When Heirs Take Matters into Their Own Hands: The Role of Will and Family Settlements
Dividing Assets Among Family Members Without Legal Implications
The Ask Wallet-Wise initiative provides expert advice on personal finance and money-related queries. Individuals can email their queries to [email protected], and a top financial expert will address them.
A recent query to the Ask Wallet-Wise initiative involved a family situation where a deceased individual had left a registered will behind, but none of the family members wished to enforce it. Instead, they wanted to divide the assets among themselves as they saw fit. The assets included both immovable and movable assets, and the family members were concerned about potential legal implications from the IT department.
In such cases, it is essential to understand the legal implications of disregarding the instructions in the will. A will is a legal declaration of the deceased's wishes and should be carried out by the legal heirs. However, if all the beneficiaries, who are family members, agree to distribute the assets other than as prescribed in the will, it is advisable to enter into a family settlement agreement to avoid any future hassle.
Family Settlement Agreement: A Legal Solution
A family settlement agreement is executed to resolve a present or anticipated dispute amongst family members. In the context of the query, it is recommended that the family members enter into a family settlement agreement to divide the assets among themselves without any legal implications from the IT department. The assets transferred under a family settlement agreement are not treated as a transfer for income tax or stamp duty purposes.
However, it is crucial to draft the family settlement agreement properly to avoid action by the Income Tax Department. Hiring a good advocate to draft the agreement is essential to ensure that it is executed correctly and meets all the necessary legal requirements.
| Will Enforcement | Family Settlement Agreement |
|---|---|
| Assets transferred as per will | Assets transferred as per family agreement |
| Income tax implications | No income tax implications |
| Stamp duty implications | No stamp duty implications |
| Legal requirements | Drafted and executed under the guidance of a lawyer |
Read also: Missing a Single EMI Payment Can Adversely Impact Credit Profile
By understanding the legal implications of disregarding the instructions in the will and entering into a family settlement agreement, family members can divide their assets among themselves without any potential legal complications.
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