Will and gift are the drafts given in the form of property to loved ones. Both are legal procedures and have certain principles and guidelines to be followed.
A gift deed is mostly irrevocable and is an impulse decision. Will, on the other hand, is revocable and time taking process. A will help the decision-maker to decide in a better way.
Will vs Gift
Both these legal entities are used while transferring financial assets to kit and kin. Transfer of property by way of gift enables the taker to ripe one the property immediately. Whereas transferring the ownership by will, is executed only after the death of the person executing the will.
There is no time lapse in availing of a gift deed. A person to avail his/her share in the will deed executed. Needs to wait till the call of the legal authority. This process is time taking and encouraged solely by the confidant of the executor.
Comparison Table Between Will and Gift (in Tabular Form)
What is Will?
A will is a paper in the court of law for declaration of the intention of the person making the will. The primary purpose of this procedure is property distribution. This legal document will come in effect only after the death of the person who is responsible for writing the will.
The documentation will need to be very specific, as it can be easily misinterpreted in the future for fraudulence. The property can be left to unknown/stranger under the will. If the person dies without making a will, the property is distributed among the kit and kin,
In India, the property is distributed as per the law of the individual religion of the person drafting the will. The person responsible for writing the will can transfer property, jewelry, and money for whomever he/she want to.
There are some legal rules to be followed while making a will. The guidelines are as follows-
- It can be documented or physically written. There should be a will executor appointed to administer the proceeding after his/her death. This enables the smooth process of implementation of will.
- The document should include all the assets of the legator mentioned correctly. The distribution of immovable and movable assets needs to be indicated to the people on the receiving end.
- If there is any change of thought, one can make complete fresh will or codicil (this legal loophole helps the testator to make minor changes without changing the whole content of will)
In most circumstances, ‘ executor can solve and answer questions related to the deceased will. However, most of the time, there is disagreement, and most of the family members don’t get along, leading to problems. Legal battles always lead to an increase in legal fees.
What is Gift?
A gift draft is an impulsive action. This deed is done out of a person’s own choice. The documentation specifies the transaction between a person giving and receiving the gift. Validation is necessary for executing a gift deed. The financial status of the donor is significant in making a gift deed. The assets of the donor need to be accessed before drafting the gift.
Registration and stamp duty are payable for the operation of the gift. In India, tax differs accordingly for every state.
Main Differences Between Will and Gift
- A will is active only after the death of a person who is responsible for the duration of the will, whereas the gift is in action, while the person who initiated the deal is alive.
- Registration and stamp duty are not required for the will. For a gift deed, stamp duty is of 2 percent is a charge for movable properties, and 3-5 percent stamp duty of market value of stamp duty is chargeable.
- The presence of executor and witness is essential when drafting a will. Whereas, while writing a gift witness and registrar is necessary.
- The gift deed is an impulsive action, mostly done without any consideration. The acceptance by the person to whom the gift is gifted is vital. In a will, the beneficiary can contest and claim the terms in a court of law. The decision of what goes into the will depends solely on the testator.
- A gift deed made to the relatives is exempted from the income tax act. Will need to be registered. Hence the income tax act is not applicable.
Conclusion
Though there is a significant difference in both the legal terms, both are primarily used for transferring properties. A will may be a cheaper option for distributing properties, while a gift deed is an expensive one. One can always amend and revoke will during one’s lifetime. If the donor foresees any disputes among relatives or the recipients, he/she might choose the gift option over will. Either way, both are important to have a structured form of division of assets.
References
- https://economictimes.indiatimes.com/wealth/tax/
- https://www.kaanoon.com/91866/gift-deed-and-will