The disputes in Indian families are growing over property distribution due to the absence of a sound succession planning. Indians believe that at some point of time when they will get older they will discuss this with their legal heirs informally and after their death everything will settle in a smooth fashion. There will be no legal disputes and everyone will cooperate and sacrifice for others if required. But the fact of the matter is the disputes, and fights over wealth within a family can be traced even in our scriptures, especially Ramayana and Mahabharata. Hence, it is very important to have a formal succession planning. For that one needs to understand applicability of succession laws in India.
Applicability of Succession Laws in India:
As shown in above projection, in India succession laws are applied as per the religion of the person and there is no uniformed succession act which is applied to everyone. Hindus, Sikhs, Buddhist and Jains are covered under Hindu Succession Act, 1956 and Indian Succession Act, 1925.
Whereas, the Muslims are governed by their Personal Law. Other religions like Christians, Jews and Parsees are covered under Indian Succession Act, 1925. So this shows that in India Succession laws are more complex than other countries.
How the wealth will be distributed to legal heirs on once death?
As per Indian Succession Act, in India distribution of wealth to legal heirs depends upon whether the person who died had written the Will or not. Following chart will clarify the things.
So from above chart it is clearly understood that succession planning depends upon whether the deceased person had written the Will or not. In case of the person who had written valid Will, the distribution will take place according to his Will but for those who died without writing a valid Will, technically in the eyes of law they are considered to have died intestate and distribution of their wealth will take place not as per their wish but as per applicability of succession laws. This is very important because a person works very hard in his life time and accumulates lots of assets which are distributed as per the provisions of law if he dies intestate.
Let us now see how wealth is distributed if a person of Hindu religion dies without writing valid will.
For a Hindu Male: Generally we believe that if Male person with Hindu religion dies his wealth is directly transferred to wife. This is a wrong belief, for this, Hindu Succession Act, 1956 has given a list of class 1 and class 2 relatives. If a Hindu Male dies intestate then his wealth should be first distributed to class 1 relatives equally in the following hierarchy. If there are no class 1 relatives then it should be distributed to class 2 relatives. Following is the list of class 1 and class 2 relatives.
Agnates: Agnate means a person related to wholly through males either by blood or by adoption. The agnatic relation may be a male or a female. One’s father’s brother, or father’s brother’s son or father’s son’s son or father’s son’s daughter are agnates. So the final relationship may be male or female but it must be through males. The relationship can also be in ascending or descending line.
Cognates: Cognates means a person related not wholly through males. Where a person is related to the deceased through one or more females, he or she is called a cognate. Thus son’s daughter’s son or daughter, sister’s son or daughter, mother’s brother’s son, etc. are cognates. Here also the final relationship may be male or female but there is at least one female in that line of relationship.
Note that if there are more than one Widow’s, then they get one share only and then divide it between themselves and a person immediate family will also be considered as one unit only.
In above discussion we saw the consequences of intestate death of a Hindu Male. Now let us see the same for a Hindu Female.
If Hindu Female Dies Without writing a valid Will:
If a Hindu Female dies without writing a valid will then her own wealth will be distributed as under;
- Firstly, upon the son and daughters and the husband.
- Secondly, upon the heirs of the husband.
- Thirdly, upon the mother and father.
- Fourthly, upon heirs of the father.
- Lastly upon heirs of the mother.
Property acquired from Husband: If the women has acquired any property from her Husband, in that case the first right will be of the heirs of her husband, in case of absence of his sons or daughters.
Property acquired from Father or Mother If the women has acquired any property from his Father or Mother, in that case the first right will be of the heirs of her father and not husband, in case of absence of his sons or daughters.
Conclusion:
It is clearly evident that one should give importance to formal Succession Planning for smooth distribution of his hard earned wealth to his legal heirs as per his wish and for that he should write a clear and simple “WILL” because in absence of the valid Will his/her hard earned wealth will be distributed as per the provisions of law. Further, when there is no clear Will, it can lead to a situation where there can be disputes between family and it can take few years to resolve so it is very much advisable to ensure our clients have a proper Will in place.
The author is a Certified Financial Planner (CFP) and managing director, www.ascentsolutions.in, a financial planning firm. Please send your feed back at smmedia4@gmail.com.
