You are here: Home » PF » Features » Financial Planning
Business Standard

Here's why succession certificate is important to claim financial assets

The process may take almost a year but is useful when negotiating with banks and debtors

Priya Nair 

Banks

In the absence of nomination or will, the heirs to a piece of or are required to prove their claims to them. In such cases, depending on the asset, an heir might be asked to produce either the succession certificate or the letter of administration.

For movable like the provident fund, bank deposits, shares, loans, or other securities, the succession certificate is required. For immovable like land or jewellery, one has to produce the letter of administration in support of his or her claim.

For instance, if the deceased had lent money to a company or an individual, the borrower might ask the heirs for proof. In such a case, the heirs will require a certificate from the court saying that they are entitled to the estate of the deceased. “Once they get this certificate, they can ask the borrower to repay the money and issue a receipt that will prove that the borrower has returned the money to the right person,” says Anil Harish, lawyer with D M Harish and Company. 

In the case of bank accounts, the or shares, there is a provision for the nominee. But if there is a dispute, the court can ask for the succession certificate. 

“For example, banks, and financial and private institutions would release funds to the nominee on their own. However, the nominee may not be the legal beneficiary. He may be a trustee till the ultimate beneficiary can be determined. Therefore, if the nominee refuses to cooperate or if there is any other dispute, one would require the succession certificate,” says Divi Dutta, Partner, Shardul Amarchand Mangaldas.

Similarly, in case the amount involved is huge or the financial institution has a doubt if the claimant is genuine, it might ask the claimant to produce the succession certificate. Additionally, in certain states, a probate (a copy of the will authenticated by the court) and the succession certificate are mandatory for transferring the title of an immovable property, Dutta adds.

Usually, if the amounts are small, the bank or the financial institution will ask for a declaration by the heirs, but there is no thumb rule regarding the amount, says Anshuman Jagtap, Associate Partner, Hariani and Company.

In some cases, the bank or the financial institution might ask for the legal heirship certificate, which is easier to obtain than the succession certificate. The difference is that the legal heirship certificate is issued to identify the living heirs of the deceased whereas the succession certificate is issued to establish the authenticity of the heirs and give them the authority to inherit the assets, says Dutta.

In order to procure the latter, the beneficiary has to file a petition in the court with details such as the name, relationship, names of all other heirs, time, and the date and place of death. Along with the petition, the death certificate and any other document that the court might require should be attached.

The court, after examining the petition, issues a notice to all those concerned and also publishes a notice in a newspaper and specifies a timeframe (usually one and a half months) for objections to be raised. 

If no one contests the notice and the court is satisfied, it passes an order to issue the succession certificate to the petitioner. If there is more than one petitioner, the court may jointly grant them the certificate. “It can take a year for the court to issue the succession certificate. If there is a dispute, the petition goes into a suit,’’ says Jagtap.


RECOMMENDED FOR YOU

Here's why succession certificate is important to claim financial assets

The process may take almost a year but is useful when negotiating with banks and debtors

The process may take almost a year but is useful when negotiating with banks and debtors
In the absence of nomination or will, the heirs to a piece of or are required to prove their claims to them. In such cases, depending on the asset, an heir might be asked to produce either the succession certificate or the letter of administration.

For movable like the provident fund, bank deposits, shares, loans, or other securities, the succession certificate is required. For immovable like land or jewellery, one has to produce the letter of administration in support of his or her claim.

For instance, if the deceased had lent money to a company or an individual, the borrower might ask the heirs for proof. In such a case, the heirs will require a certificate from the court saying that they are entitled to the estate of the deceased. “Once they get this certificate, they can ask the borrower to repay the money and issue a receipt that will prove that the borrower has returned the money to the right person,” says Anil Harish, lawyer with D M Harish and Company. 

In the case of bank accounts, the or shares, there is a provision for the nominee. But if there is a dispute, the court can ask for the succession certificate. 

“For example, banks, and financial and private institutions would release funds to the nominee on their own. However, the nominee may not be the legal beneficiary. He may be a trustee till the ultimate beneficiary can be determined. Therefore, if the nominee refuses to cooperate or if there is any other dispute, one would require the succession certificate,” says Divi Dutta, Partner, Shardul Amarchand Mangaldas.

