PROPERTY SETTLEMENT AMONG FAMILY MEMBERS

Advocate Selvakumar|Property Advocates in Bangalore|Senior Lawyer

Settlement of property among family members and others is a mode of distributing both movable and immovable properties and has been defined under Section 2 (24) of the Indian Stamp Act and Karnataka Stamp Act. A settlement deed is a non-testamentary disposition, in writing, of movable or immovable property made

1.In consideration of marriage,

2.For the purpose of distributing properties of a Settler among his family or those for whom he desires to provide for or for the purpose of providing for some person dependent on him, or

3.For any religious or charitable purposes. 

Settlement also includes an agreement in writing to make such a disposition or where a disposition is not made in writing, any instrument recording, whether by way of a declaration of a trust or otherwise, the terms of any such disposition. The Karnataka Stamp Act has similarly defined settlement.

The essential ingredients are:

1.It is a non-testamentary disposition that is it is not a Will. As such it operates immediately on execution, whereas a Will comes into operation only after the death of its author. However, a settlement may also contain a clause for reservation of life estate. 

2.The Act specifies it must be in writing; So an oral disposition is not a settlement. 

3.There may be an agreement to make such a disposition. 

4.If it is not in writing, any record evidencing such disposition is also a settlement. 

5.There must be a settler i.e. the owner of a movable or an immovable property. 

6.There must be people that are family members or other persons who are dependent on the settler in whose favor the property is to be settled. It may be for religious or charitable purposes.

Trust Vs Settlement:

A settlement deed should not be mistaken for a trust deed. In the case of trust, the author vests the property in favor of its trustees, who manage and administer the property /properties as per the direction of the author for the benefit of third person/s called beneficiaries. The trustees will act only as per the directions of the author of a trust deed and the beneficiaries do not have any say in the management of the said properties.

However, in settlement, there is no intermediate person, like a trustee and the beneficiaries have complete control over the administration, management of the property settled in their favor and enjoy the property as absolute owners subject to the conditions of the settlement deed.

Will Vs Settlement:

Settlement deed is different from Will, since a Will is a testamentary document, which becomes operative after the death of its author, whereas a settlement becomes operative immediately. 

Another distinguishable feature is that a Will is revocable and that any number of Wills may be executed by its author in respect of a single property during his life time, though only the last Will executed becomes operative. Whereas, settlement is not revocable and after proper execution of a settlement deed, the Settler relinquishes all his rights, title and interest over the said property, subject to the terms and conditions contained in the settlement deed.

Partition Vs Settlement:

Usually partition of joint properties is mistaken for settlement. However, partition constitutes division of properties between thejoint owners as well as the division of joint interest ownership in the property. Thus, the division amounts to severance of the joint interest in the ownership of the common properties and the common property is thus divided among them. Each partner becomes the absolute owner of his share and each partner's share is subject to a pre-determined percentage, governed by either the inheritance laws or by the partnership deed as the case may be. In settlement, however, the property is owned by a third person and is settled in favor of persons who do not have any previous interest in the said property and the share of the beneficiary is as per the wishes of the settler.

Gift Vs Settlement Stamp duty-Registration:

There are marked differences between gift and settlement. Gift is not made for any consideration, whereas settlement may be for consideration. Like-wise gift may be made to any person, whereas a settlement is mostly made in favor of dependents. Also gift requires acceptance, whereas settlement does not. The gift is revocable or may be suspended as per section 126 of the Transfer of Property Act on happening of any specified event, which does not depend on the will of the donor unlike that of settlement, which is final & binding once it is executed by the settler.

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Advantages:

Settlement has a very simple procedure where the properties are distributed to the dependents or for religions charitable purposes during the lifetime of the settler.This avoids future misunderstanding amongst the beneficiaries/recipients. Settlement can be made only in respect of self-acquired properties.

