 | « Back to article | Print this article |
If the property is inherited from one generation to another, the person who inherits it cannot pass it on as s/he wishes, points out Rajesh Narain Gupta, managing partner, SNG & Partners.
When an individual inherits assets, either through a will or under personal laws, s/he needs to complete a few legal formalities to become the rightful owner.
While the procedure to transfer movable assets in the beneficiary's name is simpler, it can be tricky when it comes to immovable assets.
In the case of jewellery, cash or stocks, the beneficiary only needs to transfer them in her/his name.
When it comes to real estate, the beneficiary not only needs to transfer the asset but also mutate records in the concerned government department or revenue records.
Tedious procedure
It's best to hire a lawyer to assert your claim on the assets and to comply with the formalities.
However, knowing the procedure will help in arranging documents and will expedite the process, if required.
For this, you would need to apply for a probate of the will, a letter of administration or a succession certificate from the court.
You may also need to take physical control of the inherited assets to protect them while carrying out the transfer.
There is also a possibility that the deceased who wishes to pass on her/his property may have appointed someone as a nominee for some of the assets, which may include movable as well as immovable.
But a nominee is a mere trustee until s/he is successfully able to establish a beneficiary's claim and pass on the assets.
To avoid any problems, the asset owner should appoint someone close as a nominee.
The best practice is to declare the nominee as the beneficiary under the will.
In the absence of a will
If there is no will, the assets of the deceased may be inherited by the legal heirs based on the applicable Personal Laws or the Succession Act.
If the deceased is a Hindu, for example, and has not prepared a will, the first right of asset inheritance will remain with Class I legal heirs comprising the mother, wife and children in equal proportion.
If there are no Class I legal heirs, the property or assets will be passed to Class II heirs which include brother, grandchildren, father, sister or relatives.
If the deceased is a Hindu married woman, the property will be passed in equal proportions among her husband and children.
In their absence, her assets will be passed on to her parents and the legal heirs of her husband.
If the property is inherited from one generation to another, the person who inherits it cannot pass it on as s/he wishes.
It will be subject to certain legal limitations.
Only property which is earned or owned by self-initiative can be bequeathed by the deceased to persons of her/his choice.
In fact, a will creates a barrier in the seamless succession as it does not permit smooth inheritance by all the beneficiaries.
Procedure for mutation of property title
After inheriting the property, the beneficiary needs to carry out mutation of the property title once the relevant orders are obtained from the court.
Mutation of title means the transfer of title ownership from the existing owner to the new owner in the land records, municipal records and the records of the lessor, depending upon the nature of the interest held in the property.
In some states like Delhi, the municipal corporation accepts the registered will and mutates the property based on it and other relevant documents.
The government can then charge property tax from the rightful legal owner once the mutation process is done.
Every authority has its prescribed list of documents and fees for enabling mutation.
The documents include a copy of the sale deed, application for mutation with affixed court fee stamp, indemnity bond on stamp paper of requisite value, affidavit on stamp paper of requisite value and receipt of property tax payment.
A mutation certificate is mandatory when the beneficiary plans to sell the property in the future.
The certificate proves the change in ownership.
It can also be furnished as a tax document.
The absence of mutation certificate creates hindrance when the beneficiary is selling the property as clear ownership is not established.
Mutation of a property is the key to ensuring transparency in the sale of a property and attracting the right market value for it.
It is also advisable that the beneficiary obtains the appropriate orders related to succession from the court.
It will further establish proper title to the property, and avoid unnecessary legal hassles and disputes.
Beneficiary also inherits liabilities
There is an old saying that if the deceased had a black horse, the beneficiary will also get a black horse.
The inheritor does not get any superior right to the assets that w/he inherits.
It's not that a person may only inherit highly-valued assets from a deceased without inheriting the liabilities alongside.
It is possible that an estate or assets that are passed on may come with mortgages or disputes.
In the event of an inherited home having a loan outstanding, the beneficiary will be responsible for its repayment -- the loan becomes the liability of the inheritor.
It also needs to be noted here that the written permission of a lender is mandatory for the passing of a mortgaged property to the inheritor.
It is also the responsibility of the inheritor to obtain the loan clearance certificate of the inherited property once the loan has been paid in full.
There are chances that a property which has been inherited may be under litigation owing to specific reasons.
The beneficiary of the estate also inherits the litigation liabilities of the property and bears accountability to face the conduct of a lawsuit associated with it.
The decision passed by the court in any real estate litigation becomes binding on the inheritor subject to her/his right to appeal the verdict in a higher court.
