Section I: Income Tax and Your Career

• Ques: Estate Planning And Inheritance
• Ans: Key points:
  • "Will" is the final document for legal beneficiaries. It means if some one died without drafting his/her Will, then his/her assets including insurance claims will be divided equally to all legal beneficiaries.
  • It is beneficial to transfer your property through Will and to create a trust through provisions of Will.
  • In such cases, the trust is treated as a separate entity for income tax (such as HUF) and all the benefits of basic exemption and deductions are allowed.
  • It is advisable to clearly indicate which property should be inherited by which heir so that there is no legal complication later on. Nomination facility in bank FDs etc. is merely for collection of proceeds and does not entitle the nominee to inherit the proceeds. Will is the legal document which decides the distribution of assets.
  • Trust being a separate entity, wealth tax exemption is also available.
  • Drafting of Will should be done with due diligence and taking care of the things like witness.
  • A Will can be changed any number of times during your lifetime.
  • There is no tax payable on assets inherited by the legal beneficiaries. But the income on those assets will be considered taxable.