Death has been in the mind of a lot of us recently, given the events surrounding the illness and eventual passing of one of Tamil Nadu’s tallest political leaders, M. Karunanidhi. The death of an icon is a reminder of our own mortality, and how life might change for those around us when we pass. It is also a reminder of the mortality of our loved ones and those we depend on.
Death changes a great deal of things, but the part I want to focus on is your financial situation. Here is a basic guide on how to navigate through your finances after the death of a loved one. It is highly recommended that you consult a lawyer to get comprehensive insight with respect to all your options, whether you want to sort out your own property or want advice upon the death of a loved one.
Is there a will?
A will is a document that is made by a person, where they bequeath whatever they own in favour of one or as many persons they wish to. A will comes into effect only after the person who has made the will dies. The biggest advantage of making a will is that your property will be divided exactly the way in which you want it to, so you can leave behind a larger share for your daughter or a smaller share for your husband, as you feel is right. A person can make any number of wills in her lifetime and the basic requirements to make a will are to be of sound mind and above the age of 18. The will can be registered or unregistered. It is important to note that Muslim laws don’t allow for more than 1/3rd of a person’s wealth to be distributed by way of a will. The rest must be distributed as per religious laws.
If the deceased has left behind a will, then the properties will be distributed in the manner described in the will, but it isn’t as simple as reading a document out and dividing assets. The will must be probated, that is, a certificate must be received from a court of law stating that the will is valid by either the executor (the person entrusted with ensuring that the will is followed) or any beneficiary (the parties who are stated in the will). When the court receives a will for probation, it will give a notice to all the beneficiaries in case they want to raise any objections over the bill. Once it is confirmed that there are no objections, the will can be executed.
But what happens when there is no will? Who is the legal heir?
When no will has been made, the property belonging to the deceased will be succeeded by the legal heirs. Deciding who the legal heir of the deceased will be isn’t as clear as black and white in India. This is because there are a number of personal laws that decide who the legal heir of the deceased is. If you’re a Hindu, Jain, Buddhist or Sikh, for example, you are bound by The Hindu Succession Act. Jews, Muslims and Parsis have their own personal laws that govern who the rightful heir is and Christians are governed by The Indian Succession Act, 1925. In order to get a legal heir certificate, you need to go to your local revenue (Tahsildar) office along with the death certificate and your identity proof documents. Legal Heir certificates can be used for transferring immovable properties like land and houses, gratuity/pension payments, PF payments and most importantly, insurance claims. However, the legal heir certificate is not enough if the deceased has left behind investments like Mutual Funds, shares etc.
Nominees and Succession
If the deceased has nominated someone at the time of investing, the investments automatically transfer to the name of the nominee. The nominee acts as a trust for the legal heir and if the legal heir and the nominee are the same person, there is no need for any further process. Nominating someone is an optional step, but in my opinion, it is an essential step with many benefits and can save a lot of trouble and stress. For if there is no nominee, transferring investments requires a succession certificate. Obtaining a succession certificate isn’t as simple or as quick as getting a legal heir certificate – the succession certificate is issued by a court of law under The Indian Succession Act. In order to apply for one, legal heirs must file a petition in a competent court with documents evidencing their claim and the list of investments for which the certificate is necessary. This petition also includes a fee that is payable to the court, which will issue the certificate once it ensures that there are no objections from any family members.
The death of a loved one is an event that is extraordinarily difficult to grapple with. Women, who may have been providing for, or are dependent on the deceased are especially vulnerable. However, a little knowledge of process can go a long way in easing the pain – if not emotionally, at least financially.
Rupee Rani is a weekly column on finance for women. Write to us with your queries at rupeerani@thenewsminute.com