Simple ways to transfer property to your loved ones 

Last Updated at: January 03, 2020
2690

Whether you have a large mansion, a small cottage in the middle of a forest or a busy city apartment, it is important to have a clear roadmap on the distribution of this property to avoid confusion, litigation, and disputes at a later stage. In a world of legal complexities, costs and taxation laws, do you ever wonder what are the possibilities open to you for transferring property to your intended loved one? In this article, we specifically focus on how you can transfer your immovable property to your loved ones and the dynamics associated with each method of transfer.

Transfer by way of Will:
The most common instrument relied on for ensuring that your personal property is distributed according to your wishes, a Will is a document made during the lifetime that spells out clearly the distribution plan intended for property transfer. You can also amend your will should you so desire, which automatically revokes the previous wills. A valid Will may be required to be probated by a Court, after which the Court would issue orders for distribution of property as may be mentioned in the Will.

Creating a Trust:

There are two types of trusts that can be made. One is a public trust, which can be made for religious or charitable purposes. However, by its very nature, it prohibits your natural heirs from claiming them. The other option is a private trust which can be used to transfer property to beneficiaries. In a trust, the property is transferred by you as the settler of trust to a designated person called trustee who holds it for the benefit of your children or any other beneficiaries. Trust has to be registered by an agreement, and may be revocable – property can be reverted to you or irrevocable, in which case the trustee becomes the owner of the property and you cannot claim it back.

Register Your Property

The best advantage of a trust is the protection it offers to your property and insulates it from family disputes. You can also put restrictions in the agreement, for example, specifying at what age the children would succeed to the property.

Did you know that the right to collect rent can also be transferred?
The Court has recognized right to collecting rent, the collection of dues on land, right to collect produce from a land as immovable property and hence, these may be freely transferable in case you have property ownership. You may choose for the property’s rents to vest in one person and the ownership and other rights of the property to devolve upon another person.

Giving a Gift:
Immovable property can also be transferred by way of gift, without a consideration. A gift is ideal when one member of the family wants to give up his or her share in favour of the others. In this case, the transfer has to be done by way of Gift Deed. Gifts of property may also be given on the occasions like marriage, and will not be taxable, however, capital gains arising from such property sale will be taxable.

It is important to know that gift deed once executed cannot be revoked. Hence, at a future date, you cannot ask for your property or compensation related to it.

Transfer by way of Sale:
A common option of transferring property is also a regular transfer by way of sale. A sale deed will have to be executed in favour of your relative. You may want to take tax considerations into account in this case, as any capital gains calculated as the excess of sale price over the value of a property, will be taxable in your hands.

Before taking a decision on the passing of property, it’s ideal to consult a wealth advisor to ensure that the decisions you finally take are in the most efficient way of transfer for you and your heirs.

Simple ways to transfer property to your loved ones 

2690

Whether you have a large mansion, a small cottage in the middle of a forest or a busy city apartment, it is important to have a clear roadmap on the distribution of this property to avoid confusion, litigation, and disputes at a later stage. In a world of legal complexities, costs and taxation laws, do you ever wonder what are the possibilities open to you for transferring property to your intended loved one? In this article, we specifically focus on how you can transfer your immovable property to your loved ones and the dynamics associated with each method of transfer.

Transfer by way of Will:
The most common instrument relied on for ensuring that your personal property is distributed according to your wishes, a Will is a document made during the lifetime that spells out clearly the distribution plan intended for property transfer. You can also amend your will should you so desire, which automatically revokes the previous wills. A valid Will may be required to be probated by a Court, after which the Court would issue orders for distribution of property as may be mentioned in the Will.

Creating a Trust:

There are two types of trusts that can be made. One is a public trust, which can be made for religious or charitable purposes. However, by its very nature, it prohibits your natural heirs from claiming them. The other option is a private trust which can be used to transfer property to beneficiaries. In a trust, the property is transferred by you as the settler of trust to a designated person called trustee who holds it for the benefit of your children or any other beneficiaries. Trust has to be registered by an agreement, and may be revocable – property can be reverted to you or irrevocable, in which case the trustee becomes the owner of the property and you cannot claim it back.

Register Your Property

The best advantage of a trust is the protection it offers to your property and insulates it from family disputes. You can also put restrictions in the agreement, for example, specifying at what age the children would succeed to the property.

Did you know that the right to collect rent can also be transferred?
The Court has recognized right to collecting rent, the collection of dues on land, right to collect produce from a land as immovable property and hence, these may be freely transferable in case you have property ownership. You may choose for the property’s rents to vest in one person and the ownership and other rights of the property to devolve upon another person.

Giving a Gift:
Immovable property can also be transferred by way of gift, without a consideration. A gift is ideal when one member of the family wants to give up his or her share in favour of the others. In this case, the transfer has to be done by way of Gift Deed. Gifts of property may also be given on the occasions like marriage, and will not be taxable, however, capital gains arising from such property sale will be taxable.

It is important to know that gift deed once executed cannot be revoked. Hence, at a future date, you cannot ask for your property or compensation related to it.

Transfer by way of Sale:
A common option of transferring property is also a regular transfer by way of sale. A sale deed will have to be executed in favour of your relative. You may want to take tax considerations into account in this case, as any capital gains calculated as the excess of sale price over the value of a property, will be taxable in your hands.

Before taking a decision on the passing of property, it’s ideal to consult a wealth advisor to ensure that the decisions you finally take are in the most efficient way of transfer for you and your heirs.

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Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.