Wife gets 50% share in husband’s property after divorce – India Law

Do you love your wife? You better do !

There were few changes made few weeks back in the marriage laws in India, which everybody should be aware about. A bill called “Marriage Law’s (Amendment) Bill 2010″ was passed in Rajya Sabha which has made some major changes in the women rights on how the properties would be divided after divorce.

The biggest change says – “As per new Divorce law, Wife share in property would be 50% in all her husband’s residential properties, no matter what and in other properties, her share will be decided as per the court decision.”

Wife share in property owned by husband would be 50%

Earlier, before this change – a women was entitled for a share in husband’s properties, but there was no quantum defined as per law, it would be any percentage depending on the case, but now with this amendment done, a women will enjoy equal sharing without any condition in all the residential properties owned by husband. But in this case, women will have to specifically apply for her share, she should be aware about this law about “50% share” .

A major change in this amendment is that this rule is applicable to all the properties of the husband acquired before and after the marriage, whereas as the earlier law made sure that the wife gets share only in those properties which are acquired by husband only after marriage. Now men stand to loose on this front, in-case things so sour with wife.

Husband & Wife joint holder’s in a residential property

You should be clear by now, what will happen in the case where a property is registered in the joint names of husband and wife. A lot of couple register a house in joint names, a lot of times both pay’s from their respective salaries, and in some cases only one party pays (generally husband). Imagine divorce happens – Who will get how much ? Women will keep her 50% part and she will also get half of her husband share in the house, so 75% wife and 25% husband.

Rights of women after divorce on other properties in India?

Apart from the mandatory 50% share in husband’s residential properties, the wife will also be entitled to get a share in other kind of properties, but the quantum is not set, as per the Bill, it will depend on “living standard of the wife”

Waiver of six months cooling period possible

As per the old Indian law which governed the division of assets for women after divorce, it was mandatory for husband and wife to spend at-least 6 months together before applying for divorce, but with this new amendment bill, there are provisions of waiving off the 6 months cool off period or lessen it, but only if both husband and wife wants it. Which means if one of the spouse wants to get divorce on an “urgent basis” , but other does not, it will not be possible. This is one of the major change in the bill and will help those couples who do not want to serve that “6 months” cool off period of living together.

Is this a anti-male law ?

A lot of groups have termed this change as anti-marriage and ant-male law and critically oppose it, they have termed it as a bill totally against males and illogical. The major issues with the amendment are as follows

·         The bill talks about only the division of Husband Properties, but not wife’s properties. So in-case women is at fault, still she will get 50% share in husband property, but her share of property will not be divided.

·         A major disappointment for men in this bill is that, even the “person at fault” can apply for getting the share of property, and the other party will have to respond to it. Generally as per old law’s when mutual consent was not there, the victim applies for the property share and the person who is the “bad person” has to respond to it. Now with his law change, wife can seek a divorce and ask for share in property.

·         If wife and husband are living apart from many years, a wife can oppose the divorce on the grounds of financial hardship, but men cannot! . This is called Irretrievable breakdown of marriage

·         There are concern’s raised like this law will encourage more divorce’s are women can get hold of property easily for sure.

Now there are some serious concerns due to these changes. If a husband has one residential properties, old parents who are financial dependent on him and there is divorce between husband and wife, the wife could take 50% share, in which case the men will be left with 50% property, this seems very unjustified. What is the women already owned 2 more properties on her name? She has nothing to worry! .

One serious drawback of this law is that some men, who are undergoing a bad phase of marriage, may convert their residential properties into immovable assets, or just transfer it on other names to save themselves from parting away with 50% share in worst case.

Conclusion

While there are cases where women are deprived of their share in wealth at the time of divorce in India and there was requirement of strong laws which focuses on rights of women in case of divorce in India, this amendment seems to have gone beyond what it wanted and has loopholes which can be exploited by women. With due respect to each gender, it would be great if there would have been some balanced law, and some thought should have gone for worst cases.

To summarize things, here are the take away’s from the changes made in marriage law’s.

·         In case of divorce, Woman will have 50% share in the residential property of a man

·          The wife will have to take the initiative of seeking her share in such cases.

