A succession certificate is a legal document that establishes the authenticity of the heirs and gives them the authority to inherit assets, securities and other properties left behind by the deceased. It acts as a proof of succession and gives the successor the rights to inherit debts, securities and other assets. However, obtaining a succession certificate can often be a long and tedious process.
In case an individual dies without leaving behind a will, the legal heirs have to apply for a succession certificate from a civil court. This involves court procedures, submission of various documents as proof of relation and claim to the assets, verification and inquiry by court officials, etc. The whole process usually takes around 6 months to 1 year for the succession certificate to be issued.
Considering the hassles involved in obtaining a succession certificate, people often look for alternatives that can allow for smooth transfer of assets to legal heirs without undergoing the legal complexities. Here are some of the common alternatives to succession certificate:
Transfer of assets before death
One way to avoid the need for a succession certificate is to transfer the assets and properties to the legal heirs while still alive. Assets like house, land, bank accounts, investments, etc. can be gifted or transferred jointly in the name of the legal heirs. This ensures automatic transfer of ownership to the heirs after the person’s demise.
However, care must be taken to transfer assets well in advance and not in lieu of death. As per the Benami Transactions Act, transfer of properties to relatives within 1 year of death can be contested as a benami transaction.
Nomination
Nomination is another effective tool that can substitute succession certificate for certain assets. Financial assets like bank accounts, investments, insurance policies, PF & gratuity, etc. can be nominated in favor of a legal heir. On the demise of an individual, the nominee automatically becomes eligible to claim the assets.
Nomination simplifies the transfer of ownership of the asset directly to the nominee without the need for succession certificate. However, nomination is available only for certain financial instruments and cannot be used for other assets like property, valuables, etc.
Will
Making a will or testament is one of the foremost alternatives to succession certificate. A will clearly spells out the distribution of assets among the legal heirs as per the wishes of the deceased. It appoints an executor who is responsible for implementing the will after the death of the testator.
The executor submits the will in court and if found valid, the court issues a ‘letter of administration’ that empowers the executor to distribute assets to the beneficiaries as per the will, without the need for a succession certificate.
Joint ownership of property
For real estate properties like house, land, etc. owning them jointly with the legal heirs can avoid succession hassles. The property can be co-owned with the spouse, children or any other legal heirs as joint tenants with right to survivorship.
In this arrangement, each owner has an equal share in the property and on the death of one owner, their share is automatically transferred to the surviving owners. This prevents property disputes among heirs and also eliminates the need for succession certificate.
Set up a private trust
Setting up a private trust and transferring assets in its name is another efficient means to secure the estate and avoid complex succession formalities. The settlor transfers assets to the trust with clear instructions on distribution and usage for beneficiaries after his/her demise.
Since the assets are owned by the trust, there is smooth transition to beneficiaries based on the trust deed. The trustees directly distribute assets thereby circumventing succession hassles.
Set up a family settlement
Family settlements are private agreements made between legal heirs about the distribution of unnamed properties and assets. To avoid disputes, family members can enter into a family settlement deed and get it registered while the owner is still alive.
The settlement deed acts as a binding contract between the heirs and lays down the distribution pattern of properties. On the death of the owner, assets devolve to heirs as per the family settlement without requiring succession certificate.
Using small estate affidavit
In case the total estate of the deceased is below a certain value (varies across states), heirs can use a small estate/limited value affidavit for transferring assets. This simplified procedure does not involve intricate court procedures.
Heirs have to file an affidavit in court declaring details of assets and submitting indemnity bond and other papers. Once approved, assets are distributed without requiring succession certificate.
Conclusion
Obtaining succession certificate can be a tedious process that may take several months. Planning in advance by transferring assets, making nominations, wills, family settlement, etc. can help successors inherit assets smoothly without succession hassles. However, for estates with significant value, it is better to obtain succession certificate for absolute legal clarity.