In this article, you will learn what will be better between a will and a deed of gift and what to choose. .
You can move your assets to anyone, including your children, in two ways: by gifting during your entire lifespan or by giving through a Will. Both modes have advantages and disadvantages. In this article, you will learn which options should you choose and what is better amongst them.
Anyone with the legal capacity to contract can transfer his assets to anyone. A minor, a person of unsound mind, or an involuntary bankruptcy insolvent are all ineligible to enter into a contract. You can make a gift in the name of a living person who must acknowledge the gift during the course of the person giving the gift.
Transferring Property by Gift Deed
If you want the receiver to start reaping the benefits of the asset right away, you must transfer ownership of the asset as a gift. You may gift any self-owned property to anyone you wish, provided the property is not disputed, and you are qualified to enter into a contract under the Indian Contract Act. Anyone over the age of 18 who is of sound mind can be a real estate receiver. A gift deed can be used to give away property.
Important Points to Keep in Mind
Before making a gift deed, here are the following points to keep in mind
- During your lifetime, you can give a property gift
- Once the gift is accepted, the receiver will become the property’s owner.
- The registration of a gift deed is required.
- There are no taxes on gifts made to close relatives.
- The recipient must pay taxes on gifts of real estate valued at more than INR 50,000 given to people who are not immediate family members or non-relatives.
- Property transfers are final and can’t be revoked.
Transfer of Property by Will
In contrast to a gift deed, which allows a receiver to become the owner of a property during the transferor’s lifetime, a Will allows possession to be of the receiver only after the demise of the person implementing the Will to transfer a property. According to the current laws, you are not supposed to enter a Will or attempt any stamp duty on it.
People can inherit assets in two ways after someone dies. Without a will, the deceased’s assets will be distributed to his relatives following the terms of successors applicable to the deceased. If the deceased leaves a will, the assets will be acquired by the persons named in the will. If all of the assets are not covered by the will, the assets that are not protected will be inherited by the deceased’s legal heirs according to succession law.
Not many are aware of this but there are no restrictions on a person choosing to give his assets to anyone to the exclusion of his beneficiaries under Hindu succession law. Whereas when it comes to Muslims, one cannot bestow more than one-third of his assets in a will under Muslim law.
Important Points to Keep in Mind
Before making a Will, here are the following points to keep in mind
- Although registration is not required, it can enhance transparency and assist in avoiding future litigation.
- A person who receives property through a Will is not required to pay taxes.
- Following the recipient’s death, possession of the real estate passes to the successor/s following the laws of the land.
- Anyone implementing a Will has the right to change or revoke it at any time during their lifetime.
Which Is Better: A Gift Deed or a Will?
Now that you understand the fundamental differences between a gift deed and a Will, let’s examine both options and determine which one is best for you when transferring property.
A gift deed is an excellent choice if you want the receiver to benefit instantly from the property transfer. However, transferring the property by Will is a good option for those who want to transmit their property to the receiver after the demise.
However, if you really need to assist someone who needs help immediately, you can only do so through a gift. This mode of asset transfer should be used only when there is an immediate necessity to transfer the asset. If you leave all or a substantial portion of your assets to your beneficiaries during your lifetime, you may find yourself in a difficult situation in your old age. Such incidents must have occurred frequently around us. For Instance, the popular case of a well-known industrialist being forced to live in a rented house is still fresh in our minds.
Furthermore, transferring your assets solely for tax purposes is a bad idea. It is illogical to give up control of your assets in order to save a few amounts in taxes. Gifting as a mode of asset transfer is recommended when you want to ensure and witness the transfer of all or portion of your property during your entire lifespan to avoid future litigation. Remember, never give away a significant portion of your wealth while you are still alive. You can give away a portion of your assets while leaving the remainder to your heirs through a Will.
If you only want to ensure that your assets pass on to people of your choice after death and you want to experience and control those assets during your lifetime, then making a will is a good idea. A will is also recommended if you want to maintain the smooth inheritance of your assets after your death and want your legal beneficiaries to inherit your properties. However, if you want to assist someone who needs urgent help, you can only do so by making a gift. It is advised to know all the aspects before choosing between a will and a gift deed. Vakilsearch gives you all the detailed information about both the options to make a smooth decision keeping in mind the future.