It goes without saying that the Public Provident Fund (PPF) is the most sought-after investment by many investors, especially, those who are averse to risk and wish to stay invested for a prolonged period. The interest rate paid is somewhere around 7.1 per cent. Though one may argue against its average interest rate, the prolonged investment tenure of 15 years lends the much-needed compounding effect, thus, allowing the invested money to grow over time.
The exempt-exempt-exempt (EEE) status of PPF investments means that investors gain from tax benefits at all three stages of investment, earnings, and withdrawal. The tax-free returns that accumulate to a decent corpus have prompted many investors to choose this option as an effective retirement planning tool.
While the benefits from PPF investments are indeed second to none, many investors inquire how their nominees can withdraw the accumulated amount in case of their untimely death.
What happens to PPF amount in case of account holder’s sudden death?
The Employees’ Provident Fund Organisation (EPFO) has put forward rules to explain the rules of withdrawals in case of the death of an account holder.
When a PF account holder dies, his account stays active until his or her nominee(s) or legal heir(s) withdraws the entire balance. This account will be closed. This will only last as long as there is money involved. If new money is deposited after the subscriber's death, there will be no interest paid on it. After the account holder’s death, the nominee does not have to wait for the account’s 15-year term to expire; he can withdraw the money by completing the death claim form and attaching the relevant documentation.
Withdrawal by nominee
By completing the relevant paperwork, the nominee of the PPF account holder can withdraw the entire amount from the account. For this, he must fill in the details in Form G and submit the same along with the account holder’s death certificate. There may be times when the account holder may not have filled in the nomination details. The legal heir may submit a death claim via an attorney then.
However, in addition to the death certificate, he must present a succession certificate or an attested copy of the “Probate of Will” from the court. Yes, without a succession certificate, the lawful successor can claim up to ₹1 lakh.
However, there is a caveat while claiming the amount. Many people seek loans against their PPF investments. There is a distinct possibility of the account holder(s) having sought a secured loan by submitting the PPF amount as collateral.
The nominee or legal successor while filing the death claim must know that if the subscriber has any credit or loan due on his or her account, the remaining loan amount would be deducted from the claim during the withdrawal process while the remaining funds would be handed over to the nominee(s) claiming the amount.