7 tasks to complete for settling money matters after the demise of a loved one

Apart from the need to have health insurance, the COVID-19 pandemic has also brought us close to another reality, it is crucial to make a Will. It becomes even more challenging for the family if the deceased person was the sole-bread earner and handling complex financial matters independently. Assuming your departed loved one wrote a Will, there are other matters to be take care of to ensure the funds that your loved one left behind don’t go waste.

Apply for multiple copies of death certificate

This is the most important document required when you approach financial institutions, insurance companies and government agencies. The death certificate is mandatory while closing bank accounts, claiming insurance proceeds, transferring investments and also to claim or sell the other assets of the deceased person. “Remember to apply for at least 20 copies of death certificate and make sure the deceased person’s name matches the official documents issued by the government, such as Aadhaar or PAN,” says Prathiba Girish, Certified financial planner and Founder of Finwise Personal Finance Solutions. Check for any errors in the death certificate; a mistake in, say, the name can cause problems and delay the procedure for transferring assets, applying for insurance claims, etc.

Where is the will?

Financial advisors recommend that you share a copy of your Will with your heirs in your lifetime. But if you know that your loved has left behind one, but did not give it to you, then you need to locate it. A Will is a document that your loved one had prepared that lays down who gets what. “Having a Will is a must for easy and fair distribution of wealth according to desires of a deceased person,” says Pratibha.

If there is no Will, then get ready to do a bit of running around. “In this case, you will need to apply for a succession certificate from the court,” says Vishal Dhawan, Certified financial planner and founder of Plan Ahead Wealth Advisors. A succession certificate is required for handling the finances of the deceased. It’s best to consult a lawyer. If there are multiple claimants, like your siblings, it’s best to mutually agree on the lawyer.

Sort out all the financial documents

Often you tend to have your financial documents all over the place. “Family members go through hard times because they need to find where all the investments and insurance documents are kept,” says Mrin Agarwal, financial educator and founder of Finsafe India. Armed with a copy of the Will or a succession certificate you need to approach mutual funds and insurance companies to begin with, to check for any investments that your loved one may have made in his lifetime. If your loved one had kept you informed, it’s easier to track the investments. You must also check bank statements for credit of interest from company fixed deposits, bank FDs, dividend income from stocks, annuity from insurance companies, etc.

Immediately after the demise of the person in the family, you must reach out to all the financial institutions. Apply for transfer of assets to your name and add new nominees with relevant documents.

“If you do not inform the demise of the investment holder to financial institutions nor claim the money on maturity from company fixed deposits, provident fund, bank fixed deposits or dividends from stocks then this money of deceased person will go into the unclaimed deposit account,” says Agarwal. Getting your funds releasing from unclaimed deposit account is a long-drawn process.

If the deceased person was employed, get in touch with the employer to claim provident fund, gratuity, last monthly income and insurance benefits from the employer.

Are there any loans to be repaid?

There is a possibility that your loved one may have been repaying a loan. You need to find the lender; details of loan instalments being paid can be had from bank statements. List down all such liabilities, credit card dues and so on. “Not all family members are financially savvy. They don’t understand how to repay the liabilities,” says Dhawan.

Once you have a list of all the investments and money that your loved one has left behind, loans should be paid off first. And then the remaining assets can be distributed. Otherwise, the lender can come after the legal heirs to recover pending dues.

Prepare a financial plan all over again

 If the diseased was the sole breadwinner of the family, your financial plan will change. “There could be absolute loss of income, dependent family members may not have enough funds to pay off the liabilities, etc. Also, existing assets will be utilised to pay off the liabilities,” says Pratibha.

Take a look at whatever investments have been left behind. Now, you will need to check if those investments suit your own risk profile. Is there enough money to pay off the liabilities? If not, then you would need to sell something from the kitty. Make sure you remove all the liabilities at the earliest, before you think of how you want to spend or reinvest the inheritance.

File tax returns on behalf of a deceased person

 You must file the income tax return of the deceased from the beginning of the financial year until their date of death. “By filing a tax return, the taxpayer can get closure on the financial dealings of the person, any tax due must be paid or a refund may be claimed as applicable. It is the duty of the legal heir to do tax compliance for the deceased. After filing this return, PAN should be surrendered by following a process,” says Archit Gupta, Founder and CEO, ClearTax. The return should contain the details of the income earned until the date of death. In case you are a legal heir, it is your responsibility to discharge the tax dues with interest, if any, on behalf of the deceased. Otherwise, you will end up paying a penalty, which will be an additional burden.

For the purpose of filing the income tax return of the deceased, you should have the bank statements, prepare accounts in the case of business or profession and have the details of income, expenses and investments.

Deactivate Aadhaar card and erase social media presence

Often, after the demise of a person, her Aadhaar card remains active for years as no one in the family applies for deactivation. “In such situations, fraudster takes the identity of the deceased person and carry out fraudulent activities which may result in financial loss,” says Sachin Dedhia, an Independent Cyber-crime investigator and Certified Ethical Hacker.

Dedhia states that it’s important to close e-mail and social media accounts of a deceased person after a couple of months.