Secure banking assets, but settle liabilities too
If there is no nomination, but there's a Will, the executor needs to get a probate from a court. Once the court approves the probate, the bank will release the assets as per the Will
When it comes to assets and liabilities, it’s important to take stock of the bank accounts—savings, deposits and loans—of a deceased person.
The first point of contact for a bank in case of individual accounts is the nominee. But a nominee is just a trustee of the assets, and legal heirs can make a claim at a later stage.
Savings and deposits
In case nomination is in place for savings accounts,fixed deposits, postal deposits and small savings schemes, the nominee needs to submit a claim along with the death certificate and her own KYC details. If there is no nomination, but there’s a Will, the executor needs to get a probate from a court. Once the court approves the probate, the bank will release the assets as per the Will.
In a scenario where neither nomination nor Will is left behind, the bank will first ascertain that the person died intestate or without a Will, and then the legal heirs can submit a claim for the assets. The legal heirs who don’t take the proceeds need to submit a disclaimer that they do not object to the proceeds being handed over to others. Legal heirs getting the assets need to sign an indemnity, a legal declaration that the bank will not be liable in future in case of a dispute and that they will make good for the amount in case of a dispute later.
In case a lien exists on the assets or the deceased had liabilities, like a personal loan backed by these assets, the bank will deduct the amount and hand over the balance. Similar processes are in place for small savings schemes, including PPF, subscribed through a bank or a post office.
Loans and liabilities
“If there is a Will, the executor has to recognise the registered debt claims . On ascertaining the legitimacy of the debt, it needs to be repaid to the extent of estate value recovered. However, it may be noted that any shortfall is not the personal liability of the executor or legal heir or beneficiary,” said Rajat Dutta, founder, Inheritance Needs Services Pvt. Ltd. In case of secured loans, like a home or car loan, or loan against property, the bank will first consult the legal heirs if they would like to continue any of them. Otherwise, it can recover the dues from the underlying assets. If there is a co-borrower, she is liable to repay the loan.
For unsecured loans, like credit card outstanding, the legal heirs are not immediately liable to repay. However, the banks can raise a demand depending upon the inheritance and the amount outstanding. Legal heirs should inform the bank about the demise of the holder so that interest doesn’t accumulate.
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First Published:14 Jan 2019, 10:31 AM IST
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