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How to resolve family finances when an earning member dies

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Where the death of an earning family member can bring with it complex financial tasks, you may use the following points to make your financial task easier:

The first thing to do after the demise of a family member is to inform the employer.

“You need to apply for a death certificate by getting in touch with the regional authority concerned after providing the requested information,” said Archit Gupta, founder and chief executive officer, ClearTax. “You then have to contact the banks in which the deceased family member held accounts and submit a copy of the death certificate and other documents to close loans and credit cards.” It usually takes 10 days to get the death certificate after registering the death with the municipal authority concerned.

Track investment: Meanwhile, you may take suitable decisions concerning any investment made by them. You should first make a list of their investments. This should include shares, mutual funds, fixed deposits and insurance policies, among others.

“For Sebi-regulated instruments, it is enough to look at the eCAS (consolidated account statement), which includes a list of mutual funds, stocks and other listed investments. Also, take a look at the tax filings of the years gone by for declarations of investments and assets. You can get this from the income tax filing portal or your accountant,” said Prateek Mehta, co-founder and chief business officer, Scripbox.

If the deceased family member had availed of a term insurance policy, you need to initiate the claim as soon as possible by submitting a duly filled claim form and relevant documents. Since the deceased family member was employed when he/she died, you should also get in touch with the regional EPF commissioner’s office to initiate the claims under Employees’ Provident Fund, Employees’ Pension Scheme and Employees’ Deposit-Linked Insurance Scheme schemes, if eligible.

Besides, there might also have been an insurance cover granted as part of credit card memberships or employer insurance. Do file the requisite paperwork to get the appropriate insured amount.

In addition, you should also scan through the bank statements of the years gone by to get an inventory of investments, participation in government schemes and loans extended by the deceased to others.

“Make sure to safely retain their mobile phone and other devices to access details concerning policies and other things,” said Gupta.

Check estate planning records: You must check whether the deceased had made or registered a Will. With the help of a Will, the task to distribute assets among family members becomes easier.

Rishabh Shroff, partner, Cyril Amarchand Mangaldas, said, “In case the deceased family member has left behind a Will, it is advisable to identify the various properties (movable/immovable) covered thereunder. It would be helpful if along with inventorizing the assets, you attempt to locate the related documentation to such assets e.g. title deeds to your house property, nomination papers for bank accounts, etc. This process will help ensure that no asset is inadvertently left out during the administration process. It would also be helpful if an inventory is created for all liabilities (loans and debts) and expenses (premiums, utilities, etc.) of the deceased.”

However, if a person dies intestate, i.e., without a Will and without nominating members, then the survivors need to get a succession certificate from a district court that will certify legal heirs. This would be valid only for movable assets and financial assets such as bank deposits, mutual funds, etc. However, for immovable assets, such as real estate, one has to prove to be a legal heir. One can make use of a probate in case of a Will, else a letter of administration(LoA) is essential to establish title to the property and have your name entered in the relevant records. In the case of immovable properties, the rules generally vary from state to state.

“For bank accounts, if there is no survivorship clause, the bank balance can be paid jointly to survivors as well as legal heirs of the deceased,” said Mehta.

In addition, one may be required to produce a succession certificate, letter of administration, probate or bond of indemnity or surety by the survivor or nominee.

For EPF and insurance, the nominee is usually the legal heir. In other cases, the nominee is the executor of the Will or has the responsibility of ensuring that the legal heirs get their appropriate share of the estate.

For all other investments, get in touch with the relevant financial institutions at the earliest to intimate them about the demise of the investment holder, while pausing auto modes (SIPs, SWPs), if required.

Financial assets require a death certificate and ID proof of the nominee before the investments can be transferred.

Mint Takeaway: Even though there is a lot to process for families after the loss of an earning family member, their debts also become the surviving family’s responsibility and is a financial strain that must be dealt with at the earliest.

Deal with liabilities promptly. Ensure that utility, cable, credit cards, club membership fees, car insurance, etc., all are taken care of as soon as possible.

“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, if not settled by the estate. For unsecured loans and credit card outstanding, the credit issuer writes off the dues upon the passing away of the holder,” said Mehta.

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