Important financial tasks that need to be tackled on priority on the death of a spouse

By November 6, 2020 Money Matters

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Death in the family, especially of a spouse, is when the surviving spouse is forced to take a hard look on the state of finances too. Especially when it is the financially active spouse who passes away. Even as one grapples with the grief of losing your partner of long years, it also brings into focus the need to tackle a number of time-bound financial tasks that need to be prioritized. These tasks may seem insurmountable in the state of mind one finds oneself. To ease the situation, the steps and procedures listed out in the article below can come on very handy when the need arises. Team RetyrSmart

Important financial tasks that need to be tackled on priority on the death of a spouse

The following will take you through the process of sorting paperwork and facilitating tasks. About the documents needed to close accounts, transfer investments and make claims, as well as the processes to complete these tasks. Due to the pandemic, many tasks such as closing or transferring of accounts and securing documents are available online, and this will ease your workload. For others, you still might have to do the legwork.

The documents
Start by collecting all the important documents that you will need in dealing with various government and financial institutions. Separate them into two sets: one comprising identity and address proofs of the deceased, and the second that has all the financial documents and information.

Step 1: Collect the documents, online details of the deceased person

Collect the deceased person’s PAN and Aadhaar cards, passport, license, election I-card and ration card. Make several copies of each, keep them in a folder, along with a couple of pens and blank A4 sheets. These will save you the hassle while writing an application or signing documents.

Also, if you and other family members are nominees or legal heirs, collect the same identity proofs and other documents for yourself and others, and keep several photocopies ready. You could also scan all these documents and store them on your computer or phone.

If the deceased had conducted most of his transactions online, get access to his online accounts, with account numbers, log-ins and passwords. These will include information for Internet banking, online mutual fund investments, insurance, filing tax returns, among others.

To save unnecessary agony to family members in case of sudden death, it is important to store such data at one place and share its access with the spouse or adult children. “Even if you have stored the information online or digitally in your computer, it is important to keep physical copies of important documents and information in a bank locker,” says Dinesh Rohira, Founder & CEO,

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Step 2: Get death certificate
Next, get the death certificate from the municipal body or online, if the facility is available (see How to get…). “It’s the doctor who gives the death certificate, whether at home or in hospital, and on the basis of this, the government authority provides the death certificate,” says Raj Lakhotia, Founder,

All deaths have to be mandatorily registered within 21 days and if you do it within 21-30 days, you will have to pay a penalty of Rs 25 and get it certified by the medical officer, health (MOH). After 30 days and up to a year, the joint director of statistics can provide the certificate with a fine of Rs 50 and an affidavit. After a year, it will take the order of a first-class magistrate, for which you will need the ‘cause of death’ certificate, cremation certificate and an affidavit.

The death certificate will be needed for every financial task you will conduct in the next few months. So download several copies from the official website or make photocopies and keep them ready. You may also need to get them attested or notarized.

The next crucial step is to locate the will, if any, as it helps pass on the assets to the desired people with minimal disputes. “While it is important to appoint nominees, remember that a nominee is only a custodian and the assets go to legal heirs, except for securities in a demat account where nomination takes precedence over a will,” says Rohira.

If the deceased passes away intestate (without a will), you will either have to get a succession certificate, or letter of administration, or a legal heir certificate for transferring the ownership of movable or immoveable property.

There is a difference between a legal heir certificate and succession certificate though both are often mistaken to serve the same purpose. This is the reason that 33-year-old Shambhvi Sinha decided to get a legal heir certificate when her father passed away in 2018. “It was only later we realized that we would need a succession certificate to transfer property to my mother,” says the Delhi-based architect who got the certificate in nearly six months.

A legal heir certificate is used to establish the identity and relationship of living heirs to the deceased and has limited relevance in the Succession Act. It is required only to claim benefits, compensation or entitlements like insurance, provident fund, pension, electricity connection, bank deposits, etc.

