yours you wish to list. Each of the two witness should be atleast 18 years of age who like the testator is sufficient competent to know what he or she is signing. Further the two witnesses must not be executor and beneficiaries of the estate although the witness can be an attorney, advocate or lawyer himself and one other qualified person preferably a graduate in his or her office. Now your two witnesses can be anybody else like your manager, accountant, clerk, doctor or nurse.
Your Will should also mention the name of an adult executor or executrix (the female term of executor) not less than 18 years of age whose duties is to carry out its provisions and instructions so as to distribute your estate as set forth in the Will to the beneficiaries.
Now once you have made a Will, you have every right to make any changes or amendment to the Will for whatever reason y simply making a phone call to your attorney. However you must not make changes in the Will itself like for example deleting the name Ramesh and replacing it with Rajesh. For any such changes in the Will after it is executed will make the Will invalid.
Therefore to make a valid change on your Will, you should either execute a Codicill or prepare a New Will. A codicil is a separate sheet of paper making certain changes or amendment to the last Will and Testament of the estate owners (the world Testament means a disposition or distribution of personal property to take place after the owner’s death according to his witnesses and bears the same conditions of validity as in the Will. Your codicil must be short and simple reflecting amendment like changing your executor from one person to other.
However if you have to make changes like rearranging your assets and yours beneficiaries, then it is better that you prepare a new valid Will.
After undergoing the burden of drawing up a Will, you will have many doubts before you like what will happen if your Will is contested by unknown persons thereby not passing of your estate to the rightful beneficiaries after your death. What if the executor turns out to be a rogue and rascal who instead of dutifully administrating the estate of the deceased, mismanages the estate and then pass on the proceeds of the estate to his incompetent, useless and unemployed son for rendering accounts for 10 years? What happens if the executor constantly enter into secret and shady deals which is difficult to be proved in the Court of law ? Now you can take precautions to both these problems of contesting the Will and appointing the executor at the time of drawing up the Will.

PRECAUTIONS TO TAKE WHILE DRAFTING A WILL TO AVOID CONTESTING THE WILL AFTER DEATH
When a man dies with lot of estate, everybody is interested to know what will come out to him or her. On a certain fixed day, they flock together at the lawyer’s office resulting in his office to become jam packed. But after reading out the Will, some beneficiaries feel disappointed on ground that they receive less share than others or nothing at all. They then begin to contest the Will.
The person contesting the Will has the burden to prove that the Will is not valid and hence it must not be admitted to probate at the High Court.
Now contesting a Will take lot of time, money and energy. Therefore it is necessary to take precautions while drafting a Will to avoid or reduce Will contestant after death.
Usually the main ground of challenging the Will is that the testator was not mentally competent to execute the Will. This means that the testator did not know that he or she was making a Will or did not know that extent and value of his or her property.
Now to avoid challenging the Will through plan incompetence, the last Will and Testament of say Mr. Michael Lal should begins with “I Mr. Michael Lal residing at ___ being of sound and disposing mind and memory do make and declare this to be my last Will and Testament”.
Other precautions to take in drafting the Will are :
Draft a valid Will with proper and qualified witness whose signature is attached alongwith testator in his or her presence. Further you and your witnesses should sign only in the original Will and not in the xerox copy of the Will.
You the testator has the liberty to give your moveable property to any of the beneficiaries by specifically stating “I devise (give by Will) my 50 grams of gold bracelet to my daughter _______ or I devise a sum of Rs. Seventy five thousand to my son ______ our of my saving deposit bank account No. _______.
You also have a choice to increase or decrease the share of your estate to any of your beneficiaries at your privilege. However if you choose to delete the name of any of the beneficiary or reduce the share of such beneficiary, then you must explain your motives of why you have chosen to do so. Then this notice for whatever reason cannot be easily challenged.
There should be no abusive remarks in your Will out of frustration for your daughter or son or the lawyer at the time of drafting the Will was no in a good mood.
There should be no promise in the Will that could be settled through a written contract between the two parties. For example, a servant’s salary must not be compensated through a Will., However you can devise any amount to your household servant not based on his or her salary.
