When it hits close to home, death often triggers a reality check–not just on life, but on the state of finances too. Many families are waking up to this reality as Covid continues to leave a trail of death across the country. As if it’s not enough to grapple with the loss of a loved one, one is also saddled with time-bound financial tasks that need to be prioritised. Besides accessing documents required to effect a smooth transition of assets, one must also close the financial trail of the deceased, in terms of accounts, investments, loans, taxation and insurance.
These tasks often seem insurmountable, especially if it is the financially active spouse who passes away. While it would be prudent to hire a lawyer and financial adviser to get a grip, one often doesn’t know whom to trust or where to start. “I was 23 when my dad passed away in January last year, and my mother had no idea about financial matters,” says Noida-based Meetesh Verma. “Fortunately, my friend’s father is a financial adviser and he guided us through it,” adds the software engineer.
To help you through this dilemma, ET Wealth will take you through the process of sorting paperwork and facilitating tasks. We will tell you about the documents needed to close accounts, transfer investments and make claims, as well as the processes to complete these tasks. Due to the pandemic, many tasks such as closing or transferring of accounts and securing documents are available online, and this will ease your workload. For others, you still might have to do the legwork.
Start by collecting all the important documents that you will need in dealing with various government and financial institutions. Separate them into two sets: one comprising identity and address proofs of the deceased, and the second that has all the financial documents and information.
Step 1: Collect the documents, online details of the deceased person
Collect the deceased person’s PAN and Aadhaar cards, passport, licence, election I-card and ration card. Make several copies of each, keep them in a folder, along with a couple of pens and blank A4 sheets. These will save you the hassle while writing an application or signing documents.
Also, if you and other family members are nominees or legal heirs, collect the same identity proofs and other documents for yourself and others, and keep several photocopies ready. You could also scan all these documents and store them on your computer or phone.
If the deceased had conducted most of his transactions online, get access to his online accounts, with account numbers, log-ins and passwords. These will include information for Internet banking, online mutual fund investments, insurance, filing tax returns, among others.
To save unnecessary agony to family members in case of sudden death, it is important to store such data at one place and share its access with the spouse or adult children. “Even if you have stored the information online or digitally in your computer, it is important to keep physical copies of important documents and information in a bank locker,” says Dinesh Rohira, Founder & CEO, 5nance.com.
Step 2: Get death certificate
Next, get the death certificate from the municipal body or online, if the facility is available (see How to get…). “It’s the doctor who gives the death certificate, whether at home or in hospital, and on the basis of this, the government authority provides the death certificate,” says Raj Lakhotia, Founder, Dilsewill.com.
All deaths have to be mandatorily registered within 21 days and if you do it within 21-30 days, you will have to pay a penalty of Rs 25 and get it certified by the medical officer, health (MOH). After 30 days and up to a year, the joint director of statistics can provide the certificate with a fine of Rs 50 and an affidavit. After a year, it will take the order of a first-class magistrate, for which you will need the ‘cause of death’ certificate, cremation certificate and an affidavit.
The death certificate will be needed for every financial task you will conduct in the next few months. So download several copies from the official website or make photocopies and keep them ready. You may also need to get them attested or notarised.
Step 3: Locate the will, or apply for succession certificate/legal heir certificate/letter of administration
The next crucial step is to locate the will, if any, as it helps pass on the assets to the desired people with minimal disputes. “While it is important to appoint nominees, remember that a nominee is only a custodian and the assets go to legal heirs, except for securities in a demat account where nomination takes precedence over a will,” says Rohira.
If the deceased passes away intestate (without a will), you will either have to get a succession certificate, or letter of administration, or a legal heir certificate for transferring the ownership of movable or immoveable property.
There is a difference between a legal heir certificate and succession certificate though both are often mistaken to serve the same purpose. This is the reason that 33-year-old Shambhvi Sinha decided to get a legal heir certificate when her father passed away in 2018. “It was only later we realised that we would need a succession certificate to transfer property to my mother,” says the Delhi-based architect who got the certificate in nearly six months.
A legal heir certificate is used to establish the identity and relationship of living heirs to the deceased and has limited relevance in the Succession Act. It is required only to claim benefits, compensation or entitlements like insurance, provident fund, pension, electricity connection, bank deposits, etc. The succession certificate, on the other hand, is used to prove the authenticity of heirs so that all the debts and securities of the deceased can be passed on to them. While a succession certificate will work for transferring immovable property, “a legal heir certificate can work for transferring moveable property where the amounts are not very high,” says Lakhotia.