1. Wills, Partitions & Successions
Jairam Chandnani
LEXIM ASSOCIATES
05th January, 2008

2. Hindu Succession Act

3. Succession Law
LEXIM ASSOCIATES

4. HSA Application Applies when a Hindu dies intestate
Hindus, Jains, Sikhs, Buddhists
Not to Muslims, Christians, Parsis, Jews
Overrides all Customs, Traditions, etc.
Applies when a Hindu dies intestate
Without making a valid will
Succession to property then fixed by HSA and not by his wish / will
Therefore, advisable to make a Will
LEXIM ASSOCIATES.

5. Intestate Male Firstly – Class I Heirs
Secondly – if no Class I, then upon Class II Heirs
Thirdly – if no Class II, then Agnates
Lastly – upon Cognates
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6. Female Intestate Foll. property absolute property
Inheritance
Partition
In lieu of maintenance
By gift
Own skill
By purchase
She can deal with this property as she likes
Can will it away to whomever she likes
Exception
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7. Female Intestate Firstly Secondly Thirdly Fourthly Lastly
Children, Children of pre-deceased Children, Husband
Secondly
Husband’s Heirs
Thirdly
Her Parents
Fourthly
Her Father’s Heirs
Lastly
Her Mother’s Heirs
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8. Female Intestate Exception – s.15(2)
If property inherited from her parents &
She dies w/o any children
Property  Father’s Heirs & not to her Husband /his Heirs
If she leaves behind a child
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9. HSA Share in HUF Can be willed away Else devolves on surviving members
Not as per HAS Rules but by survivorship
E.g. HUF has 4 members. Karta dies. Share of other 3 members increases by survivorship.
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10. HSA Amendment in 2005 Amdt. Introduced in Central Act
Daughter of a co-parcener shall:
by birth become a co-parcener in her own right as a son;
have same rights in HUF as a son;
be subject to same liabilities in respect of HUF property
have a share equal to a Son
Daughters can now become a Karta?
What happens after her marriage?
Date of Amendment: 9 Sept 2005
LEXIM ASSOCIATES

11. HSA Amendment in 2005 Does amended section apply to:
Daughters born after this date?
Daughters married after this date?
All daughters, married or unmarried, but living as on this date?
Mah State Amdt provided similar benefits
But only to daughters married before 22 June 1994
Same position applicable after Central Act?
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12. Wills

13. Wills-Definition
A wish, desire, choice, etc of a person as regards disposition of his property after his death
ISA, 1925: Legal declaration of testator’s intention with respect to his property which he desires to be carried into effect after his death
General Clauses Act: A codicil and every writing making a voluntary posthumous disposition of property
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14. Characteristics Legal declaration of Testator’s Intention
As regards his property
Manifests only after the testator’s death
Will not valid till testator is alive
Speaks from the Grave
Can be revoked at any time and end number of times by the testator in his lifetime
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15. Why make a Will?
Have complete discretion on distribution of property after death to persons of your choice
Reduces succession disputes
Good way to reward someone by willing a part of your wealth to him post your death
Better to make a will at an early age due to uncertainty of life- No limit on number of revisions to a will
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16. Wills - Terms Testator Beneficiary/Legatee Estate Executor/Executrix
Bequest
Bequeath
Witnesses
Life-interest beneficiary
Codicil
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17. Who can Make? Major person- of sound mind
Male as well as Female
An intoxicated person / one who does not understand what he is doing?
Deaf / Dumb / Blind?
Ordinarily Insane?
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18. How to Make? Write / type Signature / thumb mark of Testator
2 Witnesses to signature of Testator
Appoint Executors
Date the will
Designate legatees / beneficiaries
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19. What can be Bequeathed?
Any Property- land, bldg., flats, shares, bonds, money, personal effects, cars, prized possessions etc.
Must be legally transferable
Tenanted Premises?
Property must be owned by Testator
Share in HUF property?
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20. Who can be a Beneficiary / Legatee?
Any one –relative/friend/employee/servant?
Minor/lunatic?
Co. can be made a Beneficiary under a Will?
Animals can be made a Legatee under a Will?
If legatee dies before testator?
If 2 legatees ~ 1 dies?
Joint death of testator & legatee?
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21. Types of Bequests Conditional Specific v General Legacy Precedent
Subsequent
Specific v General Legacy
Distinguishable from other assets
Specific gets priority if estate inadequate for all
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22. Executors Selection Criteria: Duties Someone close to testator
Should be willing to be an executor
Better to check with him beforehand
Duties
Provide for all funeral expenses of the testator
Pay off all debts
Cannot refuse to act once accepted
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23. Witness Should be attested by 2 or more witnesses
Witness should have seen the testator sign/affix mark
Must receive a personal acknowledgement of the testator’s signature
WHO?-
Need not know contents of will
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24. Wills Wills & Other Laws: Is Stamp Duty payable?
Is Registration a must?
Are Takeover Regulations applicable?
LEXIM ASSOCIATES

