Bereave You Will, Brace You Must

The second wave of the Covid-19 virus hit the country like a tornado, with thousands of people being infected every day. While age-wise data for number of infections and deaths has not been released by the government this year, there have been many reports, including official admissions, that the second wave has hit the younger population much harder. Even if we take data published by the government for last year, nearly half the people who died of Corona virus infection were aged below 60, with 35 per cent of them within the 45-60-year bracket.

It is obvious that a large number of households have lost their earning members and, in many cases, the breadwinners in Covid. A quintessential middle-class family runs into a rough patch following such a catastrophe. The family members are often in the lurch regarding financial matters that are traditionally handled by the man in the family and seldom discussed with the wife or the children. The average middle-class Indian doesn’t also care for writing a will. In such a situation, it becomes almost impossible for the survivors to figure out how much assets and liabilities they have been left with. It makes the task of fiscal management after the passing away of the breadwinner far harder.

While lenders, if any, would come knocking on the door to recover their dues, the family is rarely informed about the assets the man has left behind. Recovering the asset and monetising it again puts up fresh hurdles for the family. The crisis leave the bereaved flummoxed.

According to CA Rohan Garg, Partner at RMR and Associates, the very first thing one should do in such a situation is to find out if the deceased was in touch with a chartered accountant or had an advocate handling the income tax and other financial matters. If so, then that person would be best placed to give the relevant details regarding assets and liabilities of the dead. “Another major source of information about life insurance policies of the deceased is his insurance agent, as they always keep record of every policyholder,” says Garg.

The job becomes more difficult if the deceased handled the finances himself or herself without opting for services of a chartered accountant or an insurance agent. One wonders how would the family track down details of all investments, including insurance policies.

According to Prateek Mehta, co-founder and Chief Business Officer at Scripbox, a good place to start is by creating a list to help you connect the dots. For Sebi-regulated instruments, look at the eCAS (Consolidated Account Statement), which includes a list of mutual funds, stocks and other listed investments. One should also look at tax filings from the previous years, as they might have a list of assets.

“It would also be helpful to look at old files for any physical records of assets like old insurance policies, share certificates, etc. Most financial institutions create an SMS and email trail. A lot can be learnt from the inboxes of the deceased. It would be important to look at outflows from bank statements, to ascertain credits into government schemes like Public Provident Fund (PPF), Kisaan Vikas Patra, Sukanya Samridhi Scheme, etc,” Mehta says.

Once details of all these investments are tracked down, the family members can proceed towards getting access to the same. One can start with informing all banks, insurance companies, deposit lockers, etc about the demise of the family member as soon as possible, says Anurag Jhanwar, co-founder and partner, Fintrust Advisors. If there are any joint accounts family members held with the deceased, then these can be operated by the survivor. For other accounts, the family members can ask respective banks for nominations.

In most cases, a nominee is declared when an account is opened, and after due verification, funds are transferred to the nominees. “The same goes with mutual funds, PPF and other investment accounts, where the nomination is sought while opening accounts,” Jhanwar says.

“One should also check if the deceased had signed up for the Employee Provident Fund and made at least one contribution to the account in the last 12 months (before death). If yes, then immediate family members can get up to Rs 7 lakh in free life insurance cover under the Employee Deposit Linked Insurance. Check if, under any government scheme, family members of the deceased are eligible for the relief fund,” he says.

If a person dies intestate or without a will and without nominating members, then the survivors need to get a succession certificate from a district court which authorises legal heirs. This certificate is valid only for movable assets and financial assets like bank deposits, mutual funds, etc. “But for immovable assets like real estate, one has to prove to be a legal heir. In case you choose to forfeit your share in favour of a family member, it can be done by signing a release deed,” says Mehta.

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. 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 the nominee. For EPF, the nominee is the legal heir.

Even though there is a lot to process for families after the loss of a loved one, 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 are all are taken care of as soon as possible. The general rule is that 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. 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,” Mehta explains.

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Checklist For Family

• With the PAN Card of the deceased, you can connect with CAMS and Sebi to find out all investments in mutual funds and stocks.
• Go through the past year’s bank statement to know if any insurance payments were made. Connect with the insurer, and they will support you with the claim.
• Visit banks to check on fixed deposits made.
• Check income tax returns filed in the last three years by the deceased, and you will get an update on past investments.
• In case of no will, inform the housing society to transfer the property in the survivor’s name.
• Keep the mobile and email ID of the deceased active as a lot of information of investments will show up here.
• Keep all your money in fixed deposits till you learn how to handle it on your own.

Vishve@outlookindia.com