Property can be transferred to whom you love. This can be done by way of a gift or through a will, without any consideration. Know here the pros and cons of each method:
Transfer of property by way of gift
If a person wishes to transfer any property it can be done by the way of gift. As per the provision of Indian Contract Act a self-acquired property can be gifted to anyone as long as the person is competent to contract. Any person who is not a minor and sound mind can enter into a contract, as long as he is not declared as insolvent. By executing a gift deed an immovable property can be gifted to any person. For this purpose the person need to pay stamp duty on the market value of the property on the date of execution of the gift deed. And where gift deed is made in favour of certain close relatives, the some states like Maharashtra have provisions for concession in payment of stamp duty. A gift deed may be made in favour of any person who is living at the time of making the deed. The gift also has to be accepted by the donee or any other person on his behalf during the lifetime of the person making the gift. As per the provisions of the Transfer of Property Act any transaction which involves the transfer of an immovable property more than value of one hundred rupees needs to be registered with the registrar of the area. Additionally in case the gift is to be made in favour of a person who is not relative as per the definition of the relevant provisions of Section 56(2) and the value of that property which is to be gifted exceeds Rs 50,000 as on the date of the gift although donor do not have any tax implications for such gifts, the recipient or the beneficiary of such property has to include the market value of that property in his total income in the year and has to pay appropriate tax on such gift.
Transfer of property through a will
A transfer of the property can also be made by executing a will but the vesting of the property will take effect only after the death of the person who executed the will. Registration of a will is not mandatory or statutory in India. But it is always advisable to register the will to avoid any litigation with respect to succession of the properties. There is no estate duty payable by an individual who succeeds to the property of the deceased person. Furthermore any property inherited either by the law of succession or under a will is exempt from income tax laws, as well as Section 56(2). So it can be say that the will is the cheapest mode of transferring a property to the persons whom you wish to transfer. After the death of a person the property can be inherited in two ways. The property/assets owned by the person at the time of death will pass on to his relatives as per the law of succession applicable to the deceased where no will is executed. In case where a will is executed by the deceased person the property/assets will be inherited by those whose named in the will. The assets/property that is not covered will be inherited by the legal heirs of the deceased as per the law of succession. Under Muslim law a Muslim cannot bequeath more than 1/3 of his assets/ property under a will.
Gift or will, which option should a owner choose?
The answer of this question is complicated as situation for every person are different. However the person can consider certain points before deciding on any action. If any person wishes is only to ensure that the assets owned by him pass on of your choice only after death of his death then it is advisable to bequeathing the assets by the way of will. However if a person wants to help someone who is in need of immediate help it can only be done by executing of a gift deed. Transfer of properties by the way of a gift should be resorted to only when it is required under specific situation. Also it is not advisable to transfer properties just for the sake of tax planning as it would be risk and you can lose control of your assets just to save some money from taxes. On the other hand if you wish to transfer a part of your property during your lifetime to avoid any litigation then resorting to a gift is advisable.