How NRIs Can Manage Bank Accounts, Shares & Property of a Deceased Relative

Handling the financial assets of a deceased family member in India presents unique challenges for Non-Resident Indians (NRIs), particularly when navigating unfamiliar legal terrain from abroad. This guide provides a clear path forward, focusing on essential steps for managing bank accounts, shares and property. 

While it emphasizes key considerations for estates domiciled in India, seeking advice from a legal expert remains crucial to tailor procedures to the deceased’s country of domicile. For personalized support, consider consulting professionals at ezyLegal.

Inheritance of a Deceased Family Member

When someone passes away without a valid will, a situation known as intestate succession, their assets distribute according to India’s community-specific succession laws. These typically cover real estate and financial holdings, where financial assets include bank accounts, term deposits, equity and debt investments, insurance policies, gold, cash and similar items.

Most financial assets qualify as movable property. Under the Indian Succession Act, 1925, the succession of movable property follows the law of the deceased’s domicile at death. For NRIs or their relatives holding assets in India, this means applying the domicile country’s laws for transfers. Always consult a legal expert to clarify applicable procedures and regulations in that domicile.

The process can feel overwhelming, especially with emotional strain, but understanding the framework helps. For instance, if the deceased was domiciled in India, personal laws like the Hindu Succession Act guide distribution. This ensures fair allocation among heirs, but disputes can arise without proper documentation, leading to prolonged court involvement.

Key Legal Rights for NRIs

NRIs hold the same inheritance rights as Indian residents for assets located in India. They can inherit, own and transfer immovable properties like land and buildings, as well as movable ones such as bank accounts, shares and mutual funds. These rights extend to ancestral, self-acquired and jointly owned properties, depending on the heir’s relationship to the deceased and governing laws.

Legal implications for NRIs include compliance with the Foreign Exchange Management Act (FEMA), which regulates cross-border transactions. Failing to adhere can result in penalties or blocked repatriation. Specific groups, like those with dual citizenship or Overseas Citizens of India (OCI) status, may face nuanced rules, though inheritance itself requires no Reserve Bank of India (RBI) approval.

Types of Property and Inheritance

Property in India falls into broad categories that NRIs must understand for effective management.

• Ancestral Property: This passes through up to four generations of male lineage, remaining undivided and subject to personal laws.
• Self-Acquired Property: Acquired through personal earnings, transferable via will or succession laws.

NRIs can inherit both types, but the framework varies. With a will, distribution follows the testator’s wishes; without, intestate rules apply. For Hindus, this means priority to Class I heirs like spouses, children and mothers.

Managing Financial Assets of a Deceased Family Member

Transferring a deceased relative’s financial assets to beneficiaries requires completing legal formalities in India. If life insurance exists, file claims per policy terms, providing death certificates and proofs.

Procedures differ by asset type, but common threads include notifying institutions and submitting documents. Delays often stem from incomplete paperwork or disputes, impacting heirs emotionally and financially.

1. Bank Accounts, Fixed Deposits, Safe Deposit Lockers and Other Bank Assets

To close or transfer these, follow bank policies. If a nominee is appointed, they submit account details, the death certificate and KYC documents. Without a nominee, transfers go only to legal heirs, with the nominee acting as custodian until heirs are confirmed.

For NRIs inheriting from Indian residents, extra steps apply:

• Complete documentation at bank foreign offices or before Indian embassy officials.
• Use a Power of Attorney (PoA) for an Indian resident to handle tasks.

If beneficiaries are in India, they follow standard bank procedures. Offline methods, like in-person visits to branches, often prove more efficient for complex cases, avoiding online portal glitches. However, online portals through banks like State Bank of India or HDFC Bank allow initial notifications and tracking.

Practical tips: Gather all statements early to avoid surprises. DIY is feasible by preparing a checklist of required docs, but if disputes arise, professional help prevents escalation.

2. Shares, Securities and Other Financial Investments

Notify issuers, stock exchanges or brokers with death certificates, KYC and proofs. Legal heirs or nominees follow prescribed processes for transfers.

Online demat account portals ease submissions, but offline affidavits or court orders may be needed for disputes. Efficiency favors offline for personalized guidance from depository participants like NSDL or CDSL.

What Assets Can NRIs Inherit in India?

NRIs can inherit all property types, even those restricted for purchase.

