A family settlement is precisely a mutual agreement between family members regarding the distribution of property assets among themselves. The parties to this family settlement must be related to each other and must have a legal right to share in the property in question.
Moreover, a family settlement may or may not be limited to property, but can also enclose movable assets like cash, money in bank accounts, cars, bikes, jewellery, etc. However, a family settlement agreement is ordinarily used to amicably settle common property or joint property that a family owns as against self- acquired or individual property.
A family settlement is a mutual agreement among family members, ordinarily made to completely prevent getting involved in court battles by splitting up the family property through mutual understanding among the family members.
The family settlement agreement is supposed to have the same format as that of a partition deed. Apart from this, it is not mandatory to register and stamp the family settlement agreement.
A family settlement is highly beneficial for:
- those who do not wish to get involved in unnecessary court battles that may or may not get messy ultimately,
- Achieving swifter and more conflict free way of settling family disputes.
A family settlement is a peacemaking procedure where an outsider, generally a senior family member or a lawyer, counsels, assists as well as guide the entire family to arrive at a mutually acceptable solution regarding the property dispute.
Additionally, this family settlement agreement does not necessarily have to be a single legal document comprising the entire division of the family property when it can also be a bunch of legal documents analysing the property rights of every family member.
As per the provisions of the Income Tax Act of 1961, a settlement agreement is neither a transfer of property nor a gift. As a result, exclusive transfer of property documents will also have to be pulled out with the said family settlement agreement to be able to execute an actual transfer of property.
The first step towards any litigation including a partition of property suit is to carefully draft and send a legal notice to the other legal heirs of the property related to family property partition/ settlement.
The legal notice for such a partition must mention the shares of each co-owner (legal heir), entire details of the property in question as well as the required action that has to be taken.
In case the co-owners fail to reply to the legal notice or in case the co-owners send a vague reply, a partition suit can be filed in the court where the jurisdiction of the property would lie.
A suit for partition of property is a court case filed when all of the co-owners fail to mutually agree to the terms and conditions towards property division, and when either of the co-owners wish to divide the property according to their shares in the property.
The first step for the court is to analyse and determine whether the person/ co-owner who have approached the court to file the partition suit has the genuine claim in the disputed property or not. Eventually, once the right to share in the property is established and no extra inquiry is further required, then the court may allocate individual ownership of the property to the rightful co-owners of the property.
In case, the property cannot be divided solely on the partition suit, the court has the authority to order an inquiry. This inquiry is conducted to pass a introductory decision for the appointment of a Commissioner who then evaluates the property and presents an official report. The court then establishes each share of every co-owner solely on the basis of the report by the Commissioner and distribute the property according to each co-owner’s rightful share in the property.
Any queries about that please feel free to call us or enquire us