You the testator should not sign a Will drafted by a lawyer who wants substantial devise to the lawyer and his family at the sole decision of the lawyers himself or herself.
You should not have a joint Will with your spouse (wife or husband). Your Will should be a separate document of your own after preferably attaining atleast twenty one years of age.
Make sure that your Will is not town or mutilated and the original is preserved in a special locker of the attorney and not in the bank sage deposit vault of either the testator or the attorney (a sudden death of any of them would make it difficult to secure the original when it is needed the most).

PRECAUTION TO TAKE WHILE SELECTING AN OUTSIDE EXECUTOR WHO IS NOT THE BENEFICIARY OF TH ESTATE.
Although theoretically the power and duty of an executor is an honorary position, for all practical purpose it is not. It is a great responsibility as if it is a full time job.
Now as basically a Will evolves round the family, the executor so chosen must preferably be within the family. Your son could be an ideal proposition. But if you find that your son is immature and would not be capable of managing the estate upon death or your son is a highly unreliable and dishonest person who cannot be trusted in anything, then you should appoint an outside executor who would not be the beneficiary of your estate.
The first element necessary while selecting an outside executor is to see that he is person of utmost professional honesty, reliability and creditability. He must be educated and knowledgeable absolutely dedicated to his work. Therefore it would be better that such an outside personal be linked with a close family member such as spouse or son as a co-executor.
Further on the face of it, you must never select an executor whom you have been meting at such places there is no business involved. Also you must not select an employee like manager because such a person has not yet established his credibility and credential of running and managing his own business.
Legally speaking, you can name anybody as an executor in your Will like a friend, a professional person, business relation or is having a business relation for a long time.
In case you do not have in mind such a responsible person and is looking for him or her, then you can consult the executor and trustee department of your bank and your reliable friends and ask for their help or suggestions which will give you good guidelines to find out the credentials credibility and business entrepreneurship. Then you look for ideal source for such information through books, periodicals, magazines and interviews.
Now when you are interviewing such likely persons, you must not inform them for the time being that you are thinking of appointing an executor.
An ideal person to appoint an executor of a Will is a person with whom you are having a favourable business relations for a long time. You find that in the course of your business relationship with him, he has been always honouring his commitment in time and he is a graduate and sufficiently experienced in running his own business. Further from time to time, he has been giving good advice to you which has been benefitting you all along. When you go to his audited public profit and loss account and the balance sheet or interview, you find that he is running a profitable business and there is a good future potentiality or his product and his business. You also receive good reports about his business acumen from his agents and banks. Further he has been getting along well with your heirs. Now in all such circumstances, you can safely predict that a person who has established a good track records during your lifetime would be faithful, humble and dedicated in his work as an executor.
Once you have selected a responsible executor to manage your estate, an essential state planning should be your “Estate Organisation System and Manual”. This important written down manual should be maintained and updated on all essential aspects of business like courtesy, good manners and salesmanship skills, the art of negotiations with your brokers, bankers, tax consultants and authorities, society members and professionals.
For example your written down system can have essential materials or articles on ‘Property deals and contracts : Guidelines for taking proper steps and precautions, guidelines on how to manage house property effectively, Residential Property : Are you over-taxing yourself ?, Guidelines as to how to invite tenders for structural repairs and articles and books on buying and selling a home, how to develop hotels, motels and government approved restaurants depending on your line of business. Such up-to-date written down organisation system can be substantiated with good books on taxation law, Indian succession act, art and skill of negotiation, accountancy and financial management, the art and skill of managing an organisation or business, transfer of property act, stamp duty ready reckoner and market value of flats and so on which will make it easier for your executor to perform his work effectively and efficiently.
You can now discuss your Estate Plan with your would be executor, ask for his opinion and suggestion on estate planning and then take his approval that he would be willing to act as an executor. In this way though research and interview, you will be able to choose your executor wisely.
DUTIES AND RESPONSIBILITIES OF THE EXECUTOR
You must remember that when a man or a woman dies, the executor mentioned in the last will and Testament takes over the administration of the estate to fulfill the provision of the Will.
