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THE EXECUTOR OF YOUR WILL
Choosing the right man to execute your Will is as important as its contents
Stories abound of the estates of the rich and famous languishing in courts years after their death.
They teach us one lesson—‘one can never really know for sure’. While many estates remain
unsettled, a similar number of estates have no Will to decide the distribution of wealth.
Every Will or Testament is consummated by the death of the testator. Once he dies, the executor(s)
named in the Will assumes importance in administering the estate.
Probate (that is, proving) is a process that proves that the Will of a deceased person is valid, so that
the property can, in due course, be retitled to the beneficiaries. Even when a Will names the heirs
clearly and who gets which asset, the property does not automatically transfer on the death of the
person making the Will. It must pass through a court­supervised administration process. It is here that
an executor plays a crucial role. If an estate is spread across jurisdictions, the probate process at
each jurisdiction needs to be completed.
The probate court plays a pivotal role in helping the executor to probate and then administer the
estate. Broadly, the key responsibilities of an executor can be grouped under six headings:
■ Establishing and ensuring the Will was the “last Will”, his appointment as an executor and
determining the kind of probating required;
■ Probating the Will, filing the inventory of assets that will pass under the Will, safeguarding and
maintaining the estate;
■ Payment of taxes and other statutory dues of the estate, making payment of debts after carrying out
necessary due diligence;
■ Deal with Testamentary Trusts (to protect minors) and Living Trusts (to escape Probate
proceedings) if it is set up under a Will and creating mechanisms to fulfil the obligations;
■ Distribute the assets according to the wishes of the testator; and
■ Representing the estate in the courts if and when the Will is challenged.
The executor. Notwithstanding such onerous responsibilities, selecting an appropriate executor
remains a neglected aspect of legacy planning. Acting as an executor is challenging and one should
know that the task will be time­consuming before taking on this responsibility. Once one starts dealing
with the estate, one is legally bound to complete the job, and can only be relieved of one’s
responsibilities by a court order. Since an executor owes a duty of confidence to the heirs, he needs
to act in their best interests, including taking timely and considered decisions.
Usually the testator names the executor, but given the onerous nature of the duties the person has
the option of refusing the responsibilities before he starts dealing with the estate. Any one (of course,
majors) can be named as an executor under a Will by the testator, including a beneficiary under the
Will.
While differing thoughts circulate about beneficiaries being named as an executor, the broad
consensus is that it is a preferred choice given the fiduciary tasks of protecting the assets; caring for
minors, challenged individuals, needing medical attention, etc., who are heirs to the estate. When a
beneficiary is named as an executor, courts have not chosen to disapprove the same since a Will represents the testator’s wishes.

NURTURE YOUR SLICES OF FAMILY HISTORY

Many families have old musical instruments, clocks, recipes, letters, weapons, furniture, jewellery and, finally, vast tracts of land left behind by their ancestors. Each one of the above items would embed in themselves a range of family anecdotes and cultural history. The stories often fade over time and after three or four generations, the details can be lost unless some enterprising family historian rescues them from obscurity. The objects, however, remain and come to be known as “heirlooms”. In our experience, succession planning for heirlooms and relics is extremely relevant. They are the only vehicles to educate the future generations about the traditions, values, efforts, toils, innovativeness, acts of kindness of the ancestors, both for the family and society. It would be a shame for a society so rich with traditions to let them die without being preserved. And succession plans for heirlooms is an act of preservation. Setting up trusts (with specific restrictions about holding non­business assets) is one of the easiest ways for a family to preserve its antecedents, relics, stories and events. Other variants of a trust will also serve the same purpose. But how does one put heirlooms in the Will? The process is simple enough. Here are a few ways: First, listing of the items by name or description. For example, ‘Grandmother’s recipe book handwritten by her’—a notebook of, say, 80 pages. If it is jewellery, it can be described as an item made of gold, or gold, pearls and diamonds. They can be described as earrings and bangles, etc. Normally, every jewellery has its manufacturer’s name or his code embedded. This code or name can be used to identify each item in case there are many similar items. Second is use of modern technology. The photographs can be incorporated in the Will or trust deed or any other document where listing is done. Another attractive way of preservation is to set up dedicated museums for family assets. Many uber­rich have shown interest in setting up such dedicated museums under Trusts that will own, govern and manage private museums. Such private museums can also house vintage cars, stamps and coin collections. A private museum will serve the twin purpose of keeping the family legacy alive, besides enhancing the value of the assets. Apart from ‘financial and physical parenting’ of such legacy items, it will also publicise and create awareness of the family’s heritage, contribution to society, education, fine arts, and so on, and become a subtle way for creating ‘brand equity’ for the family. While there is no tedious paperwork attached to this process, the fundamental paperwork is involved in crafting a trust deed for the purposes of heirloom succession. Unlike in the past decades, there are specialised agencies—universities, artefact societies, museums and historical societies—that provide professional services such as determining the age of the artefact and likely band of value in which an artefact would fall. Since these are independent agencies, even insurers are willing to accept their valuations. Do heirlooms come under succession laws? The answer is a clear ‘no’. These are known as personal assets with sentimental values. They are outside the purview of any regulations in this regard. Only when a heirloom takes the shape of land and buildings does the income tax department get interested because of capital gains and the relevant tax implications. Otherwise, there are no legal hassles in passing on heirlooms to the next generation. But are there tax or other liabilities that successors have once they receive the heirlooms? No. It is only in the case of land or buildings that capital gains tax may get attracted. Is there a principle to be used so that there is no fight among successors before or after death? If the trust deed or Will is written in good time, usually a family with sound ‘values’ discusses among all its constituents and then a decision is arrived at very amicably. I have come across cases where many family members didn’t show any interest in these heirlooms which did not have much commercial or exploitable values. Hence, one should not expect any real fight among the succeeding generations. And they can be gifted too. Heirlooms can be gifted by the patriarch or matriarch of the family to whomever they choose. Then it would be a personal transaction rather than a succession plan for the family. What about married daughters? Can they be given some of the heirlooms? Yes. There is nothing that stops a family, patriarch or matriarch from giving some or more of the heirlooms to married daughters in their Wills. Under the current interpretations of the Hindu laws (Supreme Court decisions) and other succession laws, daughters have a right to the family property. As a corollary, it can be stated that nothing prevents the daughters, notwithstanding that they are married, from receiving some portions of the family’s herilooms. Hindu, Christian, Muslim and other personal laws do not come into force in this. In my view, artefacts, such as family heirlooms, carry emotional and sentimental values. They are unique in their own ways of passing on family’s value systems, especially in the areas of philanthropy, care and giving and establishing institutions of learning, to name a few, which in turn, spread a culture of values. It is important that family offices and public domain trusts focus on this area and create awareness of cultural preservation.

