Gift Deed vs Will: In India, choosing the right method for transferring property to heirs is crucial. Gift Deed and Will are two ways to do this, each with its own pros and cons.
If you’re considering passing on assets to your heirs, it’s essential to understand the differences between gift deeds and wills to make an informed decision.
What is a Gift Deed? A gift deed is a legal document that transfers ownership of immovable property or assets to another person, known as the donee.
This process is regulated under the Indian Contract Act of 1872 and the Transfer of Property Act of 1882. Once a gift deed is executed, the donee becomes the legal owner of the property.
One advantage of a gift deed is that the recipient usually receives total income tax exemption and only needs to pay a small amount of stamp duty, which varies from state to state. For instance, in Mumbai, the stamp duty for a gift deed is a flat rate of Rs. 75,000.
Completing gift deeds is relatively quick, usually taking about a week, whereas executing a will may take 8-12 months.
However, a major downside of a gift deed is that it cannot be easily changed or revoked. If you live in the property given by the gift deed, the recipient may ask you to vacate it as they are now the legal owner.
Making a Strong Will: A will may be a better option if you want to transfer property to your children while ensuring it remains in your name until your passing. Writing a will allows you to retain control over the property and change the terms at any time.
You also have the option to specify conditions, such as the right to live in the property until your death or to become a joint owner instead of transferring full ownership rights immediately.
Canceling a Gift Deed: There are instances where you may need to cancel a gift deed. If the recipient fails to provide basic amenities for your care as specified in the deed, or if the deed was entered under duress, undue influence, or fraud, it can be challenged and canceled.
To reclaim the property, you can apply to the Maintenance Tribunal, which aims to resolve such disputes within 120 days.
The Maintenance and Welfare of Parents and Senior Citizens Act, 2007 helps protect senior citizens from lengthy legal battles with their children if issues arise with gift deeds.
Why is a Will Better Than a Gift Deed? A will offers more control as the property remains in your name until your death, allowing you to make changes as needed.
It provides flexibility if your circumstances or wishes change and ensures the property remains under your control, preventing anyone from asking you to leave. Additionally, a will lets you clearly specify how you want your assets to be divided after passing.