Real estate has been one of the most preferred investment options globally. No doubt these immovable assets are India’s favourite when it comes to investments, legacies and bequeathing. However, thorough estate planning is essential to minimise any issues that may crop up in the future with regard to both, immovable and movable property.
There are two ways of passing on your assets to your loved ones. Through a will or a gift deed. Let us understand the difference between both and how to go about planning your will and gift deeds in this blog.
What is a will?
A will is a ‘written expression of the intention of the Testator (maker of the Will) as to the mode and manner of division of his/her properties (movable and/or immovable) to such person(s) as he/she may deem fit.’ To put it simply, it is a legal document written while the testator is alive and takes effect after his or her death.
How to make a will?
Any individual who is competent and of sound mind can bequeath his/her assets by making a Will. It can be written either by the Testator, or his agent and must be attested by at least two people, who are third parties to the will. While there are no prescribed formats when it comes to writing your will, the following points need to be covered:
- The name/s of Testator’s legal heirs and/or family members, if any;
- The name of the person/s to be appointed as ‘Executor’ who will carry out the directions and requests of the Testator in the Will. They will be in charge of the management and disposition of the assets there in the will;
- Details of all the assets owned/acquired by the Testator till that point, and;
- The mode and manner of distribution of the Testator’s assets
It is not necessary to register a Will to render it enforceable. A will can also be revised a number of times till the Testator is alive. Experts however advise getting it registered to minimise potential disputes amongst the heirs in future
What is a gift deed?
A gift under Section 122 of the Transfer of Property Act is defined as the transfer of asset/property made without consideration by a donor (asset owner) of his own free will. A gift is transferred during the lifetime of the parties and takes effect, subject to acceptance and/or delivery, etc. immediately upon the registration of the gift deed or immediately upon delivery and acceptance thereof in the case of movable property.
In layman’s terms, a gift deed is an agreement made between a donor and a donee that outlines the simultaneous and reciprocal act of giving and receiving. For a gift to be valid, it must be given voluntarily rather than under duress and without the exchange of money.
How to make a gift deed?
There are two key points to be noted when it comes to gift deeds:
- Acceptance: It is a legal necessity that the gift is accepted by the recipient after it has been executed and during the donor’s lifetime. If the donee does not accept the gift, it becomes void.
- Acceptance: It is a legal necessity that the gift is accepted by the recipient after it has been executed and during the donor’s lifetime. If the donee does not accept the gift, it becomes void.
A gift cannot be revoked, unless both the parties, i.e, the donor and donee agree to the same. At the same time, if the gift is intended to be made in favour of a person who is not your relative, and the value of the property which is the subject matter of the gift exceeds INR 50,000, as of the date of the gift, the recipient of such property has to include the market value of the property in his total income in the year of the receipt and has to pay the appropriate tax on such gifts.
Wills and gift deeds both have their own share of pros and cons. One has to consider multiple points before deciding on a specific course of action. Having said that, both are a symbolic representation of your love towards your near ones. Making the right investment choices which are beneficial to you and your family even in the future is a must. With TMR Group, invest in plots of the future that bring assured profitable returns in the future. These plots in and around Hyderabad are located in the midst of development projects and offer massive development scope and ROIs. To know more about these future lands, visit https://tmrinfra.com/