Movable Assets:

• Bank accounts (NRE, NRO, resident)
• Shares, mutual funds, bonds
• Fixed deposits
• Jewellery, vehicles, cash
• Personal belongings

Immovable Assets:

• Residential and commercial properties
• Agricultural land (inheritance allowed, purchase restricted)
• Farmhouses and plantations (similar restrictions)

Under FEMA, inheritance from residents or other NRIs is permitted if originally acquired legally.

Laws Governing the Inheritance of Immovable Property in India

NRIs inherit from Indian residents or non-residents, provided compliance with foreign exchange laws at acquisition.

In intestate cases, personal laws dictate. For Hindu males under the Hindu Succession Act, 1956:

• Class I heirs: Spouse, sons, daughters, mother.
• Class II: Father, siblings.
• Agnates: Male-line relatives.
• Cognates: Through either parent.

Legal implications include mutation of records, which if ignored, can lead to title disputes affecting sales.

Process of Claiming Inherited Property

Claiming involves sequential steps to minimize delays.

1. Obtain the Death Certificate: Essential proof, ideally within 30 days. Delays require affidavits or magistrate orders.
2. Determine Applicable Personal Law: Based on religion, defining heirs and shares.
3. Probate the Will: Court validation, mandatory in states like Maharashtra, West Bengal, Tamil Nadu for certain properties.
4. Obtain Legal Heir or Succession Certificate: Court-issued for no-will cases, authorizing claims.
5. Transfer Ownership: Submit docs to authorities like revenue offices or banks.

Timelines vary: 3-6 months for simple cases, up to 18 months with disputes. Costs include court fees (e.g., 2-3% of estate value in some states) and legal expenses.

Step	Timeline Estimate	Key Documents	Potential Challenges
Death Certificate	7-30 days	Medical report, ID proofs	Delays in registration
Probate/Succession Certificate	6-12 months	Will, affidavits, heir proofs	Court backlogs, disputes
Ownership Transfer	1-3 months	Certificates, property deeds	Bureaucratic hurdles
Asset Distribution	Varies	Bank statements, investment proofs	Verification rejections

Practical tips: Use PoA for NRIs to delegate; track via online portals like e-Courts for status.

Key Documents Required for NRIs Inheriting Assets

Smooth transfers demand:

1. Death Certificate: Proof of demise; delayed issuance needs affidavits.
2. Succession/Legal Heir Certificate: Establishes heirs for debts/securities.
3. Ownership Evidencing Documents: Policies, receipts, statements.

NRIs may need apostilled docs or embassy attestations.

Filing Taxes: Ensuring Tax Compliance on Behalf of the Deceased

File returns in two phases.

1. Up to Date of Death: Legal heir registers as representative assessee on the Income Tax portal.
2. After Death: Executor handles until distribution; then, heirs tax income from assets.

No inheritance tax, but capital gains on sales apply. Consult experts to avoid penalties.

Repatriation of Inherited Funds

NRIs remit sale proceeds up to USD 1 million per financial year via RBI guidelines, needing inheritance proofs, tax clearances. Exceeding requires approval. Real-world impacts: Delays can tie up funds, affecting liquidity abroad.

Common Challenges and Solutions for NRIs

Challenges include disputes, tenant issues, procedural ignorance. Solutions: Engage legal pros, use PoA, maintain records.

Offline methods shine in resolving queries directly, while online suits tracking.

Real-World Examples and Case Studies

To illustrate, consider these anonymized experiences drawn from recent discussions.

1. Mutual Fund Claim Delays: An NRI sought to claim units bought by their parent without nomination. Despite submitting death certificates, succession docs and court orders, rejections persisted over minor details, costing over INR 200,000 and two years. Lesson: Add nominations early; persistent follow-ups and legal aid resolve such bureaucratic hurdles.
2. Bank Account Closure Struggles: A family faced upsell attempts from banks while closing a deceased relative’s account, amid grief. Multiple visits and forms led to frustration, but compiling a shared asset list beforehand eased identification. Outcome: Successful transfer after six months, highlighting empathy gaps in systems.
3. Property Inheritance Dispute: Heirs disputed ancestral land without a will, leading to court delays of 18 months and fees around 3% of value. Mediation via PoA resolved it, allowing sale and repatriation. Key fact: Per recent stats, unclaimed assets in India exceed INR 5 lakh crores, often due to poor planning.
4. Insurance and Investment Transfers: An NRI used online portals for notifications but switched to offline for verifications, cutting time from expected 12 to 8 months. Research shows such hybrid approaches reduce errors by 40%.

