Tapuriah Jain & Associates

CLAIM RIGHTFUL SHARE THROUGH SUCCESSION

How To Claim One's Rightful Share - The heirship certificates are the legal documents needed to prove that you are the right beneficiary to successfully claim, the ancestral property or the property of your deceased parents. The next of the kin basically needs it as the certificate specifies the list of the name of the heirs who are eligible to claim or transfer the property of their deceased parents in their name. Thus, when the head of the family or any member of the family dies then any member of the family or his heirs can go and apply for a legal heir certificate and all the legal heirs of a person will be listed in the legal heir certificate issued by the appropriate office.

Who are the direct legal heirs of the deceased person - A son, daughter, widow or a husband and any grandchildren whose parents are no more are considered as the direct legal heirs of a person in case of all these persons are not there or are not available then in that case brothers, sisters will also be considered as legal heirs for a particular person.

What does a legal heir certificate contain - A legal heir certificate will contain the name of the deceased person their age at the time of his/her death and his/her sex and the list of family members who all are to be considered as the legal heirs of the person so dead.

Purpose lying in obtaining this certificate - The main purpose is to transfer the ownership of the immovable properties from the name of the deceased to the name of the surviving family members or the legal heirs and also to claim any pension benefits, provident fund, gratuity, insurance claims or any other service benefits of central and state government departments, specifically when the deceased has not selected a nominee. Therefore, for all kinds of immovable properties, the claim can be made through a legal heir certificate.

Nominations & Death Certificate- For access to the deceased's bank accounts, the process differs slightly. If the deceased has made some nominations, then naturally, the nominees will claim the balances. "If there is a nomination made by the deceased, then the nominee can claim the balances/investments based on the nomination. Banks, under RBI's guidelines, are bound to pay to the nominees if the nominations had been registered with the bank. Here registration refers to a confirmation from the concerned bank.

But for most people, the real problem arises when there is neither a nomination nor a will. What do you do in such a case? "You need a certified copy of the death certificate to gain access to the bank accounts. The banks usually look to see if the deceased had assigned a beneficiary for the account. If there is no beneficiary, then the succession rule would apply. Usually, the hospital or the crematorium issues the death certificate.

Legal Heirship Certificate - A number of other documents such as legal heirship certificate, nominations and death certificate may be procured, as an alternative to a succession certificate, for the purpose of establishing an inheritance or aiding in the transfer of assets from the deceased. It is comparatively easier to obtain these documents.

In some cases, a legal heirship certificate may be relied upon in the place of a succession certificate merely because family members are able to obtain a legal heirship certificate with much ease and speed. Therefore, families typically first apply for a legal heirship certificate and in the event a legal heirship certificate is not accepted by the relevant authority for any reason, then a succession certificate is applied for.

A legal heirship certificate establishes the relationship of the heirs to the deceased for claims relating to pension, provident fund, gratuity or other service benefits of central and state government departments, specifically when the deceased has not selected a nominee. Banks and private companies also accept such certificates for allowing transfer of deposits, balances, investments, shares, etc.

Procedure For Procuring A Legal Heirship Certificate - While the Indian Succession Act, 1925 does not prescribe a method for obtaining a legal heirship certificate, it can be easily issued by revenue officers such as tahsildars, revenue mandal officers or talukdars, in every taluk.

A legal heirship certificate can be issued and relied upon for certain limited purposes only. Legal heirship certificates are not conclusive when it comes to determining the legitimate class of heirs of a deceased person under the laws of succession or the title of heirs to any disputed property that belonged to the deceased.

In case of any disputes between the heirs of the deceased, the revenue officer cannot issue a legal heirship certificate and is required to direct the heirs to approach a civil court for determination of the rightful heirs.

Legal Heirship Certificate vs Succession Certificate - A legal heirship certificate is issued to identify the living heirs of a deceased person whereas succession certificate is issued to establish the authenticity of the heirs and give them the authority to inherit debts, securities and other assets that the deceased may have left behind.

The documents required for procuring a Legal Heirship Certificate- The first and foremost document required for applying for the legal heirship certificate is the death certificate of a particular person which can be obtained from the municipal corporation or from the registrar of birth and death of that particular area and second is the address proof where the deceased person lastly resided or lived for a longer time is to be submitted along with the details of the person applying for it as well as the details of the legal heirs are also required for applying for the heirship certificate.

