Transfer of Inherited Assets in India - Part III - "Judicial Settlement" or Settlement
Precap: Part I and Part II was roadmap of transfer of inherited assets and transfer by mutual agreement. Part III of this article shall focus on court process for transfer of assets of the deceased owner.
Inheritance is a legal right of all heirs, which cannot be taken away without due process of law. If heirs are unable to agree on transfer of assets, they may seek court intervention to distribute assets.
“Judicial Settlement of Estate” is a process when distribution and transfer of assets of the deceased occurs under court supervision.
Ownership of assets of the deceased must transfer. Without transfer, no heir, including surviving spouse, shall have any right, whatsoever, in any asset of the deceased. No asset may be possessed, sold, or transferred in any manner. No heir has a right to lease property. No heir has right to use cash assets, collect rent or interest income from assets in the name of deceased.
Heir(s) must begin the process within six months of passing away of asset owner. All heirs, male and female alike, become “Joint Owners” as “Tenants-in-common” of all assets of the deceased on the date of his/her passing away. Anyone claiming otherwise, must establish his/her claim in court of law.
Every heir has a right to "Partition” his/her share of inheritance and dissolve tenancy relationship at any time.
Transfer of ownership of assets of the deceased occurs by the following two court processes:
1. Appointment of Legal Representative of Deceased by grant of "Probate" of Will, "Letter of
Administrator" or "Succession Certificate" for transfer of assets; OR
2. Partition of inherited assets.
“PROBATE” OF “WILL”
“Will” is not the primary document for transfer of ownership. It cannot be implemented till it is admitted to probate by court. The Court must certify that "Will" in question is a valid legal document.
The process begins by filing of Petition by “Executor” named in the “Will” with request to appoint him/her as Legal Representative of the deceased. The executor submits original “Will”, death certificate of the deceased, list of his/her heirs, inventory of debts and liabilities, and appraised value of assets. All heirs are notified and provided an opportunity to contest “Will”, whole or any part of it, by filing objections to grant of probate to executor. All creditors are notified by publication in local newspaper.
If Court finds that the "Will" in question is a valid document, it will admit the Will to “Probate” and appoint the Executor to administer the Estate upon filing of the set court fee (see below).
The Estate of the deceased opens and "Executor" begins collecting assets, paying debts and liabilities of the deceased, and transferring assets as per the “Will”. He/she submits report before the Court for review.
The Estate is closed for all future claims after all assets of the deceased are transferred.
Although, in many states, like Delhi, “Probate” is not mandatory, but it becomes a necessity when any heir requires "Executor" to do so.
LETTER OF ADMINISTRATION OF ESTATE
Letters of Administration is similar to Probate but it may be issued to any heir of the deceased. If an “Executor” is incapable or refuses to act as an “Executor”, or deceased did not execute “Will” or “valid Will”, any heir may petition for grant of “Letter of Administration”. The administrator shall have the same responsibilities as that of an “Executor”. If existence of “Will” is claimed, it must be established. Otherwise, transfer of assets shall occur in accordance with law of succession.
SUCCESSION CERTIFICATE
A Succession Certificate is granted by the Court to any heir to represent the deceased for the purpose of collecting debts and securities due to him/her.
It is meant for protection of debtors, so they know as to whom they can safely pay the debt due to deceased person. The certificate does not make the heir (who obtains Succession Certificate) owner of any amount collected by him/her. It only furnishes him/her with an authority to collect the debts and allows the debtors to make payment without incurring any risk.
COURT FEE
The Court fee for grant probate of “Will”, “Letter of Administrator” and “Succession Certificate” is a set percentage of value of the assets. It differs from state to state. In Delhi, court fee for grant of probate and Letter of Administration is 4% of value of probate or administration assets.
For issuance of Succession Certificate, Court Fee payable is 2.5% for the items initially mentioned in the petition and if any additions are made then on the additions, Court Fee is to be paid @ 4% of their value.
PARTITION OF INHERITED ASSETS
Every heir has a right to partition his/her share in inheritance and dissolve "Joint Tenancy Relationship" at any time after passing away of the deceased owner.
An Heir files “Suit for Partition” in Civil Court. All other heirs are served with summons and Plaint and provided an opportunity to respond. If heir(s) agree on partition, the suit may be adjudicated as uncontested matter. Otherwise, the court shall conduct a trial and enter an order partitioning share of the claimant.
The court has an authority to grant order of Partition “by kind” or Partition “by sale” of asset(s). If asset(s) cannot be partitioned, the court may order the asset to be sold and give share to the heir who filed Suit.
COURT FEE
Suit for Partition requires payment of ad valorem court fee, based on “Court Fee Act, 1870” and valuation slab applicable to every state. The ad-valorem court fee payable for Suit for Partition in Delhi is Rs. 6,248 (for first 4 lakhs) plus Rs. 48.80 for every Rs. 5,000 or part thereof, in excess of 4 lakhs.
For Example, if share of heir seeking partition is worth 2 crore rupees and property is in Delhi, heir must pay the following court fee -
Upon first 4 lakh: Rs. 6,248.00
Upon remaining Rs. 1,96,00,000 Rs. 1,91,296.00
Total: Rs. 1,97,544.00
REGISTRATION OF COURT ORDER WITH OFFICE OF SUB-REGISTRAR
Heir(s) must register Court Order and record ownership of asset with office of sub-registrar, where the property is located to facilitate smooth sale/transfer in future.
To conclude, transfer of assets of deceased is a set legal process. All heir, male and female alike, must know their rights, make informed decisions, and take timely action in transfer of assets under legal professional assistace and guidance.
Author: Santosh K. Pawar is managing attorney of Law Firm of Santosh K. Pawar. She is licensed to practice in India and U.S. She specializes in U.S. Immigration and NRI property matters. Her expertise includes consulting on property and transfer of inherited assets in India. For more information and assistance, contact by email at santosh@attorneypawar.com, call at (585) 264-1649 or WhatsApp at (585) 474-0935.
