Given the plethora of legal options available today, the absence of a Will is not an impediment to succession, writes Krishnaveni Sivagnanam

After retirement, Kumar, a financial consultant, and his wife, a school principal, pooled in most of their resources to invest in a small farmhouse. They invested the remaining amount as fixed deposits, shares, debentures, etc, in Kumar’s name. It seemed as if they had tied all loose ends, when a fatal heart attack claimed Kumar. While coping with unforeseen loss was harrowing, what was even more traumatic for Kumar’s wife was handling complex financial issues, as he had not left behind a Will.

Such situations are not very uncommon. A person dying without leaving a Will is described in law as ‘dying intestate’.

Intestate succession laws provide for the distribution of property when a person dies without leaving a valid Will, wherein the spouse and other legal heirs will receive shares in the estate according to the laws of descent, distribution and marital rights. In India, Hindus, Sikhs and Jains are covered under the Hindu Succession Act, 1956 and Indian Succession Act, 1925. While Muslims are governed by Muslim Law, Christians, Parsis and Jews are governed by the Indian Succession Act, 1925. The law provides for various ways to prove the legal heirs of the deceased and ensures successful distribution of property.

Legal Heir Certificate

In the event of a person dying intestate, the primary document that will aid the family is the Legal Heir Certificate. The government issues a Legal Heir Certificate to those whose parent, spouse or child is dead. An enquiry is conducted by a revenue inspector, and village or mandal administrative officer, after which the certificate is issued. This certificate is helpful for transferring electricity connection, house tax, telephone connection, transfer of patta and bank account, insurance claims, etc. If the deceased is a government servant, the Legal Heir Certificate is issued for sanction of the family pension and to secure employment on compassionate grounds.

It’s important to remember that the Legal Heir Certificate is valid only if the claim is undisputed. The moment a claim or dispute is made—for instance by a second wife or stepchildren, estranged son or daughter—the certificate becomes invalid and is cancelled. In the case of ‘E Padma v. The District Collector’ on 18 February 2010, the Madras High Court dealt with the case of a second wife challenging the decision of the tahsildar who refused to include her name in the Legal Heir Certificate. The petition was dismissed as the first wife was still alive and the marriage of the second wife could not be accepted as legal. While delivering the judgement, the court also added that if the petitioner claimed she was entitled to be declared as the legal heir, she should move the appropriate civil court for a Succession Certificate.

Succession Certificate

A Succession Certificate establishes who the legal heirs of the deceased are and gives them the authority to inherit debts, securities and other assets. It also affords protection to the parties paying debts to the representatives of the dead person. In the case of Kamala Banerjee, whose husband was a former employee of Kolkata Port Trust and died intestate, the Port Trust insisted on a Succession Certificate from a court of law to release pension arrears (‘Kamala Banerjee & Another v. Union of India and others’ in 2013 in the Calcutta High Court).

To obtain the Succession Certificate, the legal heir has to petition the district court or High Court within whose jurisdiction the assets fall. The petition usually mentions the relationship of the petitioner with the deceased, details of other surviving legal heirs, the time, date and place of death of the deceased, and the fact that the deceased died intestate. The court, after examining the petition, issues a notice to all the respondents. It also issues a notice in a newspaper and specifies a time frame—usually 45 days—within which anyone can raise objections. If no one contests the notice and the court is satisfied, it passes an order to issue a Succession Certificate to the petitioner. The court generally levies a fee of 3 per cent of the property for which the Succession Certificate is sought.

A Succession Certificate is not a document to declare the share of the successor or to decide on the question of title to properties. For these issues, the successors have to approach the civil court for relief. The purpose of the certificate is to assure the debtor that if he pays the money to any one of them it will be deemed that he has paid every successor. It is the duty of the grantee to dispose of the amount in the proportion in which the heirs are entitled.

