My family friend uncle (no blood relation to me***) who considered me like his grandson passed away recently with the following 2 types of investments in which he had listed my name as follows: 1) Electronic shares solely in his name with my name as the sole nominee: I will be transferring them to my name next week after getting death certificate and intend to continue holding these shares for years as I have no intention to sell them in the near future. Will this transfer be liable to any income taxes for me? Do I have to show them on my next year’s ITR? Does being or not being a blood relative make any difference in this situation? *** 2) Bank fixed deposits which are jointly in his name, his sister-in-law’s name (his only other surviving relative) and my name: once his name is removed, we have two scenarios possible: a) Break the FDs, SIL and I take 50-50 split: will I be liable to income tax on this? b) Continuing to hold the FD jointly with SIL: if we choose this option, will I get 100% of the amount after SIL passes away? Or is it possible for her to nominate one of her family members to take her share after she passes away? c) Secondly, will I be subject to taxes if I fully acquire the FDs after she passes away? d) In short, I want to know which is the better option for me? I want to continue holding the FDs so I can fully acquire them rather than forfeit 50% if I split them right now. But I’m not sure. Thank you so much.
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1) transfer is not liable for any income tax
2) you have to declare the shares inherited by you in your income tax returns
3) break the fixed deposits and take your share
4) sister in law can bequeath her share of fixed deposit to whom do ever she pleases
5) you don’t have to pay taxes on fixed deposit inherited by you
1. Since, you don't want to sell the said shares , then payment of the tax is not needed , but you can show these share as assets.
2. Since, the said FD is in joint name , then you both have equal right to claim the fund , and hence if she agrees then you can distribute the amount after breaking the FD
- Further, even after her demise , her share can be claimed by her legal heirs ,and it will not go to you.
1. As per law, the nominee do not become the absolute owner of the property (including all movable assets). It becomes the duty of the nominee to disburse the assets received through this nomination facility to the legal heirs of the deceased.
Since you do not derive any income from this there is no necessity for you to file income tax for this income which has not come to you.
2. a) Since this is income from other sources, you have to reflect them in your ITR.
b) It will be impossible to predict what the other person has in her mind towards her share in the FD, hence you may have to follow it up.
c) The first answer (a) suits this too.
d) Your relationship with the sister in law is not known hence you cannot impose your own option without her consent.
As per law, nominee is just a custodian for the legal heirs and cannot use the same for their own usage. So, you would not be able to claim those share in absense of any will or registered gift deed in your name. Any surviving legal heir can file a petition for grant of succession certificate and can get the properties in their name. You will have to just act as a custodian for them.
Also, in case of FD, you will not get her share in case of her death as her property will go her legal heirs or as per her will. You can only your share in FD. Your uncle's share can also not be claimed by you as per law.
Thanks for the response. He was single and has NO LEGAL HEIRS. His only surviving relative is his sister-in-law and as such, both of them wished to give these shares to me. Infact, he wanted to sell these shares last year and transfer the proceeds to me then and there itself, but I was advised by professionals that that event would trigger capital gains tax/gift tax/etc. but if he put my name as nominee, it would be better as there’s no tax on inheritance. So then will there still be a problem in transferring these shares to my name??? Also, for the FDs, his intention was never to split his money between his SIL and me. He wanted me to get 100% of his FDs (since he has already given the SIL some other investments) but he put her name jointly just to make sure that I always look after her during her lifetime. So if we continue holding these FDs jointly till she passes away and then I remove her name, why would there be an issue?? Again, even his SIL has no children and her siblings side of the family won’t interested in this money. She would be giving her own investments to them. So then what’s the problem?
There should not be any problem in getting shares transferred in your name as there are no other legal heirs
continue with the fixed deposits if you so desire
ask sister in law to execute a will in your favour for money lying in FD
Being a nominee the shares can be transferred to your name without any problem.
If there are no legal heirs surviving him then you can proceed wit the enjoyment of his assets on your own.
You will not suffer income tax on acquisition of these shares, however you may have to pay LTCG at the time of selling these shares.
As far as FD is concerned you may better arrive at a decision to own them by yourself during her lifetime itself.
You can ask her to jointly close the FD and the proceeds can be transferred to your account with her consent so that that amount remains with you without being distributed or disputed by her own legal heirs after her lifetime if you have not made any arrangement to this during her lifetime.
Nothing is wrong the said observation of yours is correct
- She can execute a registered released deed in your favour for making your single owner of the shares and fixed deposits , otherwise after her death , her shares can be claimed by her class II legal heirs.