What is better WILL or TRUST?
Succession planning is important as it will make the smooth disposal of the property or estate after the death of the concerned person. It will also help in avoiding clashes amongst the family members.
- Easy to act upon, easy process.
- Most popular in joint bank accounts, D-mat accounts, Residential Flats.
- Types of Joint Holder
- Either or Survivor
- Former or Survivor
- Joint Holders cannot be beneficial owners, ownership transfers with WILL, or under the Succession Act to legal heirs.
- The right in asset goes to a joint holder in case of death, hence such an asset only should be taken as a joint holder.
Nomination v/s WILL
- The nomination is a time gap arrangement for the easy operation of assets.
- It can be helpful for the operation of the assets after the death of the owner of the assets.
- WILL or Provision of the Hindu Succession Act will prevail over the nomination.
- Once the WILL is executed nomination becomes ineffective.
- A legal heir or person who has been bequeathed property as per WILL has right over the nominee.
- Courts have held that WILL shall prevail over the nomination.
Trust v/s WILL
- Private trust can be created under the Indian Trust Act, 1882.
- The creation of the trust is useful if the beneficiary is minor.
- The distribution of the estate is very easy and the owner has total control over such distribution during lifetime and even after death.
- No probate is required and also avoids succession disputes.
- If there is estate duty in the future it can be avoided.
- The registration of trust is optional.
- In case minors, unborn person, married daughters, handicapped, mentally unstable person, pets Trust is preferred than WILL.
Income Tax Aspect in case of TRUST
In the case of settlor transferring assets to the trustee, the trustees receive assets for specific obligations for the beneficiary, hence the receipt by the trust is not taxable. However, there is a grey area in case the beneficiary is not relative to the settlor.
In modern days Trust is a more popular planning tool against WILL, as trust can save against intestate creditors/liability, Trust can avoid procedure for Probate, Trust can be incorporated and planned during lifetime and it can be better managed in Estate duty environment.
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