It is important that even you should write a will, as in the unfortunate event of anything happening to you, your estate will be equally divided between your wife, children and your mother, who is one of the class I legal heirs under the Hindu Succession Act.
My parents , along with my wife, have an equal stake in my privately-held company. My family includes my estranged brother who runs a competing manufacturing business. My parents do not want to write a will. What will be the legal ramifications if they die intestate and what steps can I take to safeguard my stake in the company?
This is quite a peculiar problem that is quite common in Hindu families wherein the shares of the family-run business is held by all family members. Since your estranged brother runs a competing business, you will not like him to have a shareholding in your company and intervene in the running of business in any manner. If your brother gets the ownership in your company, it will create a complex legal situation for you and your family.
In the event of your parents passing away intestate, their estate will be inherited by both the sons, namely yourself and your brother.
This implies that the 50% shareholding held by your parents will be inherited by you and your brother to the extent of 25% each, and thus your brother will have significant minority shareholding in your company which will vest various rights in his favour exercisable under the Indian Companies Act and, in any case, there will be accountability issues.
It is important that even you should write a will, as in the unfortunate event of anything happening to you, your estate will be equally divided between your wife, children and your mother, who is one of the class I legal heirs under the Hindu Succession Act. So, in the event of your demise during her lifetime, certain shares owned by you would go to her and this will only compound the problem.
It is therefore important for your parents to either write a will in your favour for the shares owned and held by them in your company or gift those shares to you now during their lifetime to avoid creating legal complications for you and your family.
It is important to understand that under intestate succession, all the legal heirs get equal rights and share in the estate of the deceased, while in the case of a will, differential rights are created and the estate is inherited as per the wishes of the deceased as expressed in the will and is not distributed equally. Hence, depending on the family circumstances, it is critical to write a will.
Anju Gandhi is partner at SNG & Partners, Advocates & Solicitors.