25. Nomination Wills v Nomination ~ What Prevails? Always Wills Nominee
Only a stop-gap arrangement till Estate executed & bequests made
Plugs gap between Death of a Person and Bequest to a person
Once Will executed, nomination automatically ends
Exception?
LEXIM ASSOCIATES

26. Revocation Irrevocable only after death Revokes by marriage?
By making a new will / codicil
By destroying existing will
LEXIM ASSOCIATES

27. Wills - FAQs Is a person legally required to make a Will?
What happens if a person dies without a Will?
Is a Will final forever?
What is the Legal Format for a Will?
Can one distribute everything in his lifetime?
Can an illiterate make a Will?
Should every page of a Will be signed?
LEXIM ASSOCIATES

28. Wills - FAQs Can one Will away everything to Charity?
Can a Muslim make a Will?
Can one exclude close family and select distant relatives / friends?
What happens if more than Will is produced?
Should every property be mentioned?
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29. Wills & Tax CGT on Transfer of asset under a will COA of Legatee
Period of holding of Legatee
Indexation
Taxation of Income of deceased
Executor entitled to recover the tax paid from the estate of the deceased
LEXIM ASSOCIATES

30. Wills - Probate Why required? What is it? Probate - Process
Copy of the will certified by Court seal
Establishes authenticity/finality and validates all acts of executors
Probate - Process
Application to Court
Will copy
Court fees
Why required?
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31. Wills - Probate
Onus of proving genuineness of Will is on one who claims it to be genuine
He must also dispel all suspicious circumstances
Court expects all legitimate suspicion to be removed before accepting the Will as genuine.
K Laxmann (SC)
Shashikumar Banerjee (SC)
Court to consider genuineness & expln. of all suspicious circumstances
Lalitaben J Popat, (SC)
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32. HUF Partition

33. HUF Partition
HUF consists of lineal male descendants from a common ancestor + their wives
Now even Daughters are included
Partition:
Defining of the shares of coparceners in Joint Property
Division of Joint Family by a definite + unequivocal indication to separate
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34. HUF Partition Hindu Law recognises Total & Partial Partition
IT / WT recognises only Total Partition
Partition defn. (IT) : Physical division, if so capable or else such division as property admits – mere severance of status is not a partition
Partial Partition defn. (IT) : Partial as regards HUF property or Members of the HUF or both
If Tax not an issue, can have Partial Partition
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35. HUF Partition Manner of Partition: Oral Partition By a Suit
By an Agreement or Deed of partition
By an Arbitration Award
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36. Stamp Duty Duty under various Articles Instrument of Partition :
2% on the Market value of the Separated Share of the Property
Value on which Stamp duty is leviable:
Total FMV of Property less the Largest Share partitioned
If all Shares are equal, then deduct any one Share
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37. Registration of Agr. Sardar Singh / Kashinath Sa (SC)
If it creates right, title & interest in Imm. Prop. then compulsorily Registration
If a mere declaration of a pre-existing right or reference to past partition & not creating right in praesenti – then No Registration
Unregistered Agr. inadmissible as evidence
It is a Valid Agr. not a Waste Paper
Creates rights & obligations between parties
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38. Family Arrangement

