On Matters of Life and Death

To have your family’s finances up in the air because of death can be crippling. And while you can’t control circumstances, you can control a few things concerning your finances. It is morbid but necessary. I speak out of experience when I say that simple things like nominations in your investment can prevent additional heartache.

I sincerely hope this information on what happens when someone passes is just information for you.

Death

When a person dies, the first document that comes of relevance is the 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 how you want it to be, 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 their lifetime; the basic requirements to make a will are to be of sound mind and above 18. The will can be registered or unregistered. It is important to note that Muslim laws don’t allow more than 1/3rd of a person’s wealth to be distributed through a will. The rest must be distributed as per religious laws. 

If the deceased has left behind a will, 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. Probation is when 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 notify all the beneficiaries if they want to raise any objections to the bill. Once it is confirmed that there are no objections, the will can be executed. 

This process is lengthy, and remember that the courts don’t function in May. So, there is a waiting time involved.

But what happens when there is no will?

The legal heir

When no will has been made, the property belonging to the deceased will be succeeded by the legal heirs. But that isn’t as simple as it sounds.

Deciding who the legal heir of the deceased will be is governed by a number of personal laws in India. If you’re a Hindu, Jain, Buddhist or Sikh, for example, you are bound by Hindu personal law. Jews, Muslims, Christians and Parsis have their laws that govern who the rightful heir is. 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 transfer immovable properties like land and houses, gratuity/pension payments, PF payments and most importantly, insurance claims. However, the legal heir certificate is insufficient if the deceased has left behind investments like Mutual Funds, demat accounts etc. 

Update Your Nominees, Now

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 I believe it is an essential step with many benefits and can save a lot of trouble and stress.

If there is no nominee, transferring investments requires a succession certificate. Obtaining a succession certificate isn’t as simple or quick as getting a legal heir certificate – the succession certificate is issued by a court of law under The Indian Succession Act, 1925. 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 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 as is. This pandemic has brought us so much trauma, especially for those dependent on the ones who passed. We are all vulnerable. However, a little knowledge of the process can go a long way in easing additional stress. Please update nominees on all your investments. Once again, I hope & pray that this remains only as information for you.

Stay safe.