The succession certificate, on the other hand, is used to prove the authenticity of heirs so that all the debts and securities of the deceased can be passed on to them. While a succession certificate will work for transferring immovable property, “a legal heir certificate can work for transferring moveable property where the amounts are not very high,” says Lakhotia.

It also costs much less to get a legal heir certificate than it does to get a succession certificate. Courts levy a fixed percentage of the value of property as court fee for issuing a succession certificate.

The letter of administration (LOA)and probate of will are instruments that allow the heirs to administer the entire estate, including both movable and immovable properties. While a probate is granted to the executor of a will to oversee distribution of assets, the LOA is granted to legal heirs in the absence of a will or if the executor does not discharge his duties.

Financial tasks
Start by separating all the documents and tasks into assets (movable and immovable property), liabilities (loans and debts), expenses (premiums, utilities, tax, memberships, subscriptions), and income (employment).

Next, inform and intimate the financial institutions about the death of the family member because some like insurers have a time frame for doing so. You can either send a mail or go personally if it is feasible. They will then inform you on how to proceed. For tasks like securing assets and benefits, transferring or closing accounts, making claims, filing tax returns, or repaying debts, here’s what to do:

Investments & assets : A registered will undoubtedly eases the process of transferring assets in places where probate is not mandatory and there is no dispute in the family. In the absence of the will, movable and immovable properties can be transferred via the instruments mentioned earlier, including legal heir certificate, succession certificate or LOA.

Movable property: These will include bank deposits, stocks and securities, mutual funds, post office schemes, provident funds, gold and jewellery, insurance maturity benefits, vehicles and any other personal property of the deceased (see How to claim movable assets….).

In most cases, where the family members or spouses are joint account holders or nominees, and there is no dispute within the family, the accounts or deposits can easily be transferred with the help of a death certificate and identity proofs of legal heirs. This is important in case of bank deposits, where you may need to operate the account to make payments or operate the locker after the death of the member.

If the bank account is jointly held by spouses and one of them dies, the surviving spouse will have to close it and start a new account, and should preferably do it jointly with an adult child. This new account can also be used to consolidate all the redemptions and benefits from various instruments at one place. If there is a dispute or there are several legal heirs or claimants, you will have to get the consent of all or rely on the will. In the absence of a will, you will have to fall back on the succession certificate, or legal heir certificate, or LOA.

As for vehicles in the name of the deceased family member, you will have to not only transfer the ownership and registration certificate, but also the insurance policy in the name of the legal heir.

Immovable property: In case of real estate, the transfer is largely governed by a will. “It essentially depends on whether one has made the will or not,” says Rohira. In case of a will, the owner can bequeath his self-acquired property to anyone he wants and executors are required to administer the property as per the will. However, legal heirs can still challenge the will. “Probate of the will is also required in Kolkata, Mumbai and Chennai in case of immoveable properties,” says Lakhotia.

The inherited property is governed by the Hindu Succession Act 1956 for Hindus, Buddhists, Jains and Sikhs, while the rest come under Indian Succession Act 1925.

In the absence of a will, the LOA or succession certificate come into play to transfer the property to legal heirs. You may also need to prepare an affidavit along with a no-objection certificate from other legal heirs or their successors. After this, you will also have to register the property in your name and apply for mutation. This is important to record the transfer of a title of property in land revenue records for payment of property taxes, or to transfer or apply for utility connections.

Loans & liabilities: An important aspect to be looked into immediately by legal heirs is the deceased’s liabilities, whether it is secured of unsecured loans. These would include home, vehicle or personal loans, or credit card dues.

The first step, of course, would be to inform the creditors of the family member’s death. If the borrower had a co-signer, or joint debtor, the latter will be held responsible for repaying the loan. If he fails to do so, the lender can file a lawsuit in order to get the payment.

In case of a single borrower, the executor of the will is responsible for settling debts. If there is no will, an administrator is appointed by the court to deal with the deceased’s debts. It is typically the legal heir who is liable to repay all debt, be it loans or credit card dues.

Taxation: This is another area that causes much confusion regarding filing of returns, paying tax, closing the account and PAN card.

