How to Draft a Family Settlement Deed

It has been witnessed since ages that in India, the most common cause of a family dispute is due to the disagreement regarding distribution of properties and various assets among the family.  Difficulties generally arise when the deceased doesn’t leave behind a WILL. Even if a validly executed WILL exists, its authenticity and genuineness can still be challenged in the court by the legal heirs who have either been left out in the WILL or are disconsolate with the distribution of the assets.  

A Family Settlement Agreement/Deed hence is an efficient mechanism to avoid any such disputes and issues which might arise in future. It is an amicable, affordable, and swift method of coming to a common conclusion if the agreement is carried out efficiently and to the satisfaction of all the parties.  

A family arrangement is an agreement, (preferably written) between members of the same family regarding the distribution of properties and assets, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed right or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honor.

A Partition deed can also be executed amongst the co-owners and is somewhat identical to a family settlement agreement. The partition deed is required to be executed on a stamp paper of proper value and registered with the office of the sub-registrar of the place where the property is situated. After registration, the deed gets a legal and binding effect.

Hence, for a family settlement agreement, a narrow interpretation should not be given to the word “family” rather it can include a wide range of members who belong to the same family in a comprehensive sense. The basis on which such family settlements are held as valid and binding between all parties is the mutual consideration which flows between the parties while putting an end to the claims and counter claims between them.

The following are some of the advantages of forming a family settlement deed:

1. It lays down the rights regarding distribution of properties and assets among the family members amicably and without any differences.
2. Prevents unnecessary, costly, and time-consuming litigation.
3. It is legally binding, enforceable, and applicable to all the signatories. It should preferably be attested by two witnesses.

The family settlement deed is prepared in view of the amicable negotiations between the family members which must be documented with precaution and should not be vague in any manner. While drafting the Family Settlement Deed usually the following clauses should be incorporated-

1. Details of the members of the family and signatories to the deed
2. Details of the property including the area covered, dimensions, site map etc.
3. Circumstances which led to executing of a family settlement deed
4. Details of additional assets
5. Distribution of the property among the members of the family
6. Settlement of dispute and the resolution
7. Declaration
8. Signature and thumb impressions
9. Notarization/Registration of the deed

To conclude, a family settlement deed/agreement may either be made verbally or in writing, however it is recommended and favourable to make the same in writing to prevent any misunderstandings and ambiguities, as the words of mouth can always be presented with slight alterations. Once written, the deed should preferably be registered with the appropriate authorities and the respective parties must adhere to the terms of the deed and to settlement arrived at. Copyright 2023 – Helpline Law