This year more families than usual have been mourning the passing of their loved ones. The pandemic has caused immense pain for many in quite an unexpected way. In such a period of grieving, one also has the responsibility of handling multiple financial tasks that need to be taken care of. 

Here are some steps to resolve any financial complications, when such a tragedy takes place:

1.  Get the death certificate

Report and register with the concerned municipal authority within 21 days of the death of a family member by applying for a death certificate. It’s usually issued within ten days of applying. Ensure you spell out the name exactly (and in full) as per the official records of the deceased. Ask for multiple copies from the authorities. 

2. Check for a will

Secondly, check if the deceased has registered a will. Having a will makes it easier to work out the distribution of assets among family members. Nomination in turn makes it easier to transfer assets on the production of death certificates and identity proofs. However, it needs to be noted that the nominee is just a trustee of assets. In case of a conflict, the wishes of the deceased testator as mentioned in the Will takes precedence over nominations.

Furthermore, if the parents die intestate and without nominating members, then you need to get a succession certificate from a district court which will be valid only for movable assets like bank deposits, mutual funds and so on. However, for immovable assets like real estate, one has to prove to be a legal heir. One’s share in a property in turn can be forfeited by signing a release deed. 

3. Modify bank accounts

The next step would be to manage the bank accounts of the deceased. Transfer of asset ownership is relatively simple if there is a nominee or where the joint account is opened with the survivorship clause (say “either or survivor”, or “former or survivor”). It could be done by providing a death certificate and identity-related proof. Term deposits can be prematurely terminated without a penalty in such cases.

However, if there is no survivorship clause, the bank balance can be paid jointly to the survivors as well as the legal heirs of the deceased. Furthermore, there could be an insistence on the production of a succession certificate, letter of administration, probate or bond of indemnity or surety by the survivor or nominee.

If the income or arrear of the deceased is pending to be transferred by the employer, ensure you don’t close the account prematurely. Some banks allow the creation of separate deceased accounts where all inflows in their name could be allowed to be credited, provided it is not withdrawn. 

4. Track-down Investments

Make an investment list. This should list investments of the deceased such as shares, mutual funds, fixed deposits, insurance ULIPs and others. Contact the relevant financial institution to intimate about their death while also pausing auto modes (SIPs, SWPs), if need be.

For instance, contact Registrar and Transfer Agents (RTA) or mutual funds to seek transmission of units. The simplest way for customers to achieve this across mutual fund holdings is by approaching RTAs instead of notifying numerous mutual funds

Like in the case of other investments, a nominee or surviving joint holder usually needs to provide a death certificate along with identity-related proofs to transfer units in their name. Remember to update the folios with the new bank account for carrying out further transactions. 

Similarly, make claims for term policies and remove the name of the deceased from the family health policies by following the appropriate procedure. 

5. Take care of liabilities

There will be a whole lot of bills – utility, cable, credit cards, club membership fees and car insurance to pay. Ensure the bills are paid on time to avoid penalties. Similarly, tackle car or home loan EMIs.

The general rule is that the legal heirs are liable for the debt of the deceased only to the extent of one’s share in the inheritance and if not settled by the estate. So, for instance, if two daughters have inherited financial assets worth Rs 10 lakh each and the deceased parent has a Rs 50 lakh loan to repay, each will be liable to repay loans only to the extent of Rs 10 lakh.

If the home loan has been taken jointly, intimate the lender about the death while working out ways to eventually remove names of the deceased from existing properties. 

Evaluate cash flows in the new context and accordingly work out a family budget to tide over the crisis. Last but not least don’t forget to file income tax returns of the deceased. 

Takeaway

The death of a parent or an earning member in the family does bring with it complex financial tasks. Use the above checklist to make the task easier.