Succession Certificate - The Indian Succession Act, 1925 defines a succession certificate as a certificate issued by a court to the legal heirs of a deceased to establish the authenticity of the heirs and give them the authority to inherit debts, securities and other assets of the deceased. The purpose of a succession certificate is limited in respect of debts and securities such as provident fund, insurance, deposits in banks, shares, or any other security of the central government or the state government to which the deceased was entitled. Its main objective is to facilitate collection of debts on succession and afford protection to the parties paying debts to the representatives of the deceased person.

A succession certificate may be used in situations where banks, financial and private institutions release funds to the nominee (where such nominee is not the legal beneficiary of the asset) and the nominee refuses to cooperate in distribution of the asset to the legal beneficiary. Similarly, a succession certificate may be useful to prove genuineness of the claimant where the inheritance amount is substantial. Additionally, in certain states, a probate (meaning a copy of the will, if it exists, authenticated by the Court) and a succession certificate are compulsory to transfer the title of an immovable property.

Procuring a Succession Certificate - A few important pointers for procuring a succession certificate are as follows:

The beneficiary/ legal heir is required to approach a competent court and file a petition for a succession certificate.

The District Judge within whose jurisdiction the deceased ordinarily resided at the time of his death, or, if at that time had no fixed place of residence, the District Judge, within whose jurisdiction any part of the property of the deceased may be found, may grant the succession certificate.

The petition should mention important details such as the name of petitioner, relationship with the deceased, names of all heirs of the deceased, time, date and place of death. Along with the petition, death certificate and any other document that the court may require should also be attached.

The court, after examining the petition, issues a notice to all concerned parties and also issues a notice in a newspaper and specifies a time frame (usually one and a half months) within which anyone who has objections may raise them. If no one contests the notice and the court is satisfied, it passes an order to issue a succession certificate to the petitioner.

If there is more than one petitioner, then the court may jointly grant them a certificate but it will not grant more than one certificate for a single asset.

When the District Judge grants a succession certificate, he shall specify the debts and securities set forth in the application for the certificate, and may thereby empower the person to whom the certificate is granted (i) to receive interest or dividends on the securities; or (ii) to negotiate or transfer the securities; or (iii) both to receive interest or dividends or negotiate or transfer the securities.

With respect to costs involved, the Court typically levies a fixed percentage of the value of the estate as its fees (which is more particularly prescribed under the Court-fees Act, 1870, (7 of 1870)). This fee is to be paid in the form of judicial stamp papers of the said amount. In addition to Court fees, the applicant will also be required to pay requisite fees to its lawyer

Is Nomination Enough To Ensure Inheritance Of Asset - A Hindu individual, owns a savings account, mutual fund investments, equity shares in some listed companies, and one residential flat (which forms part of a cooperative society). He has also subscribed to a life insurance policy, naming his spouse as the nominee under the policy. He has assumed that, since he has named his spouse and mother as the nominee(s) for various properties that he owns/holds, the succession of these properties shall transpire as per the nomination(s), as well. However, whether his assumption is correct?

Nominee To Receive, But Legal Heir To Own - On a holistic interpretation of judicial precedents over the years the position of law on this point now, seems settled.

While there is no contest to the fact that it is the legal heir who is the ultimate, rightful owner of the property of a deceased individual (either through intestate or testamentary succession); for practical purposes, it is the person who is named as the nominee of the property of the deceased, who shall actually receive and hold such property (till the matter of succession or inheritance is decided) immediately on the demise of the individual.

This essentially means that the nominee will receive and hold the property of the deceased until he is legally bound to transfer or distribute it to the legal heirs of the deceased.

Supreme Court - In 2006, in the context of a title dispute between a nominee and a legal heir, over a flat in a cooperative housing society in Kolkata, the court plainly stated that the flat would be transferred to the nominee - but the actual ownership of the flat clearly lay with the legal heirs of the deceased.

Reserve Bank of India - In the case of deposits with a bank, the Reserve Bank of India (RBI) has clarified that upon the demise of an account holder, the nominee would receive the balance from the deceased's account, to hold "as a trustee of the legal heirs of the deceased", and that such payment by the bank shall not affect the right or claim of any person against the nominee.

The RBI has reasoned this approach as necessary, to ensure that banks are equipped to discharge their duty and are also shielded from being enmeshed in a legal dispute between a nominee and a legal heir over the property title.

