If grandparents have opened a Fixed Deposit (FD) and pass away without leaving behind a will, who becomes the owner of the funds and how a claim is filed depends entirely on succession laws and banking regulations. In such cases, the process can be lengthy and complex.
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Investing in Fixed Deposits (FDs) is widely considered to be an excellent option. The most significant advantage of this avenue is that it offers both security and fixed returns. Furthermore, it involves absolutely no risk. Consequently, bank FDs are highly popular among both ordinary citizens and senior citizens. Compared to other individuals, senior citizens typically earn higher returns on their bank FDs. It is common for grandparents to open FDs during their lifetime; however, following their demise, family members often discover the existence of these investments only after a considerable delay. The problem is further compounded when there is no valid will, or when the FDs in question are not explicitly mentioned in the will. So, in such a scenario, how can one claim the proceeds of the FD? Let’s explore the full details…
What Does the Law Say?
If the grandparents were Hindu, the Hindu Succession Act, 1956, applies to their estate. According to this Act, Class-I heirs (such as the wife, sons, daughters, and mother) are entitled to an equal share. If any of the grandparents’ sons or daughters have already passed away, their children—that is, the grandchildren—are also deemed Class-I heirs. They, too, are accorded equal rights. In such situations, grandchildren often remain unsure as