Foundation — The tools, and everything about a Will

A man leaves a sealed letter with his lawyer, to be opened only on his death. He can rewrite it a hundred times, and until he dies it changes nothing at all. Till the execution, the Will remains A CONFIDENTIAL DOCUMENT, and it comes into effect ONLY AFTER THE DEATH OF THE TESTATOR.

The same man also sets up a standing instruction at his bank to pay his elderly mother Rs 20,000 a month. That operates from the day he signs it. Money moves; his mother receives; nothing waits for his death.

That is the difference the workbook draws between the two tools. A Will goes into effect only when one dies WHILE A TRUST IS EFFECTIVE AS SOON AS IT IS CREATED. And more: a trust can be used to begin distribution of property AT DEATH, BEFORE DEATH, OR AFTER DEATH.

The classification in section 15.1 follows from this. Only TWO tools are post-death — the Will and the Nomination. The other seven — family settlement, trust, guardianship, joint holding, gift, power of attorney, mutation — all operate during lifetime.

And there is a second difference the sealed letter reveals. When the letter is finally opened, a court may need to confirm it is genuine — a Will MAY PASS THROUGH PROBATE and CAN BECOME A PUBLIC RECORD. The standing instruction is nobody's business but the bank's: a trust does not pass through probate, and a FAMILY TRUST REMAINS PRIVATE.

A man keeps two identical signed copies of an agreement: one in his cupboard, one with his lawyer. Annoyed one evening, he tears up the copy in his cupboard, thinking the lawyer's copy still stands.

It does not. The workbook is precise about a duplicate Will: it is a copy of the Will kept with the testator, which must be DULY SIGNED AND ATTESTED, and which generally lies with the executor or trustee. And then the sting: WHEN THE TESTATOR MUTILATES OR DESTROYS THE PART IN HIS CUSTODY THEN BOTH WILLS ARE CONSIDERED TO BE REVOKED.

The reason is that mode (iii) of revocation asks only about intention: revocation happens by BURNING, TEARING OR OTHERWISE DESTROYING the Will by the testator, WITH THE INTENTION OF REVOKING the Will. Tearing up his copy IS that act — the existence of a second copy does not undo it.

Contrast what happens if the copy is merely lost. THE MERE LOSS OF THE WILL DOES NOT LEAD TO REVOCATION, but where the Will is destroyed by the testator OR WITH HIS PRIVITY OR APPROBATION, the Will is deemed to have been revoked.

Losing it is an accident. Tearing it is a decision — and the law reads the decision, not the number of copies.

A landlord and tenant have a twelve-page lease. The rent is to change by a small amount. Nobody retypes twelve pages — they sign a one-page amendment, witnessed exactly like the lease, ending with the words "in all other respects the lease is confirmed."

That is a codicil. Section 2(b) defines it as any instrument made IN RELATION TO A WILL and EXPLAINING, ALTERING OR ADDING TO ITS DISPOSITION, AND SHALL BE FORMED TO BE PART OF THE WILL.

Three rules follow, and all three matter in practice.

It carries the SAME formalities. The codicil has to be EXECUTED AND ATTESTED JUST AS THE WILL. A note scribbled in the margin and initialled is not a codicil.

It is not free-standing. A codicil is NOT AN INDEPENDENT DOCUMENT. Read alone it is meaningless; it lives only as part of the Will.

And it has a size limit. WHEN ALTERATIONS ARE CONSIDERABLE THEN A FRESH WILL REVOKING THE EARLIER WILLS SHOULD BE WRITTEN. Three codicils layered on a twenty-year-old Will is precisely how estates end up in litigation.

The workbook's specimen ends with the words that define the instrument: "In all other respects, I hereby CONFIRM my said Will." Change one thing; expressly leave the rest standing.

Two families arrive at a bank to claim a deceased customer's deposits.

The first produces a letter the customer wrote. The bank asks: is this letter genuine, and is it the last one he wrote? A court answers that question, and its certificate is a PROBATE — THE COPY OF A WILL CERTIFIED UNDER THE SEAL OF A COURT of competent jurisdiction.

The second family has no letter at all. The bank asks a different question entirely: who exactly are you? A court answers that question with a SUCCESSION CERTIFICATE, issued to the legal heirs for establishing their authenticity and AUTHORIZING THEM TO REPRESENT THE DECEASED for the purpose of collecting debts, securities and other assets.

The workbook puts the distinction in one line: A PROBATE IS ISSUED WHEN THERE IS A WILL, WHILE A SUCCESSION CERTIFICATE IS ISSUED WHEN THERE IS NO WILL. And section 370 confirms the exclusivity — when the deceased has left a valid Will, his entire property vests with the executor and thus SUCCESSION CERTIFICATE CANNOT BE GRANTED.

One more thing neither certificate does. A succession certificate DOES NOT DETERMINE THE RIGHT, TITLE AND INTEREST of a deceased person to any property, so mere issuance does not give right of succession. It answers who may collect, not who owns — the same limitation Chapter 14 identified in mutation.

Two brothers hold property together, and the difference between two forms of holding decides what happens when one of them dies.

