Bank Fixed Deposit Accounts: What Happens When the Account Holder Dies?

The fixed deposit (FD) accounts are one of the most popular investments enjoyed by the citizens of India. This is because these are unaffected by the market risks or any other kind of risks, and offer decent returns as well. However, what happens when the account holder passes away before the account is matured? Should a family member wait for the account to mature, or contact the bank right away?

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Before we understand what’s the appropriate way to deal with the situation above, it’s important to first understand the rights of a nominee of a fixed deposit account.

The following are the main rights of a nominee for a fixed deposit account:

• A nominee doesn’t always claim the FD amount. This is because they are just a custodian who has the responsibility to ensure the maturity amount is provided to the actual/legal heir. So, unless the account holder has legally made the nominee the legal heir, they can’t claim the amount.
• HUF, societies or trust can’t appoint nominees. Only individuals can qualify for that.
• A nominee is the official contact person in case an account holder dies.
• Even if a person didn’t appoint a nominee at the time of opening a fixed deposit account, they can do so during the maturity period as well.

So, it’s clear now that the nominee can claim the maturity amount but is the owner of the same only if they are the legal heir too. Otherwise, they have to transfer the amount to the actual heir.

The following are the documents they will need for that:

• Death certificate of the deceased
• Claim form which is provided by the bank
• Address proof and identification proof

If the account holder had not appointed any nominee, then the following documents can be used for claiming the funds: succession certificate from legal heirs, and an indemnity bond.