If there is more than one petitioner, the court may grant a joint certificate, but each certificate will be for a single asset. In the event of death of one of the holders, the certificate does not hold good and a fresh certificate has to be obtained. Grant of certificate to one heir does not strike out or destroy the claim of others. However, if one of the heirs is dissatisfied and takes the matter to court, assets are distributed as per the succession law applicable to the deceased’s assets, state, and religion. A Succession Certificate is needed for transfer of assets such as fixed deposit in a bank, provident fund, shares in a company, etc.

The certificate may be revoked if the process for obtaining the certificate was defective or fraudulent, and when the certificate becomes redundant and inoperative owing to certain circumstances. An appeal against revocation or cancellation of order of the district judge lies with the appropriate High Court.

Nominations

Most banks, insurance companies and financial institutions usually release funds to the nominee. However, the nominee is not the final beneficiary of the asset. A nominee is just a trustee in the eyes of the law, who has to disburse the amount as per the laws of succession. The object of nomination is to facilitate the disbursement of funds on the demise of the nominator. The Bombay High Court reiterated this fact on 31 March 2015 in the Salgaonkar case whose facts are follows: The deceased Jayant Shivram Salgoankar had made several investments in mutual funds and named two of his heirs as nominees to the bulk of those investments. The remaining heirs contended that the investments formed a part of the estate and were subject to laws of succession. The nominees on the other hand argued that by virtue of their nomination they were the rightful owners and the investments did not form a part of the estate. The court held that a nominee is only a convenience to enable the company, bank or insurance company to discharge its obligation. However, the nominee can only hold the proceeds as per trustee for the rightful heirs of the deceased whether under intestate law or a valid Will.

Letter of Administration

Letters of Administration become necessary when a suit has to be filed by the legal heirs with respect to the property, when a lease has to be surrendered, and a debt has to be released. The next of kin or a close relative may apply for a Letter of Administration. The court generally gives first preference to the surviving spouse to administer the estate over any other claim. Next in line of preference are the children, grandchildren, great grandchildren, and in their absence the father or mother of the deceased, and other relations. In the absence of all the aforementioned, creditors or a person of the court’s choice gets preference.

Before the grant, an administrator cannot file a suit in representative capacity of the estate, release an action or release a debt, assign the property of the deceased, surrender a lease, give notice as administrator or effect a valid mortgage. An application by a competent person is to be filed to a civil court of competent jurisdiction, which will appoint the administrator to dispose of the debts. Though the title of administrator does not exist until the grant of administration, it relates back to the time of the death of the intestate. As the property does not vest in the administrator until the grant of administration, the heirs of the intestate have the power to deal with property until the appointment of the administrator and their transaction in respect of the property will not be invalidated by the subsequent appointment of the administrator, if the transaction has not caused any injury to the estate.

Though intestate succession may loom large at the beginning, it can be solved through proper planning and execution. In the absence of counter claims or disputes, matters can be solved with the help of the aforementioned documents. Even sale of immoveable properties of the deceased can be effected with the help of a Death Certificate and Legal Heir Certificate. In some states, in cases of intestate succession, property can be gifted or shares in immovable property can be released by legal heirs to each other by executing and registering gift deeds or release deeds. With mediation and conciliation mechanisms available, the need for litigation to solve such problems is on the decline. Thus, the absence of a Will is not an impediment to succession any more.

LEGAL OPTIONS AT A GLANCE

• A person dying without leaving a Will is described in law as dying intestate.
• The primary document that will aid the family to manage the estate of the deceased is the Legal Heir Certificate.
• A Succession Certificate establishes the legitimate legal heirs of the deceased and gives them the authority to inherit debts, securities and other assets.
• The nominee is not the final beneficiary of the asset but just a trustee in the eyes of law, and has to disburse the amount as per the laws of succession.
• Letters of Administration become necessary when a suit has to be filed by the legal heirs with respect to the estate.

The writer is head of research at Altacit Global, a law firm specialising in intellectual property, corporate law, real estate and franchising

Photo: iStock
Featured in Harmony — Celebrate Age Magazine
November 2016