·          Women and children will also have rights in the other assets of man, which will be decided by court

·          It does not matter if the property was acquired by before or after the marriage

What do you think about this amendment ? Do you also feel its too anti-male but only designed keeping women in mind ? Do you feel its correct to keep 50% share for wife in husband’s property in case of divorce as per law in India ? Note that the bill still needs to be passed in Lok Sabha

Source : Manish Chauhan - Jagoinvestor

UNDERSTANDING HOUSE RENT ALLOWANCE (HRA)

UNDERSTANDING HOW HRA WORKS !!!

There are many tax components you need to be clear about and also figure out how to plan your investments to gain maximum returns as well as maximum tax benefits. One such tax component is the tax benefit you can claim from your house rent allowance. This article helps you understand how this works!

HRA (house rent allowance) is provided to salaried people under Section 10 (13A) of Income Tax Act, 1961, in accordance with rule 2A of Income Tax Rules. Self employed professionals are eligible for tax deductions under section 80GG of Income Tax Act, 1961.

Dependent factors

When you are calculating HRA for tax exemption you take into consideration four aspects which includes salary, HRA received, the actual rent paid and where you reside, i.e. if it is a metro or non-metro. If these aspects remain constant through the year, then tax exemption is calculated as a whole annually, if this is subject to change, as in a rent hike or shift in residence etc. then it is calculated on a monthly basis.

The place of residence is significant in HRA calculation as for a metro the tax exemption for HRA is 50% of the basic salary while for non-metros it is 40% of the basic salary.

On paying rent

It is not essential that you should pay rent only to a landlord to avail your HRA benefits. You can pay rent to your parents to claim tax benefits. However, they need to account for the same under `Income from house/property' and will be entitled to pay tax for the same.

Remember you cannot try the same with your spouse, as it is not permissible under income tax law, as you are expected to reside together for all practical purposes.

You need to submit proof of rent paid through rent receipts, for which only two need to be submitted, one for the beginning of the year and one towards the end of the financial year. It should have a one rupee revenue stamp affixed with the signature of the person who has received the rent,  along with other details such as the rented residence address, rent paid, name of the person who rents it etc.

How is HRA calculated

To figure out how much HRA exemption you are eligible for, consider these three values which includes a. The actual rent allowance the employer provides you as part of your salary, b. the actual rent you pay for your house from which 10% of your basic pay is deducted, c. 50% of your basic salary when you reside in a metro or 40% if you reside in a non-metro.

The least value of these three values is allowed as tax exemption on your HRA. You can discuss restructuring your pay structure with your employer in order to avail the most of your HRA tax benefit.

Here is a sample illustration for your understanding:

Sheetal earns a basic salary of Rs. 40,000 per month and rents an apartment in Delhi for Rs. 20,000 per month (hence eligible for a 50% of the basic pay for HRA exemption). The actual HRA she receives is Rs. 25,000.

These values are considered to find out her HRA tax exemption:

a. Actual HRA received, i.e. Rs. 25,000,

b. 50% of the basic salary, i.e. Rs. 20,000, and

c. Excess of rent paid over 10% of salary, i.e. Rs. 20,000 — Ra 4,000 = Rs. 16,000

The value considered for her actual HRA exemption will be the least value of the above figures. Hence, the net taxable HRA for Sheetal will be Rs. 25,000 — 16,000 (available HRA deduction) = Rs. 9,000.

Availing tax benefits on your home loan and HRA

As long as you are paying rent for an accommodation, you can claim tax benefits on the HRA component of your salary, while also availing tax benefits on your home loan. This could be the case if your own home is rented out or you work from another city etc. However, you need to account for any rental income you receive from the property you own.

source : http://in.finance.yahoo.com/blogs/strategic-moves/understanding-hra-works-065653407.html

NEW PENSION SCHEME

WHAT IS NEW PENSION SCHEME (N.P.S)

New Pension Scheme (NPS) is a defined contribution scheme, its pay out depends upon the amount of contribution and the growth on the investment over a period of time for an individual while defined benefit schemes pay out is defined and is based on salary and number of years in service etc. at the time of retirement of an individual.

