Mr. Gerard Colaco: Knowing your possible needs like vehicle purchases, child education, family functions, vacations, etc., is always good. This prompts you to put aside some money for these requirements.
Finally, every citizen of India must have a passport, an income-tax PAN card, a driving licence and an election identity card. These are the four basic documents that establish you as a citizen of India. Indian citizens who migrate and obtain foreign citizenships would also do well to obtain an Overseas Citizen of India (OCI) card or a Person of Indian Origin (PIO) card.
All investments, bank accounts, insurance policies, etc., must be in joint names or with nominations registered. Similarly any real estate that you purchase must always be registered in joint names. Joint holding is always stronger than a nomination. A nomination is only a right to receive and hold in trust, until the property is finally settled as per a will or operation of law. A joint holding on the other hand immediately confers a fifty per cent ownership right, in case the only other holder is no more.
That brings us to the final point under “other objectives,” and that is succession and estate planning. It is good to have a sound knowledge of what will happen to your assets if you are suddenly not around. In India, there are separate laws of succession for different communities. It is the Hindu Succession Act, for Hindus, the Mohammedan Succession Act for Muslims, and the Indan Succession Act, to most of the rest.
To understand the implications of not making a will, let us take an example of Indian Christians who are governed by The Indian Succession Act, 1925. If no will is made, we give you a few examples of how assets will devolve upon death.
Example 1: Let us assume a family of husband, wife and one child. If the husband dies intestate (without a will), the assets are distributed equally between wife and child.
Example 2: Husband, wife, child 1 and child 2. If the husband dies intestate, each gets a third share of the husband’s assets.
Example 3: Husband, wife, child 1, child 2 and child 3. If the husband dies intestate, the wife gets a third of the husband’s property. The remaining two-thirds is distributed equally among the children. The principle of 1/3 to the wife is upheld, even if there are more than three children. No distinction is made between male and female children and married and unmarried children.
The issue is this: suppose a person’s assets are worth a crore of rupees. He dies leaving behind a wife and an 18 year old child. At 18, the child inherits 50 lakh rupees worth of assets. Being a major the child can do anything he wants with these assets. Does he have the maturity at 18 to handle such money? We have known cases where young people in their late teens or early twenties came into huge amounts of money and blew it all away or were cheated out of it, or took to drink and drugs.
What we therefore advise most couples who have settled down in their marriages is, to make a joint will, leaving everything to the surviving spouse. In case one of them dies, the surviving spouse can then make a separate will later. Even if the surviving spouse fails to do this, the property goes equally to the children.
Mind you, we are not telling you what to do. All this is food for thought. You can mull it over and arrive at a decision.