Importance Of Will And Nominee

INTRODUCTION: WILL

Even though one loathes to consider it, death is a certainty that must come at the end. Further, given the dreaded exigencies that the Covid Pandemic has left in its wake, people have been given to the grim realities of the importance of leaving behind testamentary disposition of one's assets and property.

Historically, "Will" has just been limited to real property while "testament" applies only to dispositions of personal property (thereby, resulting in the title of the document as "Last Will and Testament"). However, now the word "Will" validly applies to both personal and real property.

What is a Will?

But what exactly is Will? A Last Will and Testament is a legal document that communicates a person's final wishes pertaining to possessions and dependents. It is pertinent to note that even a person of unsound mind can execute a valid Will if it is made during his lucid interval. A person's Will outlines what to do with possessions, and what happens to other things for which he is responsible, such as custody of dependents and accounts and interests management etc.

As per Section 2(h) of Indian Succession Act, 1925 a "Will" is a legal declaration of the intention of a person with respect to his property, which he desires to take effect after his death. A Will made by a Hindu, Buddhist, Sikh or Jain is governed by the provisions of the Indian Succession Act, 1925.

The procedure of execution of the Will is overlooked by an executor, who is a person whose name is written in the Will to ensure that the distribution of the property takes place in accordance with the last Will of the executor.¹ A Testator is free to make the beneficiary of the Will the executor. According to Section 213 of the act, such a right to act as an executor or a legatee cannot be established unless the Court of competent jurisdiction has granted either probate or letters of administration². However, this section is not applicable to both the 'Mohammedans' and 'Indian Christians'. Indian Christians were rendered immunity from this clause through The Indian Succession (Amendment) Act, 2002 (26 of 2002) whereas Will of Muslims are governed in accordance to Muslim Personal Laws.

It is pertinent to note that the probate of Will is not necessary in states other than in Bengal, Madras or Bombay. The same has been ad nauseam held by the Supreme Court in various cases. While upholding the decision of the Delhi High Court in Mrs. Winifred Nora Theophilus v. Mr. Lila Deane and Ors³, the Apex Court in Kanta Yadav V. Om Prakash⁴ pronounced that on interpretation of Section 213 read with Section 57 (a) and (b), it is clear that the restriction contained in Section 213 will not be applicable in those cases where the Will is formulated by either Hindu, Buddhist, Sikh or Jaina outside the state of Bengal, Madras or Bombay."

Key Aspects of Will:-

Details of the Testator– Name, age, address and other pertinent details owing to the person making the Will.
Intention of Testator– A Will is a declaration of intention of the person making the Will. By definition, intention relates to the future and is different from statement of narration of facts. A Will that only narrates the present state of affairs and does not carry a clear exposition of the intention of the Testator is not a Will. Similarly, if a Will made by a wife stating what her deceased husband always desired before death is not a Will; since it carries intentions of the Testator's deceased husband and not of the Testator.
Subject matter of a Will – A Will can only be made with respect to the property of testator who has legal rights and title over it. One cannot give away that one does not have.
Details of the subject matter – The details of the properties which the testator wants to give to his beneficiaries under his Will. In case of a movable property, the details and description of the property/ies should be clearly and individually mentioned.
Beneficiary Details– In case of multiple beneficiaries, the details of each beneficiary like name, age, address, relationship of the beneficiary with the Testator.
Desires to be carried into effect after his / her death– The Will must state clearly that the testator desires that it comes into effect after his / her death. A renunciation during one's lifetime does not amount to a Will. It can be revoked by the testator only during his lifetime. If the document desires to partition property among the testator's sons while the testator is still living, the document cannot be called a Will.
Guardian (in case of a minor) – If the Testator wishes to give his property to any beneficiary who is a minor, then definitely he should appoint a guardian who will take care of the minor's property till the minor attains majority.
Executor of the Will– The Testator should also appoint an Executor to his Will. An Executor is a person who is supposed implement the Will after the Testator's death. These people should preferably be younger than you, since they are expected to perform duties and execute your will after your death. One could even appoint the beneficiary of the Will as the executor of the Will.
Signature and Date– The Will should be clearly dated and signed by the Testator at the place in the document just below the last sentence in the document.
Exclusions– The Testator cannot give any property that is joint family property or ancestral property that is common to many other members too. Such a Will becomes void.
Alteration/ Modification: It cannot be changed/ modified/ altered or disregarded after the event of his demise.
Forced or Coercion: A will, should not be obtained by force, coercion or undue influence. It will be a void will. A will, made under influence of intoxication or in such a state of body or mind, sufficient to take away the consent and will of the testator, is void.