At the time of normal retirement after attaining 60 years, the subscriber can withdraw 60% of the accumulated wealth and will be required to invest remaining 40% of the accumulated wealth to buy a life annuity from insurance company approved by Insurance Regulatory and Development Authority (IRDA). The mandatory provision of annuitisation will be invested to buy life annuities as per various options available to him. The amount of annuity varies depending upon the option selected by him. Registration of ASPs (Annuity Service Providers) is under process and as soon as they get registered, other details will be made available.

In old pension scheme government pays pension after retirement as its liability while in NPS government co-contributes to employee during his service period to build up a corpus on which annuities will be paid.

• The PFRDA is the regulator of the NPS. The NPS Trust will oversee the functioning of the CRA, Trustee Bank, pension fund managers and other stake holders.

• NPS is mandatory for Central government, employees joining service after January 1, 2004. The scheme is extended to all citizens of the country from May 1, 2009, and is voluntary in nature. The new government employees will not be entitled to the benefits of the General Provident Fund (GPF).

• Government employees will contribute 10 per cent of their basic and DA to the NPS. The government will also contribute 10 per cent of its employees’ basic and DA to each of their accounts. No amount can be withdrawn from this account until the subscriber attains the age of 60 years. • Government employees can also contribute towards a tier-II account, where the government will make no contribution. Money from this account can be withdrawn anytime.

• The Drawing and Disbursing Officer (DDO) in each government office will deduct 10 per cent of the employees’ salary and DA and credit it into the respective accounts of Bank of India (Trustee Bank), along with a matching 10 per cent contribution from the government.

• Individuals other than government employees can subscribe to the NPS by approaching designated Points of Presence (PoPs), which include banks, post offices and other financial services companies. Their accounts will also be maintained by BoI. The government will not make any contribution to their accounts.

• The Trustee Bank will pass on the money deposited in the accounts of government employees and citizen subscribers to respective fund managers selected by them.

• Each NPS subscriber will be given a unique Permanent Retirement Account Number (PRAN), with the help of which the subscriber can maintain the same account irrespective of his change of job or residence anywhere in the country.

• NPS subscriber can choose from designated pension fund managers and schemes available and also shift fund managers and schemes free of cost.

• The designated fund managers invest the corpus made available to them by BoI based on the choice of schemes made by the subscribers. The fund managers are required to publish the net asset value (NAV) each day and credit the returns on the corpus into the respective accounts of subscribers.

• NSDL, which is the CRA, will maintain data of all the NPS subscribers such as their personal details, their fund managers, schemes and so on.

• The subscribers have to pay Rs.380 as an annual record-keeping charge, Rs.6 per transaction and the lowest-possible management fee of 0.09 per cent of the fund.

• The subscribers have three investment options to choose from: (1) The E option, investing index-listed stocks; (II) The G option, investing in government securities and (III) The C option, investing in liquid funds of asset management companies, bonds of PSUs and municipal corporations, and fixed deposits of banks.

• There is also the default or auto-choice option in cases where subscribers have not chosen an option. Here, the funds are invested for early years in stocks and then as subscribers’ age advances, funds are invested in less-risky bonds and other instruments. In cases where subscribers have not chosen a fund manager, such funds are equally divided among all the fund managers.

• The NPS money cannot be withdrawn prematurely, but only after attaining the age of 60 years. At 60 years, subscribers can withdraw 60 per cent of the money, while the remaining 40 per cent will be invested in an annuity plan.

SOURCE : http://personalfinance201.com/NPS/what-is-new-pension-scheme-nps.html

How to Draft a Will & Its Importance

How to Draft a Will & Its Importance

Do you want to leave your wealth and let your loved one’s fight with each other to get their shares (a la the Ambanis!)? I guess not! If you nominated some one in all the financial products you bought and thought that it will be passed to them legally without any issues, you are living in the world of fantasies (It’s a common misconception). You need to create a WILL to distribute your wealth in the manner you want to, and having nominated someone ain’t the answer

A will can be made by anyone above 21 years of age in India. You can make the will on plain paper in India. It’s not legally necessary to make the will on stamp paper. It is advisable to write your will in your own hand writing, as the same can be verified later in case of any doubts raised by relatives. It might happen that according to your family structure and your preferences, you want to divide your wealth unequally or make a provision for a close friend or a faithful servant. This isn’t possible if you die without a will. A lot of us feel that talking about “Making a Will” is pretty morbid, and hence, we don’t look at it with right attitude.

