SHOULD NRIs CREATE A SEPARATE WILL FOR INDIAN ASSETS?

Non Resident Indians or foreign nationals of Indian Origin are in a constant dilemma with respect to their assets held in India, due to various reasons. With the evolving nature of property and taxation laws in India, the question holds considerable importance because a Will is one of the most important legal documents in estate planning thereby determining the devolution of the assets of the testator (person who makes & is executing the Will) after their lifetime.  If incorrectly drafted or structured, it may lead to future disputes, inconsistencies or complications in the probate process. For NRIs and foreign nationals, it is of utmost importance that the Will is aligned with the applicable legal systems of the specific jurisdiction. Therefore, deciding whether to have one Will globally or separate Will for separate jurisdiction is impertinent as it directly impacts the smooth transmission of assets.

The answer to the question largely lies in the affirmative, however, there is no mandate with respect to the same. The decision is crucial and may be dependent on the nature of the assets held by the testator globally, the jurisdiction and nature of assets held in India, the current place of residence and the vision that the testator has towards planning his estate. 

A Will is a legal document that expresses the wishes and desires with respect to the distribution of the assets of the testator after his death. A Will holds considerable importance for NRIs, due to the complexities involved  among different jurisdictions where the assets are held. 

An NRI Will for Indian assets is one which is particularly drafted as per Indian laws and local requirements covering the assets of the testator including immovable property (land, house, flat, shop), movable property (bank accounts, mutual funds, shares, gold, car), and other assets situated in India. It is drafted and executed in compliance with the Indian Succession Act, 1925 and legal requirements of the Indian courts.

1. Indian Succession Act, 1925

The primary legislation governing Wills in India is the Indian Succession Act 1925 which details the process of valid execution of Will, requirement of signature and attestation, etc. It also governs laws of succession specifically for Christians and Parsis.

2. Code of Civil Procedure, 1908

For any dispute with respect to cross-border estates, CPC comes into play  as it defines the procedure as to how courts handle disputes such as challenging a will on fraud, coercion etc., probate proceedings, execution proceedings, appeals, etc. 

CPC also governs the process of Ancillary Probate of Will which is a process of authenticating/confirming a will executed in a foreign jurisdiction with respect to assets in the Indian jurisdiction. 

3. Personal Laws (Religion-Based Applicability)

India being culturally diverse, follows religion-based succession laws, which may have a bearing on NRIs following different religions. The Hindu Succession Act, 1956 is applicable to Hindus, Sikhs, Jains, and Buddhists, Muslim Personal Law (Shariat) Application Act, 1937, applicable to Muslims which allows 1/3rd of the asset to be . NRIs must ensure their Will aligns with their applicable personal law, especially in cases like Muslim succession where limitations exist.

Benefits Of Creating Separate Will for NRIs for Indian Assets

1. Avoids Jurisdictional Conflict-

A foreign Will executed in another country is generally not directly executable in Indian jurisdiction, even if it is probated in the foreign country For its enforcement in India, it is generally required to obtain an ancillary probate of Will, which adds to time, litigation expenses and hassle for the executors. If however, there is already an Indian Will with respect to the Indian assets, probate is mandatory only in certain jurisdictions like Mumbai, Kolkata, Chennai. In rest of the cities, a simple LOA may do the job.

2. Easier Probate process-

Probate is the process wherein the genuineness or veracity of the Will is legally confirmed by the judicial authorities. Probate of will is the legal process through which a competent court certifies that a Will is genuine and valid, thereby authorizing the executor to administer the estate of the deceased in accordance with the wishes expressed in the Will by the deceased testator. The process is easier if the Will is specific to Indian assets and prevents complicating the litigation.

3. Smooth transfer of Assets-

An Indian Will is easier to execute and is more easily accepted across Indian jurisdiction. The financial institutions, corporates, and government authorities, tend to presume its genuineness if the Will is executed in India and registered before the concerned authorities. This speeds up the entire inheritance and transmission of assets. 

An NRI can execute a Will in India by following the below-mentioned process and steps-

• The testator must be above 18 years of age. 

• The will must be made voluntarily and without coercion from any quarter.

• The Will should state the beneficiaries and assign an executor in the Will.

• The will must be signed by the testator in the presence of at least two witnesses.

• The two witnesses must also sign the Will in the presence of the testator confirming that they have seen the testator signing the Will voluntarily and that the testator is in sound mind while signing the Will.

Yes. An NRI can execute an Indian Will while residing abroad, by following the steps stated above, however, for its registration (which is not mandatory) physical presence of the testator is necessarily required before the registration authorities in India.

Although an unregistered Will is also valid legally, however, if a Will is registered, it increases its authenticity and genuineness and avoids and future disputes.

In India, registration of a Will is not mandatory. However, registration increases the authenticity, genuineness and validity of a Will. Will registration offers the following advantages-

1. Registration of a Will involves physical presence before the office of the Sub-Registrar along with 2 witness. Registration creates a presumption as to its genuineness.

2. Minimises risk of forgery or tampering.

3. If the Will is lost or damaged, a certified copy of the registered Will can be procured from the office of the Sub- registrar.

1. Identify the assets

The testator should identify and list all Indian assets held by him including movable and immovable assets. This should include commercial and residential properties, mutual funds, LIC Policies, SIPs, stocks, bank accounts, bank locker, valuables etc. 

2. Finalise the beneficiaries 

The testator should identify and finalise the beneficiaries to whom the assets must devolve upon, after the death. 

3. Finalise the executor/s under the Will

An executor is the person who takes care of the execution process after the death of the testator on his behalf. Generally, it is the executor who files for Probate of Will. 

4. Draft the Will

Once the above decisions are made, a Will should be meticulously drafted by an expert. It is generally suggested to take advise and assistance of a lawyer who takes care of all the legal complexities and drafts a Will as per the wishes of the testator. In law particularly, framing of words and sentences is of utmost importance. A phrase may have a different meaning in general and different meaning in law. Hence, taking assistance of a legal expert is pertinent.

5. Arrange for 2 witnesses 

A will is to be witnessed by at-least 2 witnesses and the witnesses must confirm that they saw the testator signing the Will, without force, coercion and voluntarily. 

6. Register the Will

It is well known that registration of a Will is not mandatory in India. However, it is always advisable to register the Will before the office of the Sub-Registrar, which decreases the chances of any future disputes on its authenticity.

It is commonly believed by many NRIs that nominating a family member in their bank accounts or mutual fund is sufficient. This is a common and potentially costly misconception.

Under the applicable provisions of law, including Section 72 of the Companies Act, 2013 and established judicial precedents, a nominee does not become the absolute owner of the securities upon the death of the shareholder. The nominee merely acts as a custodian or trustee of the shares for the benefit of the legal heirs of the deceased.

The rights of succession to the estate of the Deceased are governed by the applicable personal succession laws, and not overridden by nomination. The nominee holds the securities in trust and is obligated to transfer them to the rightful legal heirs. Therefore, any action by any company in transferring ownership of shares or releasing proceeds exclusively to the nominee, without due consideration of the claims of legal heirs, is contrary to law and infringes upon the legitimate rights of the successor.