Under JOINT TENANCY, the survivor simply takes the whole. The joint tenants have A RIGHT OF SURVIVORSHIP, i.e. post demise of the owner THE INTEREST OF THE DECEASED JOINT TENANT WILL PASS ON TO THE SURVIVOR. THIS IS NOT AN OWNERSHIP WHERE JOINT TENANT CAN LEAVE A WILL TO PASS ON THE INTEREST TO THE LEGAL HEIRS.

A Will is powerless here. The dead brother's children inherit nothing of that property, whatever his Will says — only in situations where the owner IS THE SOLE SURVIVOR joint tenant can he pass the interest by writing in the Will.

Under TENANCY-IN-COMMON the opposite is true. There is NO RIGHT OF SURVIVORSHIP, i.e. when a tenant-in-common dies, HIS LAND PASSES IN ACCORDANCE OF THE WILL OR AS PER THE SUCCESSION ACT if there is no Will. He has complete ownership to deal with his share as he deems fit, and shares can be unequal — though if no share is mentioned it is deemed to be equal.

Joint tenancy is also harder to create: all the joint tenants have to acquire their interest AT THE SAME TIME AND FROM THE SAME TRANSACTION, and the interest must be IDENTICAL IN NATURE.

One form overrides the Will; the other obeys it. The choice is made on the day of purchase.

A father leaves money with a trusted friend for his three children.

In the first arrangement he says: "Give them what you judge right, when you judge right." The friend decides everything. That is a DISCRETIONARY TRUST — where the trustees have FULL DISCRETION over the application of income and corpus, and which gives NO RIGHT TO THE BENEFICIARIES TO ANY PART OF THE INCOME.

In the second he says: "One-half to the eldest, one-quarter each to the others, every year." That is a DETERMINATE or SPECIFIC trust — where beneficiary or beneficiaries are clearly specified ALONG WITH THEIR SPECIFIC OR ASCERTAINED SHARE, and the trustees DO NOT HAVE ANY DISCRETION.

The tax consequence of the choice is severe. A discretionary trust is CHARGEABLE TO INCOME TAX AT THE MAXIMUM MARGINAL RATE under section 164(1), because the individual shares are NOT DETERMINATE OR UNKNOWN. A determinate trust is taxed on the representative assessee under section 161(1) — at the beneficiary's own slab rate.

And the courts have been generous about what counts as determinate: a trust is determinate EVEN IF THE TRUST DEED ONLY PROVIDES FOR THE MANNER OF COMPUTATION — say, "equally among all living family members" — and not the exact beneficial interest in absolute terms.

Flexibility in the deed buys discretion and costs the maximum marginal rate. A formula costs nothing and preserves the slab.

A parcel arrives at an office. The receptionist signs for it. The delivery company's job is done — their obligation is discharged. But nobody imagines the parcel now belongs to the receptionist.

That is nomination. Payment to nominee is A VALID DISCHARGE in case of all financial products, and the purpose of nomination is SIMPLIFICATION OF PAYMENT PROCESS in the event of the death of the holder AND NOT THE EQUITABLE DISTRIBUTION OF ESTATE.

The workbook is blunt about the nominee's position: in the event of a dispute the nominee's position is REDUCED TO BEING THE TRUSTEE OF THE BEQUEST, the final owners being decided according to the applicable laws of succession. A WILL SUPERSEDES A NOMINATION, though the company or mutual fund can still make payment to the nominee. And various courts in India have upheld the rights of legal heirs over the nominee, so in most financial assets SUCCESSION RULE SUPERSEDES NOMINATIONS.

But there are parcels the receptionist may keep. The exception is financial assets created by a SEPARATE ACT where provisions have been provided in the Act itself. Under the Insurance Act 1938, beneficial nominees — spouse, parents and children — are entitled to the death benefit and OTHER LEGAL HEIRS WILL NOT HAVE A CLAIM. Under the EPF Act, likewise, only immediate family members may be nominated, and they inherit the proceeds.

Everywhere else: the receptionist signs, the owner owns.

A shopkeeper going abroad leaves a signed authority with his brother to run the shop. The brother may buy stock, pay staff, sign for deliveries — in the shopkeeper's name.

That is a Power of Attorney: a legal document which gives one person (the AGENT or attorney-in-fact) the power to act for another person (PRINCIPAL). The two parties are the DONOR and the DONEE, and both should have attained majority, be of sound mind and competent to contract.

But the authority has hard edges. The agent CANNOT MAKE DECISION OUTSIDE THE TERMS of the legal document — doing so makes him liable for any fraud or negligence. He CANNOT MAKE CHANGES IN THE DOCUMENT OR HAND OVER THE CONTROL TO SOMEONE ELSE who has not been designated in the POA — the lent signature cannot be lent on. And THE AGENT LOSES THE CONTROL ONCE THE PRINCIPAL DIES.

That last rule is the one families forget. A POA dies with the donor. The brother who ran the shop for years has, from the moment of death, no authority at all — the estate passes to the executor or the legal heirs.

And the risks run the other way too, as the workbook frankly admits: the agent can sell the properties for an undesirable price or make poor investment decisions, and the agent can END THE AGREEMENT AT ANY TIME if he no longer wants the responsibility.

Which is why the workbook's advice is to consider limiting the POA to specific situations — a special power rather than a general one.