39. Family Arrangement Meaning & Relevance
Maximum disputes take place within Family Members rather than among Strangers
FA is one of the oldest ADR mechanisms
Scope of FA is extremely wide – even recognised in English Law
Instances : Ambanis, Bajajs, Modis, Ranbaxy, Mafatlals, etc.
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40. Family Arrangement Actual Example Father & 3 Sons
Several Properties, Firms, Cos., all owned by 1 / 2 / 3 / 4 members
Disputes - One brother wants to separate
Is FA possible? Yes
Process
Valuation of Properties + Business
Comm’l Understanding of division
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41. Family Arrangement Disputes under FA Who gets what Manner of Division
Disputes over Valuation
Disputes over Allocation of Assets
Disputes over
Payment Schedule,
Instalment Facility,
Interest on Deferred Payments
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42. Family Arrangement What is a Family Arrangement?
– Kale v. Dy. Director (SC)
is an arrangement between members of the same family
for the benefit of the family
by compromising doubtful or disputed rights or
by preserving family property or peace & security
by avoiding litigation or by saving its honour
LEXIM ASSOCIATES

43. Family Arrangement Courts generally lean in favour of FA
Essential that it is a “valid FA”
Entire law is based on Case law
Important Concepts & Principles of FA:
Courts would make every attempt to sustain a FA rather than avoid it
Criteria applied for FA - different from those for strangers – broadest view possible – Halsbury’s
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44. Family Arrangement Important Principles FA is not a Transfer
No Gift-tax on FA (in the past)
No Capital Gains Tax on FA
No Stamp Duty on FA Award as on a Conveyance
If there is an antecedent title of some sort in the parties and Agr acknowledges and defines this title – no Conveyance – assumed that title claimed always resided in him
LEXIM ASSOCIATES

45. Family Arrangement
MOU merely records what had been agreed + prepared after FA arrived at – No Registration
Only when FA is brought about by MOU – If it creates rights in immovable property - it would require Registration & SD
Distinction between Document containing Terms and Recitals of a FA and a mere recording of what has already taken place
MOU must be signed by all intended to be covered
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46. Family Arrangement Recording of past oral FA is not a Conveyance
MOU itself creates new interest in land & contemplates execution of other documents - not exempt from SD as on a Conveyance
Compromise creating fresh rights in land- not a declaration of pre-existing rights, is a Conveyance
Plea of practical inconvenience can’t be raised at implementation stage
Proper Drafting of MOU is Paramount
LEXIM ASSOCIATES

47. Family Arrangement Even married daughters can be made a party to FA
If she surrenders shares held by her pursuant to a FA, then it would not be a taxable transfer
Cos. cannot transfer assets under a FA and say that CG is exempt since it is part of a FA
LEXIM ASSOCIATES

48. Family Arrangement Maintenance
Would Maintenance paid under FA Award be allowed as a Deduction to Payer?
Yes : If Award creates a Charge on Properties received – Diversification at Source
No : If not a Charge - mere Application of Income
LEXIM ASSOCIATES

49. Release Deed

50. Release
In restructuring of family owned and run businesses execution of a Release Deed was a popular mode
One co-owner renounces his share in favour of another co-owner
Share of other co-owners in the property enlarged
Stamp duty friendly
Earlier SD of Rs. 200 only
Lesser SD compared to a Gift Deed
LEXIM ASSOCIATES

51. Release Bom HC Decisions
Asha K Bajaj (Bom) – 2001
Shailesh Harilal Poonatar (Bom) – 2004
To plug this loophole – Amendments in 2005 & 2006 to Art.52:
5% on MV of property released
If release of ancestral property to siblings / parents / spouse / children / grand-children / their legal heirs – SD of Rs. 200 only
LEXIM ASSOCIATES

