Inheritance and wills in Nepal: what happens to your money if you don't write one

Two years ago a friend's father died suddenly. He left a house in Patan, an FD at NIC Asia, a few NEPSE holdings on a demat that nobody in the family had the login for, and no will. The funeral took three days. The next six months took the family through ward office, district court, two banks, the CDSC office, a lawyer who specialised in partition cases, and a great deal of unnecessary stress. The estate was eventually settled. The relationships between three siblings did not survive intact.

This is what the Civil Code 2074 does for you, what it does not, and what you can do this week so the people you leave behind do not have to figure it out the way that family did.

The Civil Code 2074 framework

The Muluki Civil Code 2074, in force since Bhadra 1 2075 BS (17 August 2018), replaced the 1963 Muluki Ain as the single statute governing personal law in Nepal. Three chapters do most of the work for inheritance planning.

• Partition (ansha banda). Defines coparceners, equal shares, partition procedure. Sections 205 onwards.
• Wills (iccha-patra). Covers will validity, age and witness requirements, optional registration. Holographic and "mystic" (sealed) wills are recognised.
• Succession (hakwala). The intestate-succession order when no will exists.

The Code is Nepal's general civil statute. Nepal does not maintain separate personal-law succession statutes for different religious communities in the way some neighbouring jurisdictions do; specific community customs occasionally surface in family-court proceedings, but the Civil Code is the default reference. If your situation involves a community-specific custom that you expect to be respected, raise it with an advocate before drafting the will rather than after.

Without a will: who inherits what

If a Nepali resident dies intestate (no valid will), the Civil Code prescribes a hierarchy of heirs:

1. Surviving spouse and children, in equal shares. Biological and legally adopted children both qualify. Daughters share equally with sons since the 2007 Muluki Ain amendment, now carried into the Code.
2. Parents of the deceased, if no surviving spouse or children.
3. Siblings and their descendants (nieces and nephews), if no spouse, children, or parents.
4. More distant relatives: grandparents, uncles, aunts, cousins.
5. Government of Nepal as ultimate heir (escheat), only if no qualifying relative exists.

Two refinements worth knowing.

Stepchildren are not first-rank heirs. Their rights are limited under the Civil Code compared to biological or legally adopted children. If your spouse has children from a previous marriage and you want them to inherit, you need a will. Without one, your biological children and parents take precedence.

Care matters. Civil Code provisions recognise that a more distant relative who actively cared for the deceased while a closer heir neglected them can become eligible for inheritance. Discretion sits with the court.

With a will: what makes it valid

A will in Nepal is straightforward to write and almost never written. Requirements:

• Testator age 18+ and of sound mind. A medical certificate is a useful precaution for elderly testators to head off later undue-influence challenges.
• Two witnesses. Both must sign in the testator's presence and in each other's presence. Witnesses should not be beneficiaries; naming a beneficiary as a witness can void that beneficiary's share.
• Written and signed. Typed or handwritten. A holographic (entirely handwritten) will is recognised. The document should clearly identify the testator, list the assets being disposed of, and name beneficiaries unambiguously.
• Optional registration. Registration at the local Land Revenue Office (Malpot) or the District Administration Office adds legal weight and prevents later allegations of forgery. Not mandatory. Strongly recommended.

A "mystic" or sealed will is also recognised. The will is placed in a sealed envelope, authenticated by a land revenue officer (or by a Nepali embassy abroad), the testator keeps one copy, and the officer retains another. No witness reads the contents.

What can and cannot be willed away

The single largest source of family disputes in Nepali inheritance is the distinction between self-acquired property and coparcenary (ansha) property.

Self-acquired property, what you earned through salary, business, investments, or received as a personal gift, is yours to will however you choose. You can leave it to a charity, a friend, a single child, a non-relative.

Coparcenary property is different. Under Section 205 of the Civil Code, coparceners include the husband, wife, father, mother, son, and daughter. Each coparcener has an equal right to a partition share. Property that is ancestrally held or has not been formally partitioned is treated as coparcenary, and the coparceners' shares cannot be willed away by any single member.

