New Delhi: Fixed deposits (FD) remained one of the most preferred investment instruments, especially for senior citizens and retirees till date. However, upon the death of an FD owner, it is important for legal heirs to understand a few things about how to claim it.
At the time of opening an FD, there are several clauses that the depositor must select, and the depositor has to mention the name of the nominee as well.
Why nomination is important at the time of opening an FD?
If the depositor has mentioned the nomination details, the money will be passed to the nominee after identity verification.
It is the only reason that if the nomination is mentioned then it simplifies the procedure for settlement of claims on the death of the account holder. Neithr does it take away the rights of legal heirs on the estate of the dead. Also, it is to be noted that the person mentioned as nominee must act as the trustee of legal heirs.
What are different clauses?
In case of a joint account, there are different clauses—"Either or Survivor" or "Anyone or Survivors" or "Former or Survivor" or "Latter or Survivor".
Either or Survivor: For instance in case of husband and wife having a joint account with the "Either or Survivor" clause then in case of death, the bank shall pay the final balance along with interest to the survivor.
Also, note in case if there is a nomination in the account, then alo survivor will get the funds. Note that the nominee will only access to funds only if both account holders die. In absence of any nomination, the survivor gets the funds. In case both die, the legal heirs of both the depositors will get the funds.
Anyone or Survivor: If there are more than two joint account holders, then bank will pay the final amount along with interest to survivors if one or more account holders die.
Also, upon the death of all depositors, the nominee will end up getting access to funds. In absence of any nomination, upon the death of one or more depositors, it is the legal heir of the deceased and the survivor who will get funds. In case of death of all depositors, the legal heirs will get the funds.
Former or Survivor: If it is a joint account where only the first holder can withdraw funds from the account, then upon death of the former account holder, the second account holder will be able to withdraw funds.
However, the second account holder will have to complete basc formalities with the bank to be able to withdrawthe funds, such as submitting the proof of death of the former account holder. In case of death of both depositors, the nominee will be abe to access the fund. If there is no nomination and all depositors die, the legal heirs of all depositors will get the money.
Latter or Survivor: This case wil be just like the former or survivor scenario; the only difference is that the second account holder can operate the account and withdraw the funds. Only upon the death of the latter, the survivor can 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.