52. Gifts

53. Transfer of Property Gift - definition:
Transfer of existing movable or immovable property
Made voluntarily & without consideration
From Donor (Transferor) to Donee (Transferee)
Accepted by or on behalf of Donee
Gift must be accepted in Donor’s lifetime
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54. Transfer of Property Gift must be voluntary
Total absence of consideration
No man can gift to himself
Donor & Donee
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55. Immovable Property Gift of Immovable Property must be:
By a written Gift Deed
Registered
Attested
Invalid - If 3 conditions not met
Under Mohammedan Law?
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56. Transfer of Property Acceptance by Donee is a Must
If Donee dies without accepting Gift?
Gift made to 2 or more Donees jointly
1 Donee refuses to accept
Does the entire Gift fail?
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57. Transfer of Property Gift could be conditional If conditions not met?
Condition not dependent on mere wish of Donor
If condition is illegal or immoral or opposed to public policy?
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58. Contract Act Ex nudo pacti non oritur action Exceptions:
Contracts made without consideration are void ab initio
Exceptions:
Made out of natural love & affection
Agreement in writing
Registered
Gift given out of natural love – valid contract
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59. Contract Act Matter of fact
Does nearness of relationship prove natural love?
Agreement to Gift to spouse after filing for separation?
Is it on account of natural love & affection?
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60. Contract Act Inadequacy of consideration in a contract
Deemed Gift?
Can consideration flow from 3rd party?
If not, would it be a Deemed Gift?
Can consideration flow to a 3rd party?
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61. Stamp Duty Stamp Duty : Same as Conveyance Misconception:
3% on FMV of movables
5% on FMV of immovable
Concessional Rate for Flat in CHS
Misconception:
SD can be paid on the basis of Gift-tax Valuation of Property
Payable on FMV of Property – Ready Reckoner Value for Immovable Property
LEXIM ASSOCIATES

62. Stamp Duty Gifts to Family : SD @ 2% of FMV of the property gifted
Family definition:
Spouse
Sibling
Lineal Ascendant / Descendant of the Donor
Definitions?
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63. Stamp Duty
Instrument of Gift includes a Declaration recording making or acceptance of Oral Gift
If No Gift Deed – No SD
Receipt issued by Donee for gift of movables received – Is it an Instrument?
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64. Stamp Duty Doc. Recording Gift of movables
Gift of movables does not require instruments
Document recording past gift
Whether to be stamped?
Document does not make the gift – it only records what has happened
No stamp duty payable
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65. Stamp Duty Duty as on value of property in Deed:
Other states – Duty on FMV of property
SD on Gift of shares?
SD is on Value of Shares
Even though consideration Nil in T/D?
No SD if gift of shares in demat form
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66. Company Law Can a Company make a Gift? Can Company receive a Gift?
No express provision / case
Donation permitted
Can Company receive a Gift?
DCA’s view
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67. Company Law Example 1 Example 2
Private Co. with 5 Brothers as SH owns a flat
Gift of flat by Co. to 1 Brother
Stamp 2% or 5%?
Example 2
Gift of shares by 4 brothers to 5th brother
Stamp 2% or 0.25%?
LEXIM ASSOCIATES

68. Company Law Gift of shares in a Company
Complete when shares are handed over to Donee with signed T/D
Non-recording of transfer by Co. does not invalidate Gift
Co. would recognise Donee only after transfer registered
But Donee is legal owner of shares
He has a legal right to get transfer registered
Sheila Devi v. Tara Chand (Cal)
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69. FEMA Gift of money by a Resident to NR
Earlier limit of $5,000 per annum
Now subsumed under liberalised remittance scheme
Gift of money by a NR to Resident
No prohibition in FEMA
Gift must be Genuine
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70. FEMA Gift of shares by R to NR Gift of foreign securities by NR to R
Not on Automatic Route of RBI
Prior permission required
Gift of foreign securities by NR to R
General permission of RBI
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71. FEMA Gift of Indian Imm. Property Gift of Imm. Property abroad to R
General permission of RBI
Gift of Imm. Property abroad to R
RBI’s General Permission if Donor is
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72. Income-tax No tax on Individual / HUF Donee if Gift of money received:
From specified Relatives by an Ind.
On marriage
Gifts in contemplation of Death of Donor
Aggregate of Rs. 50,000 in a PY
No Gift Tax on Donor
Deemed Gifts u/s
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73. Income-tax Gift not regarded as Transfer u/s. 47
Cost to Donee is cost to Donor
Period of holding of Donee includes period of holding of Donor
Indexation from which date
Acquisition by Donor
Receipt of Gift by Donee
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74. Guardianship

75. Guardianship of Hindu Minors
Hindu Minority & Guardianship Act
Applies to?
Deals with powers & duties of Guardians:
Natural Guardians
Guardian appointed by Court
Appointed under a Will of minor’s parents
Who can be a Natural Guardian?
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76. Powers of Natural Guardian
Can do all acts necessary / reasonable for minor’s benefit
Can’t bind minor by a personal covenant
Transactions of Imm. Prop. of Minor
Court’s permission needed?
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77. Thank You !!
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