The deed of settlement attracts stamp duty as registration of the settlement deed is compulsory. Article 58 of the IndianStamp Act and Article 48 of Karnataka Stamp Act refers to stamp duty payable on execution and registration of settlement deeds. Since, settlement amounts to conveyance of property, the stamp duty payable is similar to that payable on a sale deed, i.e. based on the market value of the property. However, concessions are available in case of settlement made in favor of family members, i.e. Rupees One thousand as stamp duty and access of Rupees Fifty. Family members include the spouse, son, daughter-in-law and grand children of the Settler.

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TRUST PROPERTY AND LEGAL IMPLICATIONS

Advocate Selvakumar|Property Advocates in Bangalore|Senior Lawyer

Holding of property by a trustee involves varied obligations and duties on the parties to a legal instrument and these are enumerated within the Indian Trust Act 1882 that regulates the formation, and performance of the trusts, powers and duties of trusties in managing trust properties. 

Parties to a Trust

Trust is an obligation hooked up to the property thereby indicating however the property is to be used and who the beneficiaries of the trust Property are. It’s an agreement between the author of the trust and therefore the trustee i.e. the manager of the trust property and therefore the owner of the trust property. A trust could also be fashioned by someone Competent to contract, or with the permission of the court by a minor or on behalf of minor. A trust consists of over one person. The person who is that the owner of the property, who reposes confidence in another to manage the property is termed author of the trust or the settler. 

The one who manages the property as per the directions of the author of the trust could be a trustee. Each the author of the trust and therefore the trustee are parties to the document known as legal instrument that defines the objectives and functions of the trust. The establishment is termed the trust. Aside from the author of the trust and therefore the trustee/s, the party who is entitled to the advantages of the trust is termed the beneficiary, who isn't a celebration to the legal instrument. The beneficiary has the correct to insist that the trust property is to be used for his or her advantages though they're not a celebration to the legal instrument. Someone capable of holding the property may be trustee however not the govt of India. Likewise a government servant cannot be a trustee of masjid, temple, church or different non secular establishments. 

Ingredients of a Trust:

The vital ingredients of a trust are:

 (1) The objectives should make certain,

 (2) The beneficiaries should make certain and clear and

 (3) Definition of the trust property should be clear and recognizable. The trust cannot be created orally and it should be in writing punctually signed by the author of the trust. Trusts are of the many sorts. A personal trust could be a trust wherever the beneficiaries are the legal heirs of the author, or a gaggle of individual. A charitable trust is one wherever the beneficiaries area unit tidy sum of public. The trust could also be part public and part non-public. A public trust is made for relief, advancement of education, faith and different functions useful to the community at massive. 

A trust cannot be created for the subsequent functions

1.Any purpose that is verboten by law.

2.Any purpose if permissible would defeat the provisions of law.

3. Dishonorable purpose.

4.The trust that involves or implies any injury to the person, property of another.

5.The court regards the aim as immoral or opposition the general public policy. 

Creation of Trust

A trust could also be created by approach of a document known as the legal instrument. The legal instrument is mandatorily registerable beneath section l7 (b) of Indian Registration Act 1908. The taxation owed on the legal instrument is ruled by the Indian Stamp Act 1899, and falls among the powers of the State Governments. Therefore the taxation varies from State to State. The Indian Trust Act, 1882, doesn't apply to public or non-public religions endowments. Section18 of Transfer of Property Act 1882 relaxes all restrictions, just in case of properties transferred for advantage of public like advancement of data, religion, commerce, health and different allied objectives. A trustee cannot delegate his duties to a different, except clerical duties and should have the ultimate management over such delegation. 

Bailment and Trust

Often delivery and trust are confused. In delivery, there's delivery of products from one person to a different person for a few purpose and on completion of such purpose; the products got to be came back. Just in case of trust, the property is transferred in favor of trustee for the advantage of another person. In delivery, the one who received the products isn't the legal owner; however the trustee could be a legal owner of the property. 

