What happens to my investments when I die

Your investments will be passed on to your heirs after you die. If you die leaving a will behind, your property will go to the heirs named in the will according to the shares you have specified. If you die without a will, these will the heirs mentioned by the personal law applicable to you. For example, if you are a Hindu, your investments will be passed on according to the Hindu Succession Act, 1956 and if you are a Muslim, your investments will be passed on according to Muslim Personal Law. Note that property owned by an HUF (Hindu Undivided Family) cannot be passed on by a will. Your share in HUF property will automatically be divided among the coparceners (members) of the HUF. In this article, we will explain the process of succession and inheritance with major types of property:

Making a will

A will can be made in India in accordance with the provisions of the Hindu Succession Act or the Indian Succession Act. It has to be signed by the deceased and witnessed by at least two competent witnesses. A will does not have to be registered but registration can strengthen the validity of a will. A will typically appoints one person (who may or may not be an heir) as the ‘executor of the will.’ This person has to carry out all the succession formalities in trust for the legal heirs of the deceased. Note that a will can be challenged on various grounds like forgery, fraud and unsoundness of mind of the deceased in a court of law.

Nominee or Legal Heir

Under Indian law, the nominee is only a caretaker. He/she can also be the legal heir but this may not always be the case. The nominee holds your investment in trust for the legal heir and cannot misuse the money for himself/herself. In case nomination is registered only a death certificate (copy attested by notary) and (in some cases) letter of indemnity is required. However if there is no valid nomination, you will have to submit probate of will/succession certificate/leter of administration to the relevant intermediary/custodian..

Tax

There is no inheritance tax or estate duty on Indian law. However such a tax may be applicable if you have assets outside Indian under the law of the country in question. Such countries may also have different laws of inheritance and those local laws will prevail over Indian law for assets located in foreign countries.  

Stocks/Shares

Stocks and shares can be passed on to nominees by submitting a death certificate copy attested by a notary/gazetted officer. This form must be registered to the appropriate custodian such as NSDL or CDSL. If nomination is not registered, the heirs must submit either:

1. Probate of Will
2. Succession Certificate
3. Letters of Administration

You can access the form for transmission of shares and other financial securities here.

Mutual Funds

The process of inheritance of mutual funds is called ‘transmission’. Your mutual funds will be passed on to your nominees.

Documents required for the transmission of a mutual fund, if valid nomination has been registered, are.

1. Letter from surviving unit holders to the Fund/RTA requesting for transmission of units.
2. Death Certificate(s) in original or copy of the death certificate duly attested by Notary Public or by Gazetted Officer
3. Bank Account Details of the new first unit holder as per along with signature attestation by a bank branch manager or cheque copy with account number and holders’ name printed on the cheque.
4. KYC confirmation letter/acknowledgment letter
5. FATCA Self certification

If there is no valid nomination registered, you would need to submit a probate of will/succession certificate/letter of administration.

PPF

Your PPF account devolves to your nominee who must fill and submit Form G. If there is a valid nomination there is no need for a probate of will/succession certificate/letters of administration from a court of law. However if there is no valid nomination registered, the same will be required.

NPS

Your NPS balance will pass on to your heirs just like any other assets. You can find and download the form for NPS claim, in the event of death, here. If you are receiving an annuity under NPS, many annuities provide for continued payment to the spouse/return of annuity purchase price. However if you have purchased a ‘simple annuity’, the same cannot be inherited.

EPF

Your EPF balance will pass to your nominee. The nominee has to submit a composite death claim form/ Form 10 D for withdrawal of EPF balance. In addition, if your death occurs while you are an active EPF members, your family will be entitled to life insurance under EDLI – Employees’ Deposit Linked Insurance. If you are getting a pension under EPF, your spouse or child can inherit a part of the pension under widow’s and children’s pension. You can find out more about this here.

Life Insurance

Upon your demise, the beneficiaries of your life insurance policy will receive the life insurance money applicable. Technically, this amount is called the sum assured or death benefit. For example, if you have a term insurance of Rs 1 crore, your beneficiaries will get Rs. 1 crore. Only family members and not strangers can be the beneficiaries/nominees of a life insurance policy. This rule is called ‘insurable interest’ and only a family member can have insurable interest in you.

Land/Real Estate

Your title to a flat/house/piece of land etc can be passed on to your heirs through a will/applicable personal law. You will have to make an application to the local municipal corporation/municipal corporation/village talathi to make a mutuation in the land ownership record, entering your name.

Gold

Physical gold can simply be passed on through a will. If there is no will, letters of administration/succession certificate will be needed. Electronic gold will follow the same process as inheritance of stocks/shares.