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Home > Business > Special



Make a smart will. Avoid family woes

P V Subramanyam, Moneycontrol.com | November 29, 2006

If you're all set to make a will and think that all you need to do is merely download the form, fill in the details and lo! it's ready, you could be mistaken.

While making a will is not a Herculean task in itself, there are quite a few things you could have missed out on inadvertently that could lead to major hassles later.

I've heard of horror stories associated with wills and inheritances. Here's taking a look at some of the potential problems that could crop up in the will that you create. Beware!

Drama 1: A common one -- one child depriving other children of their rightful share. I have seen this happen, especially when the other children did not know about the existence of the asset. Also there have been cases where the 'other children' are magnanimous to let it happen.

Either they are too old and weak to fight, or they are worried about the fact affecting their relationship. In case you wish to ensure that your kids do not deprive their siblings of the money, make sure you say it in your will, loudly!

Drama 2: "My brother is not even bothered about my father, I have to look after him, and so his house in Santacruz should belong to me." Excellent thought. But sister, did you know that as soon as the sun rises after your father's funeral your brother can go to court and claim 'undue influence'? Especially now that the flat is worth Rs. 1.7 crore (Rs 17 million)! Though it sounds 'justified', giving all your assets to one child who took care of you may not be a great idea.

Pay the 'caretaking' child a nice salary - after all you would have paid similarly to a full time nurse. Wouldn't you? Lets say you think your 'sacrificing daughter' deserves a salary of Rs 30,000 a month - that will amount to Rs 360,000 a year, and for five years that will amount to only Rs 18 lakh (Rs 1.8 million), not Rs. 1.7 crore as she claims!

Drama 3: Will my second wife leave all the assets to the children of my first wife? If you are into 'TV serial kind of relationships' or a simple second marriage, ensure that the children of the first wife, the first wife, the second wife, and the children of the second wife are not in any kind of a financial 'joint relationship'. It does not work. Simple, but true. You need to separate them -- and your will has to be well drafted.

Drama 4: Your daughter wants to move in with you to look after you. How noble! But after three months she asks you to make her a joint owner in your property. You do not like it, but grudgingly you oblige. Your daughter is of course a sweet heart.

And she cannot say no. In fact she had 'forgotten' to tell you that she is a guarantor to her 'artist' son's TV serial venture which ran aground two years back. Wondering if the bank would start chasing you? You bet!

Drama 5: You spent Rs 5 lakh (Rs 500,000) on your son's education and Rs 12 lakh (Rs 1.2 million) on your daughter's wedding. Your son wants to know how are you planning to leave the house to them 'equally. After all there was no equality while spending! So he wants a bigger share in the inheritance. Don't fret and fume, just communicate.

Drama 6: You think your 'qualified' son can do with a smaller inheritance than your daughter who married the high school sweet heart. Your son is doing very well for himself, likes his sister, but knows that brother-in-law is a bum.

Well ask your son, he might think differently! He might legitimately say, "Look, give me more, I will be there for her when she needs me" or say "Are you punishing me for doing well in life and leaving your money to that bum?". Communicate with your children, do not assume.

Drama 7: You loaned Rs. 10 lakh to your son when he bought that penthouse. He knew you had the money and you gave. Now your son of course did repay promptly in the first year. In the second year he was a little less prompt and in the third year only eight cheques came in.

Now he's avoiding your calls! What do you do? If your relationship is important, bite the bullet. Most importantly let the other children know it, and ensure that this is mentioned in the will. Now, dividing the rest of the assets equally is unfair.

There are of course many circumstances in life which have not been enumerated here and could be unique to your case. It is necessary that you consider a financial planner for deciding how your will should be made and then a lawyer to actually draft the same for you especially it there are non-family beneficiaries.

Some simple solutions that I have seen include buying a life insurance policy early on in life and making the appropriate person the beneficiary.

For example, a client has taken an endowment policy and made his driver a beneficiary. In fact he has assigned the policy to his driver. What is the logic? Well the client is an entrepreneur with a net worth of Rs 60 crore (Rs 600 milion), but he is not sure that his wife and daughter will have the magnanimity to give Rs 10 lakh (Rs 1 million) to his driver, hence this solution!

The author, P V Subramanyam, is a financial domain trainer. He can be reached at pv.subramanyam@moneycontrol.com.

For more on financial planning, log on to www.moneycontrol.com.


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