What is the Difference Between Inheritance and Succession for NRIs?

Succession in India is the legal process of transferring a deceased person's property, assets, rights, and liabilities to another person. It not only includes determining who will inherit the assets but also the specific portions to which each heir is entitled to receive. It is mainly governed by personal laws in India, depending on an individual's religion, such as Hindu Law, Christian Law, and others. 

Conversely, inheritance in India is the process of receiving the property or assets from a deceased person. It includes transferring the ownership of a property, including movable and immovable assets, rights, and other belongings, to the legal heirs or beneficiaries. It is usually carried out by a will or intestate succession laws. In this blog, we will discuss the difference between inheritance vs succession for NRIs. We will also learn the common challenges faced by NRIs regarding the same. 

What is Inheritance?

Inheritance is the legal transfer of a deceased person's property (both movable and immovable), assets, rights, and even debts to their heirs, either through a valid will (testamentary) or by a state law when there's no will (intestate succession). In India, inheritance laws are governed by personal laws based on religion, like the Hindu Succession Act, the Muslim Personal Law Act, and the Indian Succession Act. 

What is Succession?

Succession refers to the process through which the assets, rights, property, and liabilities of a deceased person are transferred to another person or group of persons. It determines who will be authorised to inherit the deceased person's estate and in what portion. 

In India, succession is mainly governed by personal laws depending on an individual's personal religion. It includes Hindu Law, Christian Law, Muslim Law, and so on. 

Difference Between Inheritance vs Succession

The table below lists the primary difference between inheritance and succession for NRIs (Non-Resident Indians):

What are the NRI Challenges and Implications Regarding Inheritance and Succession?

Inheritance and succession matters are more complicated for NRIs as they involve cross-border legal systems, documentation, and authorities. Some practical difficulties may often cause long delays, even when the legal right is clear. Let's learn some common challenges that an NRI faces regarding inheritance and succession. 

Common Challenges Faced by NRIs

• Heirs living abroad while the assets are located in India: Most NRI inheritance cases face the problem of assets being situated in India while the heirs live overseas. This physical distance makes coordinating with Indian banks, courts, registrars, and government offices challenging. 

• Delays in Obtaining Succession Certificates: Obtaining succession certificates or probate proceedings can take several months or even years, especially when there are multiple heirs or when you have incomplete documents. You cannot access the assets until these are issued. 

• Stuck Property Transfers Due to Unclear Heirship: The property registrar will refuse mutation or transfer of inherited property if you don't provide clear proof of succession, leading to the prevention of sale or legal ownership updates. 

• Frozen Bank Account After the Account Holder's Death: In India, banks usually freeze accounts in case the account holder dies and release funds only after receiving clear and proper succession documentation, regardless of nomination. 

• Notarization, Apostille, and Consular Attestation Requirements: NRIs often need to submit documents that are notarized abroad, apostilled, or attested by the Indian embassies. Attestation errors could lead to rejections and delays. 

• Issues in Inherited Fund Repatriation: Before allowing funds to be transferred outside India, banks will require clear legal ownership and tax compliance even after the inheritance is settled.

Practical Steps for NRIs

Here are some practical steps for NRIs to follow to avoid facing the common challenges regarding succession and inheritance. 

• Check Assets: List the movable (succession certificate needed) vs immovable assets (mutation/probate) of the deceased person. 
• Gather Documents: Prepare some required documents like apostilled passport, OCI marriage/death certificate, and heir affidavits. 
• File Claims: Use succession certificates for bank/shares, a legal heir certificate for initial proof, and a mutation for property. 
• Tax Compliance: Get a PAN card and file ITR for inherited income. Claim relief under the DTAA treaty if double-taxed abroad. 

Final Thoughts 

Succession is the legal framework that determines the distribution of the property and assets of a deceased person, while inheritance is the process of receiving the property from a deceased person. Succession is primarily governed by personal laws depending on an individual's religion, while inheritance can be carried out through a will or intestate succession. Due to cross-border difficulties, NRIs often face delays related to documentation, regulatory compliance, court procedure, etc.

Additionally, if you need assistance with any NRI-related issues, reach out to the experts at Savetaxs. We have an entire team of experts who can address all your NRI taxation, investment, banking, financial, or repatriation issues. Connect with us now as we are working 24/7 across all time zones.