Why every family needs a will, not just nominees

The gap nomination leaves

Most people who have filled in a nominee on every bank account and mutual fund folio believe their family is covered. It is half-covered.

A nominee is the person the bank or fund house can safely pay. In general, the nominee holds that money as a trustee for the legal heirs, and does not own it outright. Who the legal heirs are is decided by one of two things: your will, or, if you haven't made one, the succession law that applies to your community. Our guide on nomination in mutual funds covers the mechanics; this post is about the second half.

What happens without a will

Without a will, your assets are divided under the law of intestate succession that applies to you, and that division is often not what people expect.

• The spouse usually does not get everything. For a Hindu man dying without a will, for example, the Hindu Succession Act divides his property equally among Class I heirs, which include his widow, his children and his mother. A widow may receive a fraction of what the couple saved together.
• Rules differ by community. Hindus, Buddhists, Jains and Sikhs follow one law; Christians and Parsis another; Muslims follow personal law, under which a will can generally pass only up to one-third of the estate to someone other than an heir unless the heirs consent.
• The paperwork gets heavier. Without a will, heirs typically need a legal heir certificate or a succession certificate, and every heir may have to sign or give a no-objection for each asset. If one heir lives abroad, is a minor or disagrees, the whole estate waits.

None of this is a problem if the default division happens to match your wishes and your family agrees on everything. A will is how you stop relying on both.

What a will does that nothing else can

1. Decides ownership of every asset: funds, deposits, property, jewellery, a share in a family business.
2. Aligns with nominations, so the person who receives each asset is the person meant to keep it.
3. Names an executor, someone you trust to collect the assets and carry out your instructions.
4. Names a guardian for minor children, which matters most if both parents die together.
5. Handles the unequal cases: a child who needs lifelong care, a sibling who is owed money, a parent who depends on you, a charity.

How to make a valid will in India

The formal requirements are short:

• In writing, in any language, typed or handwritten. A plain sheet of paper is enough; stamp paper is not required.
• Signed by you at the end of the document.
• Attested by two witnesses who watched you sign and sign in your presence. Do not use a beneficiary or a beneficiary's spouse as a witness: under the Indian Succession Act, a gift to an attesting witness is void, though the will itself stands.
• Dated, with a statement revoking earlier wills.
• Registration is optional. Registering with the sub-registrar adds evidentiary weight and is worth doing where a challenge is likely.

Two extra steps help, especially for an older person: a doctor's note on the same day confirming you are of sound mind, and a short video of the signing. These are not legal requirements; they make a later challenge harder.

You can change a will any time. The latest valid will replaces earlier ones; a small change can be made with a codicil, signed and witnessed the same way.

What to put in it

A useful will is specific without listing every rupee. A practical structure:

Describe assets by type and institution rather than balance: "all mutual fund units held in my name across all folios" will still be accurate in ten years, while a figure will not. Keep a separate, updatable list of accounts, folios, policies and property papers, with a consolidated account statement for your funds, and tell the executor where it is.

Mistakes that undo a will

• Nominees that contradict the will. If the will leaves a fund to your daughter but the folio names your brother as nominee, he receives the units and your daughter has to claim them from him. Update nominations to match the will.
• Joint holdings forgotten. A joint bank account or folio passes first to the surviving joint holder, whatever the will says about it. Our nominee vs joint holder guide explains the order.
• Witnesses who benefit, which voids their gift.
• Hiding the will. A will no one can find is the same as no will. Tell the executor where the original is.
• Never updating it. Revisit it after a marriage, a birth, a death in the family, a property sale or a move abroad.
• Treating it as a retirement-age task. Accidents don't follow a timetable. Anyone with dependants or meaningful assets needs one, at 30 as much as at 70.

Tax: less of a worry than people think

India has no inheritance or estate tax. Heirs pay nothing when units or property pass to them. When they later sell, capital gains are calculated using the original owner's purchase cost and holding period, so long-held equity fund units usually qualify for long-term treatment at once. Our estate planning guide covers the tax details and the transmission process.

The afternoon that saves a family months

A will takes an afternoon to write and costs little. Without one, a family may face months of certificates, signatures and, in the worst case, court, at the time they are least able to cope. Write the will, make the nominations match it, keep a list of what exists, and tell someone where all three are. For couples, our post on retirement planning for couples covers how this fits with survivor planning.

This post is educational and not legal or investment advice. Succession rules depend on your religion, residence and assets; for complex estates, consult a lawyer.