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pawan choudhary (propreitor)     29 December 2009

Can legal heir operate bank A/c.

Can a legal heir run/operate the bank account of a proprietary concern till the estate of a deceased person is fully settled ? Bank says to close the bank a/c by transferring the funds to the nominee. However, business cannot be immediately closed and till the things are settled, the obligations of the business are required to be met. Please help / suggest. Thanks & Regards,



Learning

 19 Replies

PJANARDHANA REDDY (ADVOCATE & DIRECTOR)     29 December 2009

 THE BANK INSTRUCTION  IS CORRECT,  FALLOW THE METHOD OF OPENING ANOTHER ACCOUNT TO CARRY TRANSACTION OF FIRM AS LR'S. AS LONG AS U WANT.

1 Like

adv. rajeev ( rajoo ) (practicing advocate)     29 December 2009

follow rthe advice given by the bank.

1 Like

Kiran Kumar (Lawyer)     29 December 2009

i agree with my Ld. Friends

1 Like

Daksh (Student)     30 December 2009

Mr.Pawan Chaudhary,

The do's and don'ts of any Bank are contained in its Manual which gets regulated by RBI.  Depending upon the nature of transaction and the stakes involved the Branch Manager have their discretionary powers.  In my humble view there is no harm in operating a new Bank account as suggested by other members.

Thanks and best regards

Daksh

Mihir Kanti Majumdar (Professional)     30 December 2009

Bank instruction is correct. On the death of a/c holder nominee or legal representative's right is limited to claim the deceaced left amount only. It does not extend to continue the operation of the account.

sunil pagare (lawyer)     30 December 2009

only the account holder has right to operate his account  after his death the account is closed. My all senior experts already explained  it briefly

R.K.SUNDERRAJ (LAWYER HUBLI,KARNATAKA)     31 December 2009

I agree with the learned members suggestions

pawan choudhary (propreitor)     31 December 2009

Yes, we can think of opening a new bank account, but

  I ) Can the new account be opened under the same old name of the proprietory concern ?

  II ) Wouldn't the legal heir be required to submit the court order for prooving his legal status although there is no dispute in the family ?

 III) Can the funds of the old account be transfered to this new account instead of been  transfered to the nominee ?

 IV) It is understood that under the Income Tax Laws, the return of  income can still be filed for n number of years till the final settlement takes place. Under the circumstances, can the business operations be continued ?

V ) Can the accumulated losses be transfered to the legal heir ?

Pease help and suggest

Regards

 

pawan choudhary (propreitor)     31 December 2009

Yes, we can think of opening a new bank account, but

  I ) Can the new account be opened under the same old name of the proprietory concern ?

  II ) Wouldn't the legal heir be required to submit the court order for prooving his legal status although there is no dispute in the family ?

 III) Can the funds of the old account be transfered to this new account instead of been  transfered to the nominee ?

 IV) It is understood that under the Income Tax Laws, the return of  income can still be filed for n number of years till the final settlement takes place. Under the circumstances, can the business operations be continued ?

V ) Can the accumulated losses be transfered to the legal heir ?

Pease help and suggest

Regards

 

pawan choudhary (propreitor)     31 December 2009

Yes, we can think of opening a new bank account, but

  I ) Can the new account be opened under the same old name of the proprietory concern ?

  II ) Wouldn't the legal heir be required to submit the court order for prooving his legal status although there is no dispute in the family ?

 III) Can the funds of the old account be transfered to this new account instead of been  transfered to the nominee ?

 IV) It is understood that under the Income Tax Laws, the return of  income can still be filed for n number of years till the final settlement takes place. Under the circumstances, can the business operations be continued ?

V ) Can the accumulated losses be transfered to the legal heir ?

Pease help and suggest

Regards

SURENDRA KUMAR RAKHECHA (PRACTISING CA)     01 January 2010

The answers to the each question is as under: 

I ) Can the new account be opened under the same old name of the proprietory concern ?

No, it will be opened as "The Executor to The Estate of Late..............." signed by the Legal Representative.

  II ) Wouldn't the legal heir be required to submit the court order for prooving his legal status although there is no dispute in the family ?

If all the members sign to declare a particular member of family as Legal Representative; then there is no other formalities are required.

 III) Can the funds of the old account be transfered to this new account instead of been  transfered to the nominee ?

After transferring the funds to the nominee; these can be transferred to the new account. This will be the easiest procedure.

 IV) It is understood that under the Income Tax Laws, the return of  income can still be filed for n number of years till the final settlement takes place. Under the circumstances, can the business operations be continued ?

No; but if interest, dividend or rent is received; then these can be received upto "n" number of years and accordinly return can be filed.

V ) Can the accumulated losses be transfered to the legal heir ?

No, there are no such provisions in the Income Tax Act.

Pease help and suggest

2 Like

Anil Agrawal (Retired)     08 January 2010

 Have you been declared legal heir by the Court?

J. P. Shah (RTI & CONSUMER ACTIVIST)     25 January 2010

When a account holder dies, cheques received in his name can be deposited in another account titled as ESTATE OF LATE SHRI ............ Any one can deposit amount and cheques in this account who has to pay to the deceased person. This account is opened by heirs of the deceased to enable them to make collection of dues of deceased. Once the matter is over, bank will complete formalities for settlement of dealth claim of old and new accounts and pay to the rightful heirs. However, if nomination is made, he can collect the amount as nominee and as trustee of real legal heirs of deceased.

Anil Agrawal (Retired)     25 January 2010

 Who will open another a/c titled ESTATE OF LATE SHRI ..... Is it only for collection of cheques? What about the existing a/c? If there is no nomination, succession certificate will be needed.


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