IS YOUR LEGACY REALLY YOURS?

In modern law, the terms inheritance and heir refer exclusively to succession of a property by descent from a person who did not have a Will. When a person with significant assets dies intestate, the estate comes into disrepute with each family member claiming to be the legal heir. To prevent such a situation, the society has evolved codes of conduct, known as succession acts, for identifying the claimants. In the Indian context, the Hindu Succession Act, 1956, and the Indian Succession Act govern the generational transfers of Hindus, Parsis and Christians, among others. The Muslims are governed by their own law. Assets or property owned by a person are of two types: Self­earned or acquired, and inherited ones. For self­earned wealth, the earner has all the powers to use the wealth, spend, gift, donate or bequeath as he pleases. Disposal by the earner, even if it is in total exclusion of the family, cannot be subjected to successful legal challenge or review. In the Indian context, the disposal of self­earned assets has not been subjected to scrutiny under “sufficiency of family provision” claims. The second is inherited or ancestral assets. Inheritance is the practice of passing on property, titles, debts, rights and obligations upon the death of an individual. In law, an heir is a person who is entitled to receive a share of the deceased’s property, subject to the rules of inheritance in the jurisdiction where the deceased (decedent) died or owned property at the time of death. A person does not become an heir before the death of the deceased since the exact identity of the persons entitled to inherit is determined only then. Both men and women can inherit properties. After the amendments in 2005, all descendents of the deceased, including his or her illegitimate children, are entitled to a share of the property inherited. The Acts referred to the above prohibit the joint inheritors or heirs (also referred to as coparceners) to dispose of the inherited property except as provided by the Act. In simple terms, inherited property cannot be willed away or bequeathed as per sole wishes of any one heir. But distribution shall be made between the family members entitled to receive a share and in the same share as prescribed in the Act. Any inappropriate decision would lead to litigation. Coparceners need to take special care to keep ancestral properties and accruals separated from their self­earned properties on account of the Hindu Succession (Amendment) Act, 2005. Commingling of such properties is not desired since it could lead to litigation. A succession plan for inherited properties needs to focus on the following: (i) Ensure smooth partitioning between the coparceners through a partition deed. Partitioning should be done by mutual consent of all coparceners. The partition deed should encompass all the assets that are subject to partition. On such transparent partitioning, through a written partition deed duly stamped and registered with the authorities, each recipient becomes single legal owner and can deal with their share as they find fit. Once delineation takes place, the assets can be mingled for better management and control of the enlarged base of properties. (ii) Focus on erasing the “inheritance” label from those assets. If the heir has children the assets inherited from the elders will bear the inheritance label and will remain subjected to the restrictions imposed on their distribution, even if the initial heir creates a Will for its distribution. Non­observance of this leads to legal disputes on Wills while they are being probated. One can, however, erase the label of inheritance by converting the asset into cash and then managing the cash for the benefit of the family. Converting an inherited asset into cash would require consent from all descendents empowering the first heir to sell or otherwise dispose of the inherited asset. (iii) The succession plan is as provided under the statutes. Proper documentation of the assets inherited and identifying the shares of each eligible claimant as distinctly as possible will help the succession planner to prevent commingling. Bequests are usually of real and tangible personal properties and can be made to relatives, friends and even pets, and causes that are dear to the giver. Bequests can be made both in one’s lifetime through instrument of trusts, or through a Will which reaches the beneficiary after probate of the estate is completed.

Why a bequest?

  There are many reasons to make a bequest. It allows the giver to honour a loved one or a loved cause. It gives satisfaction to know that the future gift will live on, perpetuating one’s legacy. Are bequesting and transfer through Wills different? The two terms are interconnected, yet different. Both achieve the same purpose of transferring real assets and other tangible personal property to successors, family members, pets and even unrelated third parties. Wills carry a tone of family succession and transfer of property. Non­inclusion of certain members of the family has the potential of Wills being challenged in a court of law. There are also other issues on which Wills can be subjected to judicial review or decisioning. Bequeathing is entirely voluntary and the beneficiary may come to know of the windfall only when the Will is taken up by the executor or administrator for implementing, or when the probate process is initiated.

Summary.

 
 Any inherited property retains the label of inheritance and cannot be either Willed or bequeathed. Dealing and disposing of inherited property in ways other than provided for will be a breach of law. In other words, inherited properties cannot be dealt through Wills or through bequests.

 

Included with permission from the author.

LEGACY-PLANNING-PPT-14-April-2020-Read-Only
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