Securities and Exchange Board of India - Mutual Funds Regulations, 1996 - With respect to mutual fund folios, on a cohesive reading of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, and the applicable forms, it can be understood that upon the demise of a mutual fund holder, the nominee will merely be holding it "in trust", and the legal heir is free to make a claim over the folios against the nominee.

Bombay High Court - The position of a nominee versus a legal heir in relation to the shares of an Indian company. The Court held that a nomination does not in fact, override the laws of succession in India. A nomination is made with a view to ensure that the estate of the deceased is protected until such time the legal representatives of the deceased can take appropriate steps towards succeeding to such estate. Thus, the nominee of shares of an Indian company is not the legal owner of the shares and therefore, the legal heirs of the deceased shareholder would have a rightful claim over such shares.

Exceptions To This Rule - In relation to succession of insurance proceeds, it should be noted that there was a relevant change in insurance law, in 2015, whereby the concept of a "beneficial nominee" was introduced. The change provides that if a policy holder names his parents, or spouse, or his children, or his spouse and children, or any of them, as the nominee, such person(s) shall not act as a mere caretaker or trustee but shall in fact be treated as the ultimate beneficiary of the monies payable by the insurer, to the exclusion of other legal heirs. 

However, it is not mandatory to nominate a beneficial nominee, and if the nominee is a person other than those specified above, the general rule would prevail, and such nominee would hold the monies as a caretaker / trustee for the legal heirs.

Transfer Of Shares - As, in most case, securities form a substantial part of assets. "The process of transmission in case of dematerialised holdings is more convenient as the transmission formalities for all securities held in a demat account can be completed by submitting necessary documents to the depositary participant, whereas in case of physical securities the legal heirs/nominee/surviving joint holder has to independently correspond with each company in which securities are held.

The claimant should also submit to the concerned DP an application in transmission request form (TRF) along with a notarised copy of the death certificate, in case of the death of the sole holder where the sole holder has appointed a nominee.

Sole Holder Has Not Appointed A Nominee - A problem will arise when the sole holder has not appointed a nominee. In such a case, you will need a notarised copy of the death certificate of the holder and any one of the following certificates

a) Succession certificate.

b) A certified copy of the will and the probate (if there is any).

c) A certified copy of the letter of administration (if value of holding is less than Rs 1 lakh).

Minor Child's Rights - Where the parent of a child has died suddenly without leaving a will. What can a minor child do in such a case. A minor child needs to file a case in any court or petition through a guardian under the law or a guardian appointed by the court. Although minors have the legal capacity to own property, they do not have legal capacity to manage it.

Since minors are legally incapable of handling property, a guardian is appointed from among their relatives to manage the property. If no one step forward to be a guardian (under the supervision of Court) on account of the fiduciary nature of the responsibility, the court may appoint a guardian and house the share of the minor with such a guardian.

Spouse Can't Interfere With Children Inherited Belonging - The court also ensures that minors are adequately protected. If your children inherit a share of your house, your spouse will not be able to sell it, rent it out, or even refinance the mortgage without a court order. And when it comes to investing these assets, the court takes adequate steps to protect them as well. The court may pass additional orders to protect the interests of minors as to how the assets falling to the hands of minor are to be invested till the minor attains the majority.

Mutual Agreements - The real problem arises when there are too many people vying for the same property. This is quite a possibility when the deceased has children, spouse as well as kin. All the heirs may not live in the same state, or they may not be able to agree on what should be done with the property. The more heirs you have, the more money and effort they will have to spend trying to get organised. In such a situation, relatives should opt for a mutual agreement.

If the specific relatives of the deceased have come to a mutual agreement as regards dividing the assets/properties of the deceased, then they may document, sign and witness and file the same to the succession court along with their application.

This mutual agreement must be comprehensive and deal with all known relatives and kindred of the deceased. It cannot be prejudicial to any of the relatives/kindred. This will greatly speed up the process of issuance of a succession certificate.

Mutual Agreements to be Accompanied With A Succession Certificate - Settlement is to be recorded either by way of partition deed duly registered with the sub registrar of assurances or a decree passed by the court or a settlement before the court in a judicial proceeding. However, a mutual agreement is not conclusive. A mutual agreement by itself is not sufficient. One should need to get a succession certificate as well. It is best to keep a will in place so that your family is saved from the hassles of getting things in order.

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BN- 19122019