Why is it so important to make a Will?

A will is so important, that it should be your first step in your financial life. If your family structure is diverse, and you want to leave your wealth to different members of family like you want to, you should prepare your WILL today, not tomorrow, not later. To wit, if you die without preparing a WILL, your wealth will then be distributed as per ‘Laws of succession’ (Government rules, on how wealth should be divided among family members). A common misconception, is to believe that all the estate is automatically passed on to the spouse, because children and sometimes even relatives can stake a claim to the property. Laws of inheritance and succession, are complicated and diverse in nature, and are different in case of Hindus and Muslims.

Another point you should consider, is the inconvenience caused to your family members because of your laziness, in not making a will for them. In case of a dispute, your family members have to produce the proof about their relationship with and also have to go helter-skelter to lawyers and spent money and energy. Much better then, to gift them some time of yours, and creating a will! This will save them a lot of headache.

How do you make a Will?

A will has several parts, which duly completed, make up a complete Will. Though there is no legal or defined format, there is a template, which has been generally used for ages. It’s simple, it’s very logical and derives from common sense. Let’s look the whole format and some important points while creating a will.

Step 1 : Declaration in the beginning : In the first paragraph, you have to declare that you are making this will in your full senses and free from any kind of pressure. You have to mention your name, address, age, etc at the time of writing the will so that it confirms that you really are, in your senses 

Step 2 : Details of Property and Documents : The next step is to provide list of items and their current values, like house, land, bank fixed deposits, postal investments, mutual funds, share certificates owned by you. You must also indicate, where all these documents are stored by you. In all probability, these are in your bank safe deposit box. Even the will should be stored in there! Make sure, you take the details from the bank manager, about the procedure and rules of releasing your will from the safe deposit after your death. Make sure you communicate it to the executor of the Will or your family members . I am sure, they’ll be pretty interested in this 

Step 3: Details of ownership : At the end of the will, you should mention who should own your assets items and in what proportion, after you have gone.  If you are giving your assets to a minor, make sure you appoint a custodian of your assets till the individual you have selected, reaches an adult age. This custodian obviously, has to be a trustworthy person.

Step 4 : Signing the Will : At the end, once you complete writing your will, you must sign the will very carefully in presence of at least two independent witnesses, who have to sign after your signature, certifying that you have signed the will in their presence. The date and place, also must be indicated clearly at the bottom of the will. Make sure you and the witnesses sign all the pages of the will. One important point while choosing witness, is that they should be your friends, neighbors, or your colleagues and not the direct beneficiaries in the Will. They only certify, that you yourself have signed the will in their presence and are not a party in making the will. The envelope has to be sealed after completing all the formalities and the seal must bear your signature and the date of sealing. The witnesses need not sign on the seal of the envelope.

Please Send Us Mail On info@vilasvaidya.com For Drafting Your Will

Execution of Will in Court ?

When you are dead, there is someone called an “Executor” who will be responsible for dividing your wealth amongst the beneficiaries and he will make sure the whole process is smooth (You must have seen this in Hindi movies). It is not legally required to get the will executed in a court of law in presence of a judicial Magistrate in India. However, if you wish, the will can be executed in the presence of Magistrate or the public notary, nominated by the government authorities and sealed in their presence.

Changing the WILL

You can change your will any time you want to. However, make sure that when you make a new will, you mention that this will is the latest and supersedes all earlier wills. If you don’t, it can complicate the situation, cause major confusion, make such matters go to the court of law and take several years before arriving at any final verdict.

