It is not enough to hold the assets in joint names or designate a nominee. Such persons do not automatically get title to your assets. The will supersedes everything else. If one dies intestate (Without a will), any distant relation can stake a claim to your assets and matter may lead to litigation.

‘Will’ means the legal declaration of the intention of testator with respect to his property, which he desires to be carried into effect after his death. Even an oral declaration made in the presence of at least two persons having a good social standing constitutes a Will. To be on the safe side it is better to write down on a piece of paper.

Following points to take care while preparing the will:

1. It is always better to write a will on paper and get your signature attested by two respectable persons.

2. Registration of Will is not mandatory, sometime registration also increases litigation and it takes ages for the courts to make decision.

3. It is advisable to appoint more than one executor, and preferably an odd number. In case of any dispute majority prevails.

4. None of the executors & Beneficiary should attest the will as witness.

5. An Executor can also be beneficiary, but it is advisable to avoid this situation.

6. Sign every page in full to ensure that no one can fraudulently change or insert the pages.

7. Make more than one copy of original will (Photocopies will not do) and keep them safely at different places.

Question of the Day: Have you documented/listed out your properties/Assets and liabilities?

Important Definitions:

Testator: a person who has made a will or given a legacy.

Beneficiary: a person who derives advantage from something, especially a trust, will.

Executor: a person or institution appointed by a testator to carry out the terms of their will.

HUF means Hindu Undivided Family. You can save taxes by creating a family unit and pooling in assets to form a HUF. HUF is taxed separately from its members. A Hindu family can come together and form a HUF. Buddhists, Jains, and Sikhs can also form a HUF. HUF has its own PAN and Files tax returns independent of its members.

Income tax Benefits

· An HUF can run its own business to generate income. It can also invest in shares and Mutual Funds.

· HUF can take an insurance policy on the life of its members.

· HUF can pay a salary to its members if they contribute to its functioning of the HUF. This salary expense can be deducted from the income of HUF.

· A HUF is taxed at the same rates as an individual.

How to form an HUF?

While there are tax advantages of forming an HUF, you must also meet some conditions –

• One person cannot form HUF, it can only be formed by a family. A HUF is automatically created at the time of marriage.

• HUF consists of a common ancestor and all of his lineal descendants, including their wives and unmarried daughters.

• HUF usually has assets which come as a gift, a will, or ancestral property, or property acquired from the sale of joint family property or property contributed to the common pool by members of HUF.

• Once a HUF is formed it must be formally registered in its name. A HUF should have a legal deed. The deed shall contain details of HUF members and the business of the HUF. A PAN number and a bank account should be opened in the name of the HUF.

The Public Provident Fund or PPF is one of the most popular savings-cum-investment products in India. They are ideal for risk-averse investors who are also seeking long-term capital appreciation. In addition, PPF’s tax benefits on both, investment and returns make it a compelling choice.

Here are five PPF account benefits you need to know about:

Risk-free, guaranteed returns: The Public Provident Fund is backed by the Government of India. So, one of the most significant PPF account benefits is that it is entirely risk-free. The returns, too, are guaranteed by the government. What’s more is that the funds in your account cannot be attached by even a court order to pay off debtors.

Multiple PPF tax benefits: The great thing about a PPF is its exempt-exempt-exempt (EEE) tax status, one of the only investments in India to enjoy such an advantage. The amount you invest up to Rs. 1,50,000 is deductible from your taxable income, the interest you earn is non-taxable and the maturity amount you get after 15 years is also tax exempt. This makes it one of the most tax efficient investments.

Legal Protection from court Attachment: PPF balance is protected under Section 14A of the Government Savings Banks Act, 1873. It cannot be attached by any court in India.

Small savings, good returns: The PPF allows you a lot of flexibility in the investment amount. You can open an account with as little as Rs. 100. Every year, you can invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000. You can make these investments in a maximum of 12 instalments or as a lump sum.

Liquidity with partial withdrawal and loan facilities: Although the PPF has a 15-year lock-in period, you have many options to make use of the funds in your account. You can take a loan (up to 25% of the balance available at the end of two years preceding the year in which you apply for the loan) between the third year and the sixth year. You must repay the loan in 36 months, the rate of interest of which is 2% higher than the interest you earn.

From the seventh year, you can make partial withdrawals from your account. Besides, partial withdrawals, you can prematurely close your PPF account if you need the funds for severe medical treatment or for higher education.

In case your PPF account is closed or completed 15 years you can invest in the name of your minor child.