These underscore planning’s value, with success tied to documentation and professional guidance.

Comparisons: With vs. Without a Will

Aspect	With Will	Without Will
Distribution	As per wishes	Per succession laws
Timeline	3-6 months probate	6-18 months certificates
Costs	Lower legal fees	Higher court expenses (2-3% estate)
Disputes	Reduced	Higher risk

Wills simplify, but both benefit from DIY prep like asset inventories.

Practical Tips for a Smooth Process

• Create a family-shared digital list of all assets, IDs and contacts.
• Opt for DIY where possible: File online for certificates via portals, but visit offline for clarifications.
• Avoid intermediaries unless complex; PoA empowers trusted locals.
• Update nominations regularly to bypass some steps.

These steps empower NRIs, making processes manageable without excessive costs.

For ongoing support or complex cases, reach out to ezyLegal.

Frequently Asked Questions on How NRIs Can Manage Bank Accounts, Shares & Property of a Deceased Relative in India 

Q1. Can NRIs inherit bank accounts, shares and property in India?

Ans1. Yes, NRIs enjoy full rights to inherit these, matching residents, under applicable laws.

Q2. What happens if a deceased person in India did not leave a will?

Ans2. Assets distribute via personal succession laws, like the Hindu Succession Act for Hindus.

Q3. Is probate of a will mandatory for NRIs inheriting property in India?

Ans3. Yes, in jurisdictions like Maharashtra, West Bengal and Tamil Nadu for immovable assets; recommended elsewhere.

Q4. What documents are required for NRIs to claim inherited assets in India?

Ans4. Include death certificate, will/succession certificate, heir proofs and asset ownership docs.

Q5. How can NRIs transfer bank accounts and fixed deposits of a deceased relative?

Ans5. Nominees submit death cert and KYC; no nominee needs heir certificates. Use PoA for efficiency.

Q6. Can NRIs inherit agricultural land or farmhouses in India?

Ans6. Yes, inheritance is allowed despite purchase restrictions.

Q7. What is the role of a nominee in inheritance of financial assets?

Ans7. Nominees hold as custodians; ownership vests in legal heirs per laws.

Q8. Are NRIs required to pay tax on inherited property or assets in India?

Ans8. No tax on inheritance; only on generated income like rent or gains.

Q9. Can NRIs repatriate money received from inherited assets in India?

Ans9. Yes, up to USD 1 million yearly, with proofs and tax compliance.

Q10. How can an NRI manage inheritance procedures without visiting India frequently?

Ans10. Execute PoA for a trusted Indian resident to handle formalities.

Q11. Which law governs succession of movable assets held in India by an NRI?

Ans11. The deceased’s domicile country’s law, per Indian Succession Act.

Q12. What are the biggest challenges NRIs face while inheriting property in India?

Ans12. Disputes, documentation gaps, court delays and bureaucracy; mitigated by pros.

Q13. How long does it take to obtain a succession certificate in India?

Ans13. Typically 6-18 months, depending on court and completeness of application.

Q14. What fees are involved in getting a legal heir certificate?

Ans14. Court fees around 2-3% of estate value in some states, plus legal costs up to INR 10-20 lakhs for complex cases.

Q15. Can NRIs sell inherited agricultural land?

Ans15. Yes, but buyers must be Indian residents; repatriate proceeds per RBI rules.

Q16. What if there are disputes among heirs during inheritance?

Ans16. Court mediation or partition suits resolve; early legal advice prevents escalation.

Q17. How to handle unclaimed investments of a deceased relative?

Ans17. Notify institutions with proofs; shared asset lists help identify them.

Q18. Is there an online process for probate in India?

Ans18. Partial online filings via e-courts, but hearings often offline.

Q19. What tax implications arise from selling inherited property as an NRI?

Ans19. Capital gains tax applies, with indexation benefits from original acquisition date.

Q20. How to avoid delays in bank asset transfers for NRIs?

Ans20. Ensure nominations, prepare docs in advance and use embassy attestations.