The income tax return has to be filed by the legal representative for the financial year in which the demise took place and till the date he was alive. The filing is mandatory if the gross total income from all sources is above Rs 2.5 lakh below 60 years, Rs 3 lakh for 60-80 years and Rs 5 lakh above 80 years. You will also have to attach the death certificate, your and deceased person’s PAN cards, legal heir certificate and a notarised affidavit along with the return.

After filing the return, the PAN card will have to be cancelled by physically going to the income tax office, filling the cancellation form, submitting a letter including details of the deceased and a copy of the death certificate, to the assessing officer.

Insurance: There are two types of tasks to be carried out when it comes to insurance, be it life, health or vehicle. One is making claims, and the other is closing or transferring the policy (see After the death of….).

Life insurance: Be it term, traditional or annuity plans, no life plan is transferable and expires on the death of the policyholder or continues till the proceeds have been paid to the beneficiaries, and then ends. To make a claim, the assignee, nominee, close relative or agent should send a claim intimation to the insurer at the earliest, with date, place and cause of death. The insurer asks for the following documents: filled-up claim form, death certificate, policy document, deeds of assignments if any, legal evidence of title, if the policy is not assigned or nominated, form of discharge executed and witnessed. The insurer can also ask for other documents as applicable.

Health insurance: “In case of an indemnity health plan in the name of a single person, the coverage is automatically terminated and pro-rata refund of premium for the balance period of the policy is made,” says Priya Deshmukh-Gilbile, COO, ManipalCigna Health Insurance. “While making a claim on behalf of the deceased, the insurer must be informed in writing immediately and sent the copy of the post mortem report (if any) within 30 days,” says Gurdeep Singh Batra, Head, Retail Underwriting, Bajaj Allianz General Insurance.

Vehicle insurance: “On the death of the policyholder, the motor insurance can be transferred to the heir after the asset has been transferred to him,” says Aditya Sharma, Business Head, Motor, Bajaj Allianz General Insurance. The transfer will be possible only if the insurance has not lapsed. If it expires, the heir will have to renew it in his name.

Employment: Among other financial engagements, it’s easy to forget to contact the employer of the deceased if the person dies while in service. “Besides the salary, don’t forget to get Form 16, transfer the EPF, get gratuity and any leave encashment or other dues from the employer,” says Rohira.

To get the dues, you will have to furnish proof of death and your relationship with the deceased and the fact that you are a legal heir. The death certificate and legal heir certificate should help you process the claims though the company can ask for other documents. Also remember that you will require the employer to sign Form 20 for claiming EPF dues. So submit the documents to the office well in time. If you have taken any loan from the employer, he will be within his rights to deduct these before passing on the dues. You will also have to return identification cards, close official accounts and e-mails.

Also remember that if the family was covered by group life or health insurance, these will cease to exist on the death of the employee. If you don’t have an independent health insurance, you will have to buy a fresh policy to keep the coverage intact.

Utilities & expenses: In case of all utilities, including electricity, water, gas, telephone, cable and Internet, check if the payments are due and do the needful to avoid any penalties. If utilities were in the name of the deceased, you will have to get these transferred in the name of the spouse or a legal heir. Since every service provider could have different specifications to effect the transfer or closure, it is best to check the websites to find out about the requirements. Typically, it will require the death certificate, identity proofs, declaration by legal heirs and NOC by other heirs.

It is also easy to overlook miscellaneous expenses incurred by the family member, such as club or gym memberships, online entertainment subscriptions (Netflix, Amazon), gaming or retail memberships. If the payments had been automated with the credit card, you will have to close the subscriptions and automated payments.

E-mail, social media accounts: It is important to close all the social media accounts of the deceased as these can be misused. The e-mails should, however, be retained for official communication that may be required for securing assets or benefits. The phone and SIM cards should also be retained and all data transferred to a computer. The phone is likely to have crucial information like passwords, scanned documents, contact details, etc. Do cut and throw all credit, debit and ATM cards too.

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