A comprehensive debate on the long and short of making wills
Rajesh Narain Gupta
Last week’s meeting saw a distinguished panel of speakers – Rajesh Narain Gupta, Gokul Das and Gagan Rai – pioneers in their respective fields, had the Rotarians and Rotaryannes absorbed in an interactive session on will making.
Rajesh Narain Gupta, an eminent lawyer and Managing Partner of SNG & Partners, commenced the discussion by putting forth his hope of reaching out to the masses through Rotarians and Rotaryannes on the need for making a will. After introducing himself and his fellow speakers, he proceeded to elaborate on one of the chief components of every will – its beneficiaries. “When you are trying to make a will or identifying a beneficiary and the way you are trying to do a will, every detail is very important because if anything is missed during the preparation and execution of the will, then its questionability remains, whether or not they can be enforced legally becomes a challenge” he said. He then moved on to the subject of estate and succession planning, wherein he explained that it is the process of managing and planning one’s personal estate during and after his/her lifetime that is crucial. These details may seem fundamental and trivial but he believes that these may be the very facts one overlooks in the process of formal documentation. “As lawyers, we tell our clients that the will is a process by which we are creating a differential right. Supposing somebody doesn’t make a will at all, then by default their estate then goes to all the legal heirs equally. Estate planning helps in the harmonious and planned distribution of the estate, ensuring that once assets are passed on to the successor, the clients have the liberty to chose. This devolution happens not only without acrimony, but also without causing any untoward problem for the heirs.”
In order to explain intricate matters such as estate management and preservation, Gupta started with a basic area first, i.e., components of a will. “The most important component of a will is the testator, the one who writers the will, followed by the beneficiaries who you want to give the assets to, and finally the witnesses. Under the Indian Law, it is very important for the two witnesses to have signed in front of the testator, and the testator in the presence of the witnesses. There is no stamp duty involved and the registration with the sub-registrar of assurances is also optional. If you want to make any changes in the will, there is a document called Codicils under which you can make changes to the will if deemed fit.”
Depending upon personal needs, there are trust structures, the holding company structures or the investment company structures where you protect and address any legal issues regarding family constitution in a will. He says, “If there is a family constitution, the problems around the decision-making, managing differences and successions can be addressed and dissolved with the aid of these structures. You can create a constitutional review provision and the provision for information and reports.” He then moved on to the last topic of the day – estate duty. “In all developed and developing nations, there is estate duty. Those of you who have relatives in the US and are the beneficiaries for someone situated there, there are serious US tax laws applicabilities on any kind of succession-related issues.”
He also speaks on the challenges lawyers are met with every day in convincing clients of the importance of having a will. He says, “The challenge we face as professionals is that when you mention to somebody about making a will, they are often unwilling to accept the idea. I believe that the desire to make a will is not there in a lot of us, which leaves us with the question of how the estate is to be divided and between whom.”
Making a will entails the simple process of identifying the legal heirs and how the devolution will take place between them. Then there are certain wills where there is a complex structure adopted where one can see various kinds of structures created in the will itself, which state how the money will go to whom and at what stage. He elaborates on these options that facilitate the creation of trusts under the will. “These days, in addition to the will in my private client practice area, people also discuss trust. There is an increasingly popular concept where people want to have a Living Trust. Living Trust implies using the assets of the trust for themselves and on their demise; the assets in the trust are to go to the next generation. So you have the option to create a trust even under a will. At times, people make their will and say that post their demise, a trust will be formed and they define what the end use of the trust funds will be, who will be the beneficiaries and how the assets are going to be used. Or as I just mentioned, there could be a living trust, where they transfer the assets to it and become the beneficiaries themselves as well.”
Although there are some formal structures that every will falls under, there is no straitjacket formula to the process. Different individuals have different needs and lawyers have to keep devising new structures as per the need.
Gupta elaborates on how his firm fulfils the exclusive needs of its customers. “When you form a private trust, there is an option of having a specific trust where the share of each member is pre-determinated, the trustees are informed and allocate the assets to them. There is also the option of a discretionary trust, where the trusties have the discretion of choosing the beneficiary and how the assets will be divided, although there are tax implications on these. When we talk about a trust, you need to have the beneficiaries determined. If there is no beneficiary, then the validity of the trust will be questioned” he says.
“Another structure which is quite popular with private bankers is the bank attachment trust where most industrialists availing credit facilities from banks are required to give their personal guarantees. When you give your guarantees and the account goes bad, the personal assets of the guarantors are immediately attached to the account. This compels people to think about allocating assets saved by ways of asset protection trust. Now if this exercise is done in good times where there is no legal obligation, these structures prove to be a worthy investment. Although, if somebody wants to create these structures post the event of the default happening, the option is unavailable as it becomes a fraudulent transfer and questionable in court.”
Although many Rotarians already have their wills prepared by their personal lawyers, Gupta acknowledged that most Rotarians are a part of a system where people who need this help can benefit at a marginal cost and address the associated problems. In this background, SNG and Waman have done a joint venture with NSDL to launch an Easy Will initiative in the market. He then requested Gagan Rai to offer his insights on the product.
Gagan Rai belongs to NSDL e-Governance Infrastructure Limited. This company was formed as a National Securities Depository Limited in 1996 with depository services and introduced the Demat form, creating history. He has also been a part of other projects such as automating the Special Economic Zone online by having all the work flow between the unit holders and the Development Commissioner’s office through an online system.
NSDL believes in exploring those sectors which don’t exist for the benefits of the citizens and the country and in making it happen to the maximum and optimal possible way of operations. The Easy Will initiative is an extension of the same ideology. “Easy Will is something the company entered into along with SNG and Waman for public benefit. To provide this service at a fraction of the cost most of us have incurred in a sustainable manner, we are trying to commoditise this service. While most individuals have family doctors and chartered accountants, very few have personal lawyers. A will becomes a tool to help such people and prepare one that ensures their family’s comfort, at a very reasonable cost” he continued.
The online process being discussed at the beginning of the talk comes into play at this juncture. Rai says “we have automated the entire process. The collection of data happens through an online portal in a secured manner. It is hosted in the same infrastructure where depository accounts, pension fund records and tax information network is hosted. Owing to the flexibility, data can be updated and edited easily. The second vital aspect of this is the time factor. A lawyer prepares a will which is then sent to the testator for further additions and these iterations are also available online. The third and the most important facet is that we have no access to the will data. Once a testator finds that the will is satisfactory, we allow the testator himself to delete the data from the system. We have tried to establish this from the point of view of giving something back to the society, for those who need this service and cannot afford it in the same manner that you and I can.”
Ending his dialogue on this gracious note, he asked for the blessings of all Rotarians for this noble initiative and their help in reaching out to those in need.
In closing, Mr. Gokul Das, the Managing Director and CEO of Warmond trustees & Executors Pvt. Ltd, spoke about succession planning. “What we’ve seen in succession planning is that India has gone through a phenomenal amount of asset build up but with concerns for the ultra high segments. What we aim to do with this initiative is to bring it to a broad level and what we’ve done is that we’ve cross-pollinated the strengths of NSDL and Waman on the e-Governance front on the technology platform and the legal expertise from SNG and Waman. At SNG and Waman, we are there at your time of need and we’d like to bring harmony and peace.”