How to operate bank account when Karta of the HUF dies?

Karta (Manager) of HUF has sole authority over the HUF account and also over every transaction on behalf of the HUF account, made by each member of the family. Therefore, it is necessary to appoint a new Karta to allow operation in the account after the death of the Karta to allow further operation in the same account.

When the Karta of the HUF has expired then the bank account remains the same subject to submission of declaration cum no objection letter to the bank from the new Karta and co-parceners . The letter shall provide the following information.

1. Request to delete the name of deceased Karta from the bank’s record (type and account number to be specified) with a copy of the death certificate.
2. Name of newly appointed Karta to be mentioned and his relationship with the deceased Karta.
3. Request to register and update the name of the new Karta of the specified HUF account in place of the deceased Karta and allow him to operate the said HUF account.
4. No objection to the appointment of (Name of the member) new Karta of the HUF account
5. The declaration cum no objection letter from co-parceners for deletion of the name of existing Karta and appointment of New Karta to be signed by the new Karta and all the major co-parceners of the family.

In case of a larger balance in the HUF account many banks obtain affidavit cum indemnity from surviving members and legal heirs with two guarantors confirming their acceptance to one of the members as a new Karta. Banks shall allow the new Karta to continue to operate the existing account based on such documents, in HUF accounts. A similar procedure is to be followed in cases where an account is to be closed and the balance in the account is to be paid to the new Karta. Document requirements may be different in different banks.

The Karta is traditionally the senior male coparcener of the HUF.  When Karta of the HUF dies, the next senior male member takes over as Karta. If the senior most member gives up his right, a junior coparcener can become Karta of the HUF, with the consent of all other major co-parceners  as held by Supreme Court in Narendra Kumar J. Modi Vs CIT (1976) 105 ITR 109 (SC).

As per Hindu Succession (Amendment) Act, 2005 the daughters of a family who are governed by Mitakshara Law, also become co-parceners in the HUF property. The above amendment further gave the women the right of survivorship via amended Section 6 (1) (a) and (b) of the Hindu Succession Act, 1956. This amendment gave them equal rights as the sons.

A HUF never dies. After the death of the Karta, normally the eldest coparcener becomes the Karta. Therefore, the name of the Karta has got to be replaced in the records of the bank. The deposit can be continued and closed on maturity. If it is an SB or Current account, the deposit amount can be withdrawn keeping the minimum balance in the account. The HUF account can be closed after dissolving the HUF. A HUF can only be dissolved after the full partition of the property. For this, all the co-partners and Karta must execute a deed of partition and distribute properties amongst the members. For this, the family must execute a deed of partition and distribute properties amongst the members. All family members must be part of the deed. The deed should spell out all the properties that are part of the HUF, which family members are dividing among themselves. The division of assets must be in line with the provisions of the Hindu Succession Act. The Income-tax Act does not recognize a partial partition dissolution of HUF. Partition means ‘full partition’. Once the partition of HUF is complete, it will cease to exist. If there is no partition, the income tax department will continue to assess the entity, and the family members will need to file returns.

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