Similarly, in case the amount involved is huge or the financial institution has a doubt if the claimant is genuine, it might ask the claimant to produce the succession certificate. Additionally, in certain states, a probate (a copy of the will authenticated by the court) and the succession certificate are mandatory for transferring the title of an immovable property, Dutta adds.

Usually, if the amounts are small, the bank or the financial institution will ask for a declaration by the heirs, but there is no thumb rule regarding the amount, says Anshuman Jagtap, Associate Partner, Hariani and Company.

In some cases, the bank or the financial institution might ask for the legal heirship certificate, which is easier to obtain than the succession certificate. The difference is that the legal heirship certificate is issued to identify the living heirs of the deceased whereas the succession certificate is issued to establish the authenticity of the heirs and give them the authority to inherit the assets, says Dutta.

In order to procure the latter, the beneficiary has to file a petition in the court with details such as the name, relationship, names of all other heirs, time, and the date and place of death. Along with the petition, the death certificate and any other document that the court might require should be attached.

The court, after examining the petition, issues a notice to all those concerned and also publishes a notice in a newspaper and specifies a timeframe (usually one and a half months) for objections to be raised. 

If no one contests the notice and the court is satisfied, it passes an order to issue the succession certificate to the petitioner. If there is more than one petitioner, the court may jointly grant them the certificate. “It can take a year for the court to issue the succession certificate. If there is a dispute, the petition goes into a suit,’’ says Jagtap.


image
Business Standard
177 22

Here's why succession certificate is important to claim financial assets

The process may take almost a year but is useful when negotiating with banks and debtors

In the absence of nomination or will, the heirs to a piece of or are required to prove their claims to them. In such cases, depending on the asset, an heir might be asked to produce either the succession certificate or the letter of administration.

For movable like the provident fund, bank deposits, shares, loans, or other securities, the succession certificate is required. For immovable like land or jewellery, one has to produce the letter of administration in support of his or her claim.

For instance, if the deceased had lent money to a company or an individual, the borrower might ask the heirs for proof. In such a case, the heirs will require a certificate from the court saying that they are entitled to the estate of the deceased. “Once they get this certificate, they can ask the borrower to repay the money and issue a receipt that will prove that the borrower has returned the money to the right person,” says Anil Harish, lawyer with D M Harish and Company. 

In the case of bank accounts, the or shares, there is a provision for the nominee. But if there is a dispute, the court can ask for the succession certificate. 

“For example, banks, and financial and private institutions would release funds to the nominee on their own. However, the nominee may not be the legal beneficiary. He may be a trustee till the ultimate beneficiary can be determined. Therefore, if the nominee refuses to cooperate or if there is any other dispute, one would require the succession certificate,” says Divi Dutta, Partner, Shardul Amarchand Mangaldas.

Similarly, in case the amount involved is huge or the financial institution has a doubt if the claimant is genuine, it might ask the claimant to produce the succession certificate. Additionally, in certain states, a probate (a copy of the will authenticated by the court) and the succession certificate are mandatory for transferring the title of an immovable property, Dutta adds.

Usually, if the amounts are small, the bank or the financial institution will ask for a declaration by the heirs, but there is no thumb rule regarding the amount, says Anshuman Jagtap, Associate Partner, Hariani and Company.

In some cases, the bank or the financial institution might ask for the legal heirship certificate, which is easier to obtain than the succession certificate. The difference is that the legal heirship certificate is issued to identify the living heirs of the deceased whereas the succession certificate is issued to establish the authenticity of the heirs and give them the authority to inherit the assets, says Dutta.

In order to procure the latter, the beneficiary has to file a petition in the court with details such as the name, relationship, names of all other heirs, time, and the date and place of death. Along with the petition, the death certificate and any other document that the court might require should be attached.

The court, after examining the petition, issues a notice to all those concerned and also publishes a notice in a newspaper and specifies a timeframe (usually one and a half months) for objections to be raised. 

If no one contests the notice and the court is satisfied, it passes an order to issue the succession certificate to the petitioner. If there is more than one petitioner, the court may jointly grant them the certificate. “It can take a year for the court to issue the succession certificate. If there is a dispute, the petition goes into a suit,’’ says Jagtap.


image
Business Standard
177 22