Practical example. A father owns a house. If the house was inherited from his own father and never partitioned, his wife, sons, and daughters all already have a share by operation of law. He cannot leave the entire house to one child by will. He can leave his share of the partitioned property to one child, but the rest already belongs to the other coparceners.

If you want full freedom to dispose of property by will, partition it during your lifetime so it becomes your self-acquired share. Otherwise, the will controls only your portion.

Spousal rights, daughter's rights, the post-2015 reforms

The 2015 Constitution and the 2018 Civil Code together rewrote what spouses and daughters can claim. Article 38 is the constitutional anchor:

• Article 38(1). "Every woman shall have equal lineage rights without gender-based discrimination."
• Article 38(6). "The spouse shall have the equal right to property and family affairs."

In practice:

• A surviving spouse has the right to continue living in the marital home, takes an equal share alongside each child in the deceased's separate property, and inherits the partition share that would have gone to the deceased.
• A daughter is a coparcener from birth. Marriage does not extinguish her share. The Supreme Court's 2024 ruling affirmed that a married daughter remains the nearest relative of the deceased mother for inheritance purposes, ranking above a stepson.
• An adopted child has the same inheritance rights as a biological child. Stepchildren rank lower in the default order and are not first-rank heirs alongside the biological or adopted children — if you want them included, name them in a will.

These are substantial changes from pre-2007 practice, when daughters lost their share on marriage. Older family elders may still operate on the old assumption. The law no longer agrees with them. See the dedicated women's property rights post for the longer treatment.

Where the money actually sits

Most inheritance disputes are not about the law. They are about retrieving assets from institutions that have their own paperwork.

Bank accounts and fixed deposits

If the deceased named a nominee on the account, the bank can release funds against: death certificate, nominee's citizenship, and nata pramanit (relationship certificate). Specific turnaround varies by bank and branch, but with paperwork in order the nominee route is typically a matter of weeks. If there is no nominee, the bank requires a court order recognising the heirs (the hakwala route through the District Court) before releasing funds, which adds months.

Action: open every Nepali bank account you hold and confirm a nominee is registered. Free, five-minute branch visit, and it can shave six months off your family's grief.

Demat / NEPSE holdings

CDSC handles share transmission after death under the 3rd amendment to the Central Depository Service Bylaws 2068, enacted in 2018.

The Depository Partner requires: Transmission Request Form, attested death certificate, citizenship of deceased and heir, nata pramanit, consent letters from other heirs. CDSC publishes a 35-day notice for other parties to register claims; if none arrive, the shares transmit to the named heir.

The common trap: nobody in the family knows the login. If your demat has anything in it, the password and broker contact should be findable by your family. Write it somewhere your spouse or a trusted relative can access.

EPF / SSF / CIT balances

• SSF death grant. Rs 25,000 funeral grant to the dependent family on the death of an SSF contributor.
• SSF survivor pension. Surviving spouse receives 60% of the deceased's basic remuneration as a lifetime pension (subject to not remarrying or holding alternative employment). Dependent children under 18 receive 40% of basic as monthly educational allowance, extendable to age 21 if still studying.
• CIT account. CIT pension transfers automatically to the spouse on death; after the spouse's death, the balance can be withdrawn by the named nominees.
• EPF (Karmachari Sanchaya Kosh). Balance transfers to the named nominee on submission of death certificate, nominee citizenship, and a claim form to the EPF office.

For the mechanics of SSF, EPF and CIT during the working life, see the CIT vs PF vs SSF post.

Life insurance

Insurance Act 2079, Section 127: the payout goes to the nominee named in the policy. If no nominee exists or the nominee predeceases the insured, the payout goes to the legal heir under prevailing law.

A 2025 amendment to the Act introduced mandatory settlement timelines after the Beema Samiti audit found over NPR 1.19 billion in unpaid claims sitting beyond a year, including Rs 373.79 million in matured policies alone. The amendment requires settlement within the policy-specified period.

Action: check the nominee on every life insurance policy you hold. Update it after life events (marriage, child, divorce).