Making a Will through Lawyer

“Do-it-yourself” wills often do not contain all the necessary components as required by law and many times ruled as invalid by courts (for example no signatures from witness or no witness at all). Many a time,  it can happen that while creating the will, you use such ambiguous language that it results in lengthy legal battles (“My House should go to Sunita.” Now if both mother and wife are called Sunita, which Sunita ought to get it?. Anyone who might benefit from the ambiguity of the will can jump in to claim a share! And if the courts decide in his/her favour, you wont like that situation  (not that, you’ll be around!)

What is a Probate and it’s importance?

A probate is nothing but a copy of will, certified under the seal of court. The executor (someone who is responsible to execute the will) has to file a probate petition in the court of law and if all goes well, the probate takes six months to a year. No right as executor or legatee can be established unless a court has granted the probate of the Will. Probate can be granted only to the executor appointed by the Will. The cost of getting a probate includes legal fees as well as stamp duty on the value of the property being willed. The stamp duty varies from state to state. Probate is very important in case of Real Estate. As per Sundar, a reader of this blog…

Legal heirs to get possession of the property from the nominees have to go through a legal process called probate. In Maharashtra this means, the will have to be submitted to Registrar and one will have to obtain a probate. The Registrar may ask the claimants to put an advertisement in newspaper to ensure that they will not be contested. They may even ask the witnesses who have signed the will to come to their office and sign documents. After all this, and some court affidavits, the claimants have to pay the necessary tax to the state govt. which is hefty and based on property value. After Goverments takes its cut, then finally the probate order is given. Only then will the legal heirs get their property. Note that, probate requirements differ from state to state. Hence even when making a will a Lawyer should be consulted. I know of fights between Nominees and Legal Heirs. Roadblocks put up by Goverment ( some times they ask for Registered Will etc.). So just writing a will is not the end of the story. Better consult a lawyer before drawing a will.

Further please note especially in case of land or house property, the society will not transfer the flat without a probate and tax paid certificate. Many times, a prospective buyer will not buy a flat or land, if the holding is not clear and if the property had not been cleanly transferred and if there are disputes between nominees and legal heirs.  Flat may still stay in the dead person’s name till their heirs and nominees settle their disputes. Till then, the flat may be used by Nominees or any other person. But Society will not transfer the flat to prospective buyer till the process of probate is settled first. Hence such property cannot be sold easily. Please proceed with great care in this matter.

Important points while making a Will

·         If possible, have the two witnesses be a doctor and a lawyer. A doctor signing a will, won’t raise any question of you, being of unsound mind. The lawyer, will vet the will and make sure you dont make stupid mistakes at the time of writing and signing it. 

·         The attesting witness and his or her spouse should not be a beneficiary under the terms of your Will. This might create vested interests and some times make your will invalid. Also, make sure the witnesses are younger than you and not very old as your will might be in effect for several years! And you want them to be present in this world 

·         Write your will on good quality thick white paper so it doesn’t get spoiled over a period of time. It should be stored in a plastic envelope in full size, without folds.

·         Note that you should keep just one more copy of will and stored separately from the original will. The will must be stored very safely in your bank, in safe deposit box. You must also inform your next of kin, as to where you have stored your will. Do not make many copies of your will.

·         In case of Hindus, it should be clearly stated if the property is inherited or not, because it makes a huge difference, as no ancestral property can be assigned to any person through a will. All rights on inherited property are acquired by birth. So if you inherited a property from your Father, you cannot say in a will, that you want to assign it to person X only! It will go to all your legal heirs as it is “Inherited”

·         A will must always be dated and if more than one will is made, the one with the latest date will nullify all the previous ones. In fact, there should be a statement in your will, nullifying all other previous wills. The pages should be numbered to avoid fraud.

·         The value of assets often fluctuates, so it is better to mention how much each beneficiary will receive, in percentage terms rather than absolute numbers. Unless it is pure cash.

YOU CAN CALL US IF YOU NEED HELP IN DRAFTING YOUR WILL

Phone: 8108603939,9820276434 - VAIDYA & VAIDYA WEALTH ADVISORS

Source: http://www.jagoinvestor.com/2010/11/how-to-make-a-will-in-india-and-its-importance.html