Importance of Will

A Will helps in laying down clarification on confusion regarding the distribution of the property of the deceased by expressing the desire of the deceased with regard to his property.
Writing a Will becomes crucially important when the deceased has children or other family, who is directly depended on him/ her financially.
Will plays an even more crucial role where the Testator wishes to bequeath his/her property outside the line of succession or to an outsider.
A Will can also reduce the amount of Inheritance Tax that might be payable on the value of the property or wealth the person leaves behind.
One can make one's own Will. There is no legal mandate to get a Will made by an advocate. In some states, hand- written Will is also recognised provided, it should be written in the person's own handwriting. Additionally, some of the states also recognise oral will. It is, however, always advised that the Will be witnessed by two attesting witnesses, and should be registered at the time the Will is made with the Sub-Registrar to make the Will more full-proof.
The best advantage of a Will is that it is a revocable instrument. It can also be modified during the lifetime of the person.
In case of remarriages or second marriages, it helps in the protection of the children from the first marriage from exclusion.
A Will not only helps in evaluation of wealth among the family members but also helps in the power/ share distribution in a business.

Nominee

In a life insurance policy, a Nominee is a person, whom the policyholder nominates, as to whom the insurer must pay the policy proceeds in the event of his/her demise. Although it is not mandatory to register a nominee but its importance cannot be overlooked. It helps in a hassle – free process for the family members to receive the proceeds after the death of the policyholder. A nominee can get registered at any stage during the policy tenure, however, he is usually registered in the proposal form while purchasing the Life Insurance Policy.

In case of a Bank Account, a nominee acts as a custodian of the account in case of demise of the bank account holder. They, however, do not become the owner of the bank account upon demise of the bank account holder. The nominee is responsible for ensuring that the legal heir of the depositor gets the money from the concerned account and/or the fixed deposit. The owner of the said account / fixed deposit continues to be the legal heir(s) of the deceased.

To ensure the bank accounts fall in the right hands is where a Will plays a crucial role, as the deceased can, during his lifetime, clearly express his desire as to whom he wishes his moveable assets to be bequeathed to.

Eligibility:

A nominee should be preferably a person the policyholder is closely related to, or someone trustworthy. The nominee can be anyone you deem to be your first relative – your parents, spouse, kids, siblings etc. Some investments even allow to have multiple nominees where percentages of your money can be allotted to each one of them. If no percentages are specified, it is shared equally.

Importance of Nominee

Selection of nominee ensures that the life insurance company / bank is aware about who'll be responsible towards the investments of the deceased.
In the absence of a nominee, the beneficiaries are determined on a different basis which might not be acceptable to the family members.
It helps to provide financial security to the dependents of the life insured.
In the absence of a nominee, the insurance company may also ask for a succession certificate from the court which will state who should receive the claims. Gaining succession certificate from the courts is not an easy process. The dependents need to go through a lengthy legal process and a lot of hassle to obtain the same.
In the presence of a nominee the bank will simply transfer the funds to the nominee/s account without demanding a submission of a court order, succession certificate or letter of administration.

CONCLUSION

Although death is an unpleasant subject to ponder upon, we still have to accept that it is an eventual truth. Therefore, it is extremely vital that we design the distribution of our estate and other property in an appropriate manner. During these unpleasant situations, when life is ambiguous, one needs to ensure family's safety, security and stability. In case of the unfortunate event of one's demise, one's family/ near ones go through a very painful and difficult time of coping up with the loss. To add to this, whether we like it or not, financial security and means is necessary for the dependants. Will and Nomination play a crucial role in ensuring the same to the loss bearers. These are critical measures which a lot of people miss out, which eventually creates a lot of unwanted hassle.

Therefore, the importance of such measures cannot be overlooked as it prevents, disputed, delayed and costly claim of financial supports to the family and near/ dear ones.

Footnotes

1. Sec 2(C) of The Indian Succession Act, 1925

2. Section 213 of Indian Succession Act,

3. AIR 2002 Delhi 6)

4. [SLP (Civil) No. 19096 of 2017)]

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.