Be aware of what rights, obligations and rights of the nominee as well as the legal heir in relation to their rights regarding the estate of the deceased if the deceased passes away interstate
In the past, someone wrote an inquiry on social media inquiring about the status of the benefits that were paid for her husband who died by his employer. These benefits were then given to her father-in-law since the nominee. The amount due was the not paid salary, gratuity and other benefits for employees like insurance and provident funds.
"I reside within my family with the inlaws. My father-in law wants to transfer the entire amount of these death benefits into my account at the bank. However, he got these benefits only a couple of weeks ago and used a portion of the funds mostly on food items as well as other household items. According to my understanding, as we are Hindus and even though my husband listed my father-in law's name as his nominee my son and I are the legal inheritors. Do you think this is a valid assumption?" the reader asked.
What is their legal Status?
Ruchika Bhagat chartered accountant and managing director of Neeraj Bhagat & Co, an New Delhi based CA firm According to the Hindu Succession Act, 2005 in the event of an intestate (no will) succession, property rights will be transferred to heirs of class 1, that includes daughters, sons mother, widow or son of a deceased son, and others.
"The estate of the deceased should be divided between all class I heirs in a proportional manner in the event that some members will be willing to part with their shares, a non-objection certificate or settlement deed will be necessary in that regard,"Bhagat says.
In this specific instance any transfer that is unilaterally made from an individual the deceased's father-in-law to the daughter-in law without consulting with the son of the deceased or any other legal heirs would be null and void, according to Bhagat.
According to Bhagat the issue of marriage must be taken into account when deciding on these issues. If the spouse divorced prior to death, the fundamental nature of marriage is changed, and "therefore the spouse will not be considered to be an legal heir therefore, she will not have the right to part in this property."
What Do the Legal Heirs of The Deceased Do Now?
Abhinay Sharma managing partner of ASL Partners, a New Delhi-based law firm. He advises that should the deceased person not have a Will in place, the legal heir should seek an heirship certificate from the legal system or an estate certification from the Civil Court/Tehsildar office or the court designated for civil cases or the designated civil court.
Both of these documents legally prove that the people are in fact the legal descendants of the dead.
A succession certificate is needed to purchase any property that is immovable or movable by the legal heirs in their own name. The certificate also transfers the debts to descendants of deceased. Only the successors (children or grandchildren) of the deceased are able to apply to the court designated to request this.
Legal heir certificates have little significance under the Succession Act, 1925 and is necessary to be able to claim benefits such as provident funds pension, retirement, etc. It is only available through legal heirs such as parents, spouses or children from the decedent.
Says Mihir Tanna, associate director of SK Patodia and Associates, an Mumbai-based CA firm, "Any income earned after the date of death of the deceased is tax-deductible to the legal heir , but it takes time to transfer assets to the name of the legal hair. So, any income earned following death is also taxable against the PAN of the deceased and tax deducted (if appropriate) is deducted from the PAN of the deceased up to the point at which assets transfer."
What are the obligations of the nominee of the Person Who Passed Away?
Technically, there's no any time frame within which the nominee is required to pay the proceeds to the legal descendants. The main purpose for a nomination to make sure that the estate of the deceased doesn't remain ownerless in the time when succession disputes are being settled.
"Thus when there is a possibility of settlement of succession dispute, the nominee will be legally bound to transfer all property to the legal heirs." Bhagat adds.
Bhagat claims"the person who is the nominee is the trustee for the estate, and therefore is responsible for the estate until it is passed to legal inheritors. Additionally the nominee is an authorized representative under the Income Tax Act of 1961, consequently, "he is also liable to prepare the tax return for income of the deceased, and pay the taxes due from the deceased, based on the proceeds of the estate."
In no way can the nominee be removed from the estate, unless it is to benefit the legal inheritors. If he makes use of them for any other reason the legal heirs will be legally entitled to claim the funds.
"Further It is possible that upon mutual understanding the legal heirs following the time that the person who is nominated has spent this amount, can accept the transfer by writing," Bhagat adds.
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