Settlement deed made simple

Settlement deed made simple

Better Alterantive: Settlement is less expensive than will Photo: H. Satish

Imagine a senior citizen who owns a house, acquired out of his earnings. If he wants to give his house to his younger son over the elder one, he has the option of executing a Will or make a settlement retaining life interest. The execution of Will has its own hassles in identifying a reliable person to be the executor and involves expense. The Will is to be probated for which court fee is to be paid (The probate of Will is mandatory for the properties situated at Chennai, Mumbai and Kolkatta.)

The better option in this case would be to execute a settlement deed in favour of the younger son. The senior citizen can retain the life interest of residing and letting out the same for rents and enjoying the rental benefits and other profits accruing there from during his life time along with his wife. In the event of his wife surviving after his life time, the said property will devolve on her and she will be at liberty to retain her life interest of residing and enjoying the said property during her life time by letting it out for rents and receiving the rental and other benefits without having any right to alienate, encumber, and mortgage.

Earlier the expenses for effecting a settlement deed among the family members was 4 per cent of the guideline value towards the stamp duty and 1 per cent towards the registration charges. The charges have been reduced with effect from December 16, 2004. The charges are as follows:

i) In favour of family members

stamp duty -1% on the market value of the property but not exceeding Rs.10000/- . Registration charges -1% on the market value of the property subject to a maximum of Rs.2000/-. The family member includes father, mother, husband, wife, son, daughter and grand child.

Stamp duty 8% on the market value of the property or GL value whichever is higher. Registration charges 1% on the market value or GL value whichever is higher