Rights and obligations of Trustee

The duties of the Trustee shall get to be clearly defined; he ought to adjust to the terms of the legal instrument, as per the directions of the author of the trust. He must get aware of the property of the trust and take needed care regarding the genuineness and recoverability of the investments of the trust cash. The trustee ought to, shield the title of the trust property, if necessary, by instituting legal proceedings. He mustn't originate any title adverse to the beneficiary. He must exercise correct care and be impartial and will forestall wastage and convert any putrescible property to permanent or profitable in nature. He must maintain correct accounts and adopt correct investment methods. The trustees cannot commit any breach of trust, cannot go off the loss occurred due to breach of trust in one portion of the trust property against profit of another portion of trust property. Once a breach of trust is committed by one in every of the trustees, all the opposite trustees are at risk of the beneficiary for the overall loss sustained. The trustees have bound rights, like possession of the legal instrument, title deeds of the trust property, compensation of expenses, right to settlement of accounts, right to hunt the opinion of the court. 

Maintenance of Trust Properties

The trustee could lease the trust property for a amount not prodigious twenty one years while not the permission of the court, could sell the property in tons, by public auction, or by a personal contract. He may additionally sell beneath special conditions and get and sell. He has powers to create the investment of the trust property that should be in securities listed in Trust Act. Any investment aside from within the listed securities should be with the written consent of the beneficiary. He could apply the correctly of the minor for maintenance of minor with proper care and discretion. When someone accepts to manage a trust he cannot renounce it except with the permission of the court, or with the consent of all the beneficiaries.

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Trust property cannot be employed by the trustee for his own profit, and any profit derived from out of the trust property should be transferred to the trust. It’s to be noted that the trustee cannot purchase the trust property of that he's trustee. Even his agents cannot get a similar. Further, trustee or his agent cannot get the beneficiaries interest and can't be a creditor, renter of the trust property while not the permission of the court. Equally co- trustees cannot lend among themselves. 

If a trustee legally sells the trust property, the beneficiaries have a right to follow the trust property goodbye it's derived all the same the intermediate possession except just in case of bonfide sale for worthwhile not the notice of the trust.

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ADDITIONS, ALTERATIONS AND CANCELLATIONS TO PROPERTY DOCUMENTS

Advocate Selvakumar|Property Advocates in Bangalore|Senior Lawyer

Documents are the record of assorted transactions; they contain sure terms, conditions, thought quantity, and names of the parties to the dealings, date of the dealings, clear and complete description of the topic of dealings, thus on create them simply known. For example; Sale Deed of a property contains the origin, flow of the title, gift standing, names of vendor and customer, thought quantity, easementary right and temporary description of the property with measure, construction and limits. They’re the permanent records that are relied on for generations. Such documents should be decipherable, clear, readable, and freed from error and will not produce any doubts or disputes. They mirror the terms of dealings that each the parties have freely consented.

At times, some additions, alterations, cancellations are inevitable, that are detected at the time of execution. Any such alterations, cancellations, additions got to be done before presenting the document for registration. All such modifications ought to be echt by full signature of all the parties to the documents. But, signature of witness isn't necessary for such modifications. Solely full signatures and not initials or short signature ought to be insisted. For cancellations, the initial words ought to be showing neatness affected off; it ought to be signed by parties to the document. 

Erasing with fluid shouldn't be used. Registering Authority records such additions, alterations, cancellations page wise on the document itself. This validates the additions, alterations, cancellation etc. Any modifications done once the registration aren't valid and don't type a neighborhood of the document. Moreover, the document itself becomes invalid. Copies of the registered documents are maintained at registering Offices and licensed copies issued by such Authorities conjointly record on certified copies the quantity of cancellations, additions and alterations done before registration. They are doing not contain something superimposed, deleted, changed once registration. So, correct care ought to be taken so all the modifications are done before registration underneath the total signatures of all the parties to the transactions. If something needs to be modified once registration a separate Rectification Deed needs to be executed.

Filling up the blanks

Some documents might have blanks because the needed data are out there solely at the time of execution. Usually date of execution is left blank, till the date is finalised. The small print of demand drafts, cheques like range, name of Bank, branches are all left blank. All such blanks got to be crammed up before presenting the document for registration and will be echt by all the parties to the document or fiduciary underneath full signature.

Attestation

Attestation means that witnessing the documents. Sure documents like can, Agreement to Sale, Sale Deed need attestation. Execution of the documents ought to be witnessed by 2 Persons, who are Major and of Sound mind. Each the witnesses ought to affix their full signature and will furnish their address. Attestation isn't necessary just in case of sure documents.

