The word Settlement Deed may sound technical but you need not worry, for you see, we at GP Homes – the best builders of Chennai – will let you know all the intricacies of the Settlement deed. So, let’s begin..

Registration of Settlement Deed

Settlement deed in terms of immovable property like land/building, is a legal document wherein parties settle their differences or disputes. The Legal Definition states Settlement is a disposition of property/properties – whether movable or immovable, as per the choice of the owner of the said property/properties.

A settlement deed, for it to be valid, has to be brought down in writing and has to be registered. Usually the nature of disputes settled through a settlement deed are court cases, property division, and payments settlement. 

A settlement deed between members of a family is a family settlement deed, and most often it is related to the division of property.

A settlement deed is a legally enforceable document and has to be registered. Only those properties can be settled which have been self-acquired (properties inherited and received through family partition are also considered self-acquired properties). 

Now let’s analyze the difference between Settlement, Gift, Trust, Will and Partition.

Difference between gift and settlement?

Gift and Settlement are often used interchangeably – however they are not the same.

For the gift deed there are no considerations, however, for the settlement deed, love and affection, mental satisfaction and marriage may be considered.

Gift has to be accepted by the receiver but in case of settlement there is no need for acceptance.

Difference between Trust and Settlement?

A settlement deed should not be mistaken for a trust deed. In case of a trust, the author vests the property in favour of the trustees who manage and administer the property/properties as per the direction of the author for the benefit of the third person/s called beneficiaries.

The trustees will act only as per the directions of the author of a trust deed, and the beneficiaries do not have any say in the management of the said properties.

However, in a settlement, there is no intermediate person like a trustee, and the beneficiaries have complete control over the administration and management of the property settled in their favour.

Difference between Will and Settlement?

A settlement deed is different from a Will. Since a Will is a testamentary document, it becomes operative only after the death of its author, whereas a settlement becomes operative immediately.

Another distinguishable feature is that a Will is revocable, and any number of Wills may be executed by its author with respect to a single property during his lifetime, though only the last Will executed becomes operative.

A settlement is not revocable, and after the proper execution of a settlement deed, the Settler relinquishes all his rights, title and interest over the said property, subject to the terms conditions contained in the deed.

Difference between Partition and Settlement?

Usually, the partition of a joint property is mistaken for a settlement. However, partition constitutes the division of a property between the joint owners as well as the division of joint interest ownership in the property.

Thus, the division amounts to the severance of joint interest in the ownership of the common property, that is divided among them. Each partner becomes the absolute owner of his share, and each partner’s share is subject to a predetermined percentage, governed by either the laws of inheritance or by the partnership deed, as the case may be.

In a settlement however, the property is owned by a third person, and is settled in the favour of persons who do not have any previous interest in the said property and the share of the beneficiary is as per the wishes of the Settler.

A settlement is a simple procedure, where the properties are distributed to the dependents, or for religious charitable purposes during the lifetime of the Settler. This avoids future misunderstanding between the beneficiaries/ recipients. A Settlement can be made only in respect of self-acquired properties.

Conclusion:

We’re sure this article has given you a broad overview of the settlement deed and the differences between settlement, will, gift and trust. Use it to plan your property and other asset distributions well!

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