Property and lalpurja transmission

The largest asset for most Nepali households. Steps to transmit to heirs:

1. Death certificate from the local ward office.
2. Nata pramanit from the ward office identifying all heirs.
3. Application at the District Court for hakwala (succession), unless the family is in full agreement and the Malpot accepts a simpler mutation.
4. Tax clearance at IRD.
5. Application at the Land Revenue Office (Malpot) for mutation of the lalpurja into the heirs' names.

Inherited property is exempt from capital gains tax at the point of transmission. The Malpot registration fee for transmission to heirs is the same broad rate (4% to 4.5% depending on municipality classification, per Notary Nepal's rate card), though many heirs claim partial exemption under specific provisions for transfers between spouses and children.

The "where is everything" file

The most useful single thing a Nepali household can do, and almost none do, is maintain a one-page document listing: account numbers and banks, demat broker name and login, insurance policy numbers and nominees, property lalpurja location and number, employer details for PF/SSF/CIT, contact details of a trusted lawyer or relative. Update once a year. Keep one copy with your spouse, one sealed with a sibling or trusted advisor.

No inheritance tax in Nepal

A clean piece of good news. Nepal does not levy an inheritance or estate tax. Under the Income Tax Act 2058, amounts received as gift, inheritance, or scholarship are exempt from income tax. The narrow exceptions cover situations where the inheritance is tied to an ongoing business activity.

Capital gains tax applies only on a subsequent sale of inherited property, not on the act of inheriting. So if you inherit your father's house and sell it five years later, the usual property CGT rates apply on the gain calculated against the original cost basis. Hold the house and live in it, and nothing is owed.

Time and cost, realistically

District Court workload is the binding constraint. According to Nepal News, 32,368 already-decided cases were awaiting enforcement across Nepal in fiscal year 2080/81, with 2,566 pending enforcement at Kathmandu District Court alone. Partition and succession cases often take 18 months to several years when contested.

Court fees themselves are modest. Section 69 of the Civil Procedure Code charges a flat Rs 1,000 for partition claims and deed-voiding claims. The cost driver is the advocate fee, which in Kathmandu ranges Rs 5,000–15,000 for a simple consultation, Rs 15,000–50,000 for drafting, and Rs 50,000–500,000+ for litigation depending on complexity and asset value.

If the family is in agreement, an uncontested partition runs quickly through ward office, IRD tax clearance, and Malpot mutation. Contested cases at the District Court are the slow path; the Civil Procedure Code targets first hearings within 15 to 35 days of registration, but the post-hearing path can stretch over years.

NRN inheritance, briefly

A Non-Resident Nepali (NRN) with a valid NRN Identity Card can inherit ancestral property in Nepal without prior approval from the Government of Nepal. Ownership ceilings apply on the inheritor side: up to 2 ropani in Kathmandu Valley, 8 kattha in Terai municipalities, with restrictions on agricultural land except under specific investment policies. The process is otherwise the same as for resident heirs.

If you are a Nepali parent with children abroad, make sure they hold valid NRN ID cards and that their citizenship is on file before any inheritance event. Recovering documents posthumously across borders is the slowest part of the entire process.

What you actually need to know

Three steps account for most of the practical value.

1. Register a nominee on every bank account, FD, demat, and insurance policy. Free, fast, and shaves months off the eventual settlement. The nominee is a custodian, not the final owner; but the institution releases funds to the nominee first, and the heirs then settle out of court under the Code.
2. Write a will if any of these apply to you. Self-acquired property you want to direct specifically; stepchildren you want to include; a charity or non-relative beneficiary; a partition you have not formalised; significant assets abroad. Two witnesses, optional registration at Malpot. The form is simple; the absence is what causes the disputes.
3. Maintain a one-page "where is everything" file. Account numbers, broker logins, policy numbers, lalpurja location, employer details, lawyer contact. Update annually. One copy with your spouse, one sealed with a trusted relative. The single highest-leverage household document a Nepali adult can keep.

This post lives in the saving section of the Nepal Money Basics guide, alongside the women's property rights walkthrough and the money talks with parents post.

If you are unsure how to structure a will or what a fair partition looks like in your situation, send the broad shape (no PII) to parjanya57@gmail.com and I'll point you at the right starting question.