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A Beginner’s Guide to Succession Certificates in India

A Beginner’s Guide to Succession Certificates in India

When it comes to estate planning, we often hear of a succession certificate. But do you know what it is? Let’s dive in.

Team Yellow

5

n

min read

July 25, 2023

So, What Is A Succession Certificate?

Simply put, under the Indian Succession Act, 1925, a succession certificate is a legal document usually issued by the District Court to facilitate the transfer of financial assets (usually from banks and other such institutions) to legal heirs.

Predominantly, it gives the applicant the authority to:

  • Collect the deceased’s assets
  • To receive interest and/or dividends, and
  • To aid the transfer of those securities

Courts in India have time and again held that the ‘grant of the certificate gives to the grantee a title to recover the debt due to the deceased, and payment to the grantee is a good discharge of the debt’. Essentially, when a debt is owed to the deceased, the debtor can make payment of the debt to the holder of the certificate, and it is a valid discharge of the debt as against the debtor.

In an interesting landmark judgement [Banarsi Dass V. Teeku Dutta; (2005) 4 SCC 449], the Supreme Court threw light on the purpose of a succession certificate. It posited that all that the succession certificate purports to do is to facilitate the collection of debts, to regulate the administration of succession and to protect persons who deal with the alleged representatives of the deceased persons. The Apex Court emphasized that such a certificate does not give any general power of administration on the estate of the deceased. A succession certificate is intended to protect the debtors, which means that when a debtor of a deceased person pays their debt to a person holding a certificate, they are lawfully discharged. The grant of a certificate does not establish a title of the grantee as the heir of the deceased, but only furnishes them with authority to collect their debts and allows the debtors to make payments to them without incurring any risk.

When Do We Need It?

In most cases, succession certificates are required for movable assets such as bank accounts, fixed deposits, stocks, and mutual fund investments, retirement or provident fund accounts, insurance claims, and so on.  However, a common practice has evolved depending on the State or an institution’s rules, where authorities demand a succession certificate for ascertaining the applicant’s claim over an immovable property as well, such as flats, houses, commercial properties and so on.

Is A Succession Certificate Necessary When A Will Exists?

When there is a valid Will in place, the need for the certificate does not arise and therefore, is usually not demanded by authorities, since the certificate’s main purpose is for the collection and transfer of assets, when the deceased has not left any specific instructions for the same.

Who Can Apply For The Certificate?

A person with sound mind, who may have a financial interest or claim derived from the deceased's estate, can apply for the succession certificate at the Court of competent jurisdiction. That being said, a beneficiary, legal heir or even a creditor can apply for the certificate, depending on the requirement.  Even a minor can apply for a succession certificate through their guardian.

Where Must The Application Be Filed?

The application is generally filed in the District Court depending on where the deceased ordinarily resided or where the assets in question are found to be located. Also, the certificate is valid throughout India once the certificate has been granted. So this eliminates the requirement to apply for multiple certificates across different States.

It is also important to note that only one succession certificate can be granted. It can be issued to a single applicant or multiple applicants jointly.

What Is The Process To Obtain A Succession Certificate?

The applicant can request for a succession certificate by filing an application at the Court of competent jurisdiction, in the prescribed format, and must include the details of time and date of passing and the address of the deceased, details of the legal heirs, list of assets for which the certificate is sought, right of the applicant over the claim and other documents as may be prescribed.

Along with the application and the supporting documents, the appropriate Court fee must be paid by the applicant - usually a certain percentage of the asset’s value with a prescribed cap on the maximum fee.

Post submission, the Court reviews the request and publishes the details in the local newspaper inviting objections. If no objection is received within a period of 45 days, the Court grants the succession certificate to the applicant.

Can The Certificate Be Revoked Or Cancelled By The Court?

In some situations, the Court can even revoke or cancel the succession certificate when fraudulent methods have been used to obtain it or facts were untrue or misrepresented. It is therefore helpful to be aware of such reasons, in order to avoid circumstances leading to it.

Succession Certificate vs Legal Heir Certificate

A succession certificate is often confused with a ‘legal heir certificate’. However, the two are not substitutes for each other, and their requirements may differ in specific cases. A legal heir certificate is a document to establish the relationship between the deceased and his/her legal heir/s alone. Whereas in the case of a succession certificate, the right of claim over the assets of the deceased is granted to the applicant, who can be the legal heir, beneficiary or even a creditor. Depending on the location of the assets, the authorities may demand a succession certificate or a legal heir certificate, as the case may be.

Need Assistance?

In conclusion, recovery of assets can be a complicated and exhausting process in India, with so many intricate details and legal processes to consider, especially for someone who is unfamiliar with the system.

For this reason, Yellow Smart provides an end-to-end seamless and hassle-free solution to ease any worry of running from pillar to post to get these processes completed. Be it filing applications in Court or reaching out to financial institutions, we’ve got you covered.

Team Yellow
5

n

min read
July 25, 2023

Tags

Legal Knowledge

Estate Planning

Succession Planning

Financial Planning

Financial Education

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