Thus although you have taken lot of efforts in drawing up a Will, it becomes effectively only when it is petitioned before the High Court Under section 276 of the Indian Succession Act and it is recognised by the Court that your Will is valid revoking all previous Wills and Trusts. IN short, probate establishes the proof of the Will.
Thus before making a petition, you the executor and the beneficiaries must take care to see that you do not sign the letter (obviously drafted by the unscrupulous solicitor or lawyer) that till the estate is administered, the solicitors will manage the estate of the decease, operate the bank account on behalf of the executor and the beneficiaries and charge any fees they like for administrating the estate whose fees will be accepted by everybody and cannot be challenged. Alternately you must take care to see that you do not file administrative suit in the court of law in place of obtaining probate or letter of administration (as may be wrongly advised by the solicitors or lawyers) as such administration (as may be wrongly advised by the solicitors or lawyers) as such administrative suits are not going to establish the ownership of the property in the name of new owners. Also in case some other laws exempts form obtaining probate or letter of administration, you the executor and beneficiaries must take care to see that you insist on obtaining probate or letter of administration so that your do not come in the trap of any unscrupulous professionals that such probate or letter of administration should not be obtained as it is not necessary under some other law.
Another important duty of the executor is to pay special taxes occurred because of a person’s death like the Estate Duty. Therefore where there is no Estate Duty, the executor cannot delay administrating the estate on ground that income tax which is a continuous liability (whether a man dies or not) has to be paid. On the other hand, it is the duty of the executor and the solicitor or lawyer to obtain probate immediately so as to legitimately lower income tax.
Therefore so long as the probate petition is on, the executor must notify all the beneficiaries of the Will. He must also notify all creditors of the deceased through advertisement in the newspaper so that they can apply before the court within the specified time.
The Executor must maintain proper books of accounts and render accounts to the beneficiaries including attending to their queries, if any.
Now as basically the right to own property lies with the beneficiaries under the Will, neither the attorney nor the executor can delay administrating the estate of the deceased. Therefore within one year the executors must file a petition for probate so that they can distribute the estate’s net assets according to the Court’s order and then close the estate.
PASSING ON THE ESTATE THROUGH LETTER OF ADMINSTRATION
After going through the intricacies of the Will, you naturally pause before yourself a question : Why should I go in for a Will when I only have a house owned by me, a car, fixed deposit and saving back account all in my name and this estate of mine is not large enough to substantiate a Will ? Now when you die without a Will referred to as dying intestate, the state and all heirs (persons who are entitled to receive a dead man’s property through intestate estate) contesting the Will rather than you shall decide how and to whom your assets will be distributed. This means that your estate would be distributed to all sorts of unrealiable people whom you would never gift if your were alive. Further the court will even appoint a guardian if such a need arise.
Now where there is no will, Section 278 of the Indian Succession Act provides for applying for a Letter of Administration. Now in such circumstances, all the presumed beneficiaries of heirs shall come in and bring to the probate office a list of the deceased assets that comprise an estate. The court can also appoint a stranger individual to be the administrator of the estate who will handle the functions of the deceased who dies intestate.
The Administrator so appointed by the Court then handles the paperwork of the estate such as composing a list of the deceased assets, hearing from the likely heirs, processing claims from creditors and even hearing petitions form contestant in court who if successful, the deceased estate would be distributed according to state intestate laws.
Thus as lot of formalities and complications are involved in administrating an intestate estate, there is delay in distribution of the assets which adds to the expenses. Very often the work involvement and the delays caused in administrating the estate through Letters of Administration creates much higher expenses than obtaining probate through a simple and valid Will.
CONCLUSION
Everyone owning assets in his or her name individually must have a Will. This Will should be reviewed every year to reflect any changes in your personal, legal or financial situations. Now whether there is will or not it must be petitioned before the High Court who has the responsibility to see that the executor closes the estate in favour of the beneficiaries or heirs.
Now when a person owns large estate, he can also do his estate planning through revocable living trust and/or public charitable trust property. These trust properties which does not go to the probate court is run and managed by the Trustees who have important duties to perform on long term basis. The main advantage of forming such Trusts is that you have the satisfaction that your estate directive is carried out now during your lifetime.