What happens to your money if you die without a will

Most Indians don't make a will. Many think it's only for the wealthy, or that nominations take care of everything. But when someone dies without a will, the law decides who inherits, and the result can surprise a family, divide property in ways no one intended, and lead to years of paperwork.

Who inherits when there is no will

For Hindus, Sikhs, Jains and Buddhists, the Hindu Succession Act sets the order. Muslims, Christians and Parsis follow different rules.

When a man dies without a will, his property goes first, in equal shares, to his widow, his children and his mother. Only if none of them are alive does it pass to others, such as his father and siblings.

When a woman dies without a will, her own property (what she earned or bought) goes first to her husband and children. If there are none, it goes to her husband's heirs, and only after them to her own parents. So a married woman's in-laws can inherit before her parents. Property she inherited from her own parents goes back to her father's family if she has no children.

These rules on a woman's property are being challenged in the Supreme Court and may change. Until then, a will is the only way to decide for yourself.

A nominee is not the owner

This is the most common mistake. A nominee on your bank account, mutual fund, demat account or insurance policy is the person who receives the money when you die. But for most of these, the nominee holds it for your legal heirs. If the nominee is not your heir, or not your only heir, the other heirs can claim their share, and courts have upheld such claims.

So keep your nominations up to date, because they make the money easy to release. But it is your will, or the law if there is no will, that decides who finally owns it.

What a will changes

• You decide who gets what: a house to one child, investments to another, something for a parent or a cause.
• You protect people the law might leave out, such as your own parents ahead of your in-laws, a partner, or a sibling who depends on you.
• You can name a guardian for young children, and an executor to carry out your wishes.
• Your family saves time and money. Without a will, heirs often need a succession certificate or other court papers before banks and fund houses will release the money, which can take months.

How to make a simple will

1. 1.List what you own: bank accounts, FDs, mutual funds, shares, EPF and PPF, insurance, property and valuables.
2. 2.Decide who gets each one, and who gets anything you forget to list.
3. 3.Write it down clearly, with your name, date and signature, and sign it in front of two witnesses who also sign. The witnesses should not be people who inherit under the will.
4. 4.Name an executor you trust to carry it out.
5. 5.Registration is optional. A will is valid without it, but registering it at the sub-registrar's office makes it harder to dispute.
6. 6.Tell someone where it is, and update it after a marriage, a birth, a death in the family, or a big purchase.

For a large or complicated estate, a family business, property in several places or a family where disputes are likely, have a lawyer draft it.

Keep your nominations up to date too

A will and nominations work together. Check every account and policy has a nominee, especially your mutual funds and demat account, where you can add more than one and set their shares. We help our clients review nominations across their investments as part of succession planning.