NEW DELHI : Fixed deposits (FD) are the most common investments that most people make, especially retirees. On the death of the FD owner, if the legal heirs want to claim it, they need to understand a few things.
FDs, typically, have clauses that the depositor must choose when opening it. If the FD is in the name of one person, the bank will check whether there’s a nominee mentioned. If the account has nomination details, banks will verify the nominee’s identity and pass the money to him or her.
The nomination facility intends to simplify the procedure for settlement of claims on the death of the account holder. It does not take away the rights of legal heirs on the estate of the dead. The person mentioned as nominee must act as the trustee of legal heirs.
A joint account can have different clauses—”Either or Survivor” or “Anyone or Survivors” or “Former or Survivor” or “Latter or Survivor”.
Either or Survivor: Let’s say you and your spouse have a joint account with the “Either or Survivor” clause. If one of you die, the bank will pay the final balance along with interest to the survivor.
Even if there is a nomination in the account, the survivor will get the funds. The nominee gets access to funds only if both account holders die.
In case there is no nomination, the survivor gets the funds. In case both die, the legal heirs of both the depositors will get the funds.
Anyone or Survivor: To understand this, assume that there are more than two joint account holders. The bank will pay the final balance and interest to survivors if one or more account holders die.
On the death of all depositors, the nominee gets access to funds. If there is no nomination in place, on the death of one or more depositors, the legal heirs of the deceased and the survivor will get funds.
On the death of all depositors, the legal heirs of all the depositors will get the funds.
Former or Survivor: It is a joint account where only the former account holder, the first holder, can withdraw funds from the account. Once the former account holder dies, only then the second account holder will be able to withdraw funds.
The second account holder will have to do some basic formalities with the bank to start withdrawing funds, such as submitting the proof of death of the former account holder.
On the death of both depositors, the nominee gets access. If there is no nomination and all depositors die, the legal heirs of all depositors will get the money.
Latter or Survivor: This is similar to the former or survivor; the only difference is that the second account holder can operate the account and withdraw the funds. Only when the latter dies, the survivor will have access to funds. Here, too, on the death of both depositors, the nominee will get access to funds. And if there is no nominee, the legal heirs of all depositors would get the money.