Thumb Impression

There are many folks who cannot sign. Thumb impression of such folks is taken for execution of documents rather than signature. left thumb impression (LTM) in case of males and right Thumb Impressions (RTM) in case of females got to be obtained on documents for execution.Temporary description “LTM or RTM of Sri/Smt…………………       “has to be written right away below the thumb impression. Because the persons, who affix thumb impression are illiterate, who cannot scan or write, the whole contents of the documents ought to be scan over and explained to them and a separate note thereto impact needs to be annexed to the document ideally signed by an Advocate.

Thus, the transfer or assignment of right, title and interest over the properly, no matter the character of transfer, entirely depends upon the Deed of Conveyance. Any ambiguity, unintended addition or deletion within the Deed might produce to disputes. Therefore, to avoid any unsavoury things care ought to be taken whereas drafting the property documents.

Possession of property

It is important that, the transferer transfers possession of the property in favor of the Transferee. It’s not necessary that actual physical possession needs to be handed over to the Transferee, however even grant of possession can transfer and build right and interest over the property in favor of the Transferee.

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SUPREME COURT DECISION ON ‘WILL’

Property lawyers in Bangalore|Property transfer advisor|Advocate Selvakumar

Execution of a can is needed to be evidenced in terms of the provisions of Section 63(c) of the Indian Succession Act and Section 68 of the Indian evidence Act. In Janki Narayan Bhoir v. Narayan Namdeo Kadam, [(2003) two SCC 91], whereas addressing the question in an elaborate way, the Hon'ble Supreme Court has command as under: 

“To say can has been punctually executed, the necessity mentioned in Clauses (a), (b) and (c) of Section 63 of the  Succession Act are to be complied with i.e., The individual has got to sign or affix his mark to the desire, or itought to be signed by another person in his presence and by his direction; 

The signature or mark of the individual, or the signature of the person linguistic communication at his direction, has got to seem at an area kind that it may seem that by that mark or signature the document is meant to own result as a will; 

The most necessary purpose with that we have a tendency to are presently involved during this attractiveness, is that the desire has got to be documented by 2 or additional witnesses and every of those witnesses should have seen the individual sign or affix his mark to the desire, or should have seen another person sign the desire within the presence and by the direction of the individual, or should have received from the individual a private acknowledgement of signature or mark, or of the signature of such different person, and every of the eleven witnesses has got to sign the desire within the presence of the individual." 

As regards compliance of the availability of Section 68 of the evidence Act, it absolutely was opined:

"In a way, Section 68 offers a concession to those that need to prove and establish a can in an exceedingly Court of law by examining a minimum of one attesting witness despite the fact that can has got to be documented a minimum of by 2 witnesses obligatorily underneath Section63 of the Succession Act. However what's vital and to be noted is that one attesting witness examined ought to be in an exceedingly position to prove the execution of a can. to place in different words, if one attesting witness will prove execution of the desire in terms of Clause (c) of Section 63, viz., attestation by 2 attesting witnesses within the manner contemplated in this, the examination of different attesting witness are often distributed with. The one attesting witness examined, in his proof has got to satisfy the attestation of a can by him and therefore the different attesting witness so as to prove there was due execution of the desire. 

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If the attesting witness examined besides his attestation doesn't, in his proof, satisfy the wants of attention of the need by different witness conjointly it falls wanting attestation of will a minimum of by 2 witnesses for the easy reason that the execution of the desire doesn't simply mean the signing of it by the individual however it suggests that fulfilling and proof of all the formalities needed underneath Section63 of the Succession Act. wherever one attesting witness examined to prove the desire underneath Section sixty eight of the proof Act fails to prove the due execution of the desire then the opposite obtainable attesting witness has got to be referred to as to supplement his proof to form it complete altogether respects. Wherever one attesting witness is examined and he fails to prove the attestation of the desire by the opposite witness there'll be deficiency in meeting the necessary needs of Section sixty eight of the evidence Act."

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