Can An Unmarried Woman Pass On Her Wealth To A Charitable Trust? What We Know

A woman hoping to set up a Will or trust that helps direct her part of an estate’s value, while preventing legal challenges from other heirs of the property, makes for an interesting case study. In a query

raised at the conditions of anonymity on Mint, a 55-year-old woman based in Pune asked a business expert how she can execute her plans if she owns a part of an estate, including a bungalow worth Rs 8 crore and financial investments of Rs 7 crore.

According to the query, the woman intended to direct her part of the wealth to her nephews and a charity foundation supporting education for underprivileged girls without encountering legal obstacles from her younger brother residing in the USA.

An Estate Plan

In response, Neha Pathak, executive group vice president, head of trust and estate planning, Motilal Oswal Private Wealth, explained how the woman can proceed with her wish. On assuming that the woman is a Hindu and the properties concerned are completely self-acquired, with no rights or interests held by other individuals, the woman needed to create a legally sound estate plan as per the Hindu Succession Act.

“Since you are unmarried and have no direct legal heirs, such as children or parents, your brother would be your closest Class II legal heir. In the absence of a Will or trust, he would inherit your entire estate by default,” Pathak explained. But a clear and well-executed estate plan would help the woman direct the wealth to her nephews and the charity foundation.

The woman must first prepare a clearly worded Will, where the exact allocation of her assets in the bungalow and financial investments towards the nephews and the charitable cause are drafted professionally in an undisputable manner. The woman is also advised to authorise the Will executor to liquidate assets and distribute the proceeds.

More On The Execution Of Will

The Will must feature details of the beneficiaries, the property information, bank information and a brief explanation about the woman’s decision that sums up her intentions. Pathak suggested registering the Will with the sub-registrar in Pune. While not mandatory, registering the Will bolsters its authenticity and credibility. The Will must be executed in the presence of two reliable witnesses.

The executor must also be defined in the Will to ensure it is executed swiftly, even in the unfortunate event of your passing. Such an executor should preferably be younger than the woman and well-informed about their role. The document can be further protected by storing it with a trusted person or authority.

For the charitable component of the assets, the woman is advised to form a private trust during her lifetime. The investments and the bungalow can be transferred to the trust, while still keeping control over them as the initial trustee. There won’t be any tax implications of this transfer, but stamp duty will be involved for transferring the bungalow to the trust’s name.