It is common that we observe family disputes on ancestral property. In the Indian regulatory system, otherwise, a deed prepared or some agreement is pre-done for the division of property among ancestors, the property passes on to legal heirs with immediate effect of demise. But it is a comprehensive and difficult practice for the government to legally identify the legal heirs of that person and the ratio in which the property and the related assets are to be distributed. Also, in case if the improper allocation is done a dispute among the ancestors shall happen.
Drafting a Family Settlement Agreement is a formal way of countering any future dispute which might happen between the family members on happening of a certain event or demise of any person in the family. Forming a family settlement agreement is a prior solution, often suggested by legal practitioners before advising them of taking the matter to courts. A matter dragged into court involves great spend over hiring legal officials, document preparation, and government fees. Also, the matter requires time for the judiciary to prepare a mid settlement decision for both parties.
In this post, you will get to all about knowing the importance and legal aspect of the Family Settlement Agreement.
Family Settlement Agreement:
A Family Settlement agreement also is known as Family Compromise Agreement is a legal stamped document recording statement of all family members agreeing on common terms and conditions to accept and practice to follow in respect to foreseeable disputes The agreement requires participation and attestation from all family members to assure that the agreement is made with the consent of all members and is not made in force or through any fraudulent means.
The agreement is sealed with acceptance of all family members who firmly accept the resolution provided in the agreement at a future date when such an event as quoted in the agreement happens. It is drafted like a property deed and is duly attested and notified by government authorities.
Why form a Family Settlement Agreement?
Family Settlement Agreement is a document to settle all family disputes out of court premises. It does not require any major approvals or acceptance from any third party. Forming a Family Settlement Agreement benefits in the way that is:
>It settles inter rights in relation to a property matter among the family members without leaving incidences of disputes.
> It is general and reasonable for the benefit of the family to preserve the rights of the family and settle peace by avoiding litigations or by saving honor.
> Since consideration for a promise is essential in a contract, it legally binding to all family members like any other contract or agreement which are to be obeyed to maintain peace on family grounds.
What clauses do a Family Settlement Agreement should include?
A Family Settlement Agreement is discretionary and is based on clauses proposed after a formal discussion of family members. In general, practice, the following clauses should never be ignored while forming a Family Settlement Agreement :
- Details of the Participating Family Members
- Matter of Dispute / Purpose of Forming Agreement
- Details of Property, Assets, Security, etc
- Property for Division, Ratio of Property Division, and Related Terms and Conditions.
- Breach of Contract, Resolution
- Declaration and Signatures
- Legal Attestation
How does a Family Settlement Agreement assure legal remedy?
Documents if properly notarized and recorded with the appropriate legal authorities assure all legal remedies to the right holders. Family Settlement Agreement can also be registered as a property deed or a divorce agreement with all clauses and terms agreed in front of the registrar. The agreement binds all parties involved in the agreement by referring to legal obligations made in the Indian Contract Act.
If proper requirements of the law are met, the agreement becomes legally enforceable under the Indian Succession Act, 1925.
Why MN & Associates for Family Settlement Agreement?
We at MN & Associates are backed by leading corporate professionals and legal advisors, all handling corporate compliance and legal matters. Our team of professionals includes Chartered Accountants, Company Secretaries, Cost Accountants, and legal advisors.
We assist our clients in delivering prompt resolution on their home /property-related legal matters, taxation compliances, corporate/company compliances, business registration, brand incubation, and much more.
Our experts guide all throughout the practice, from drafting of the Family Settlement Agreement until it receives a legal sanction in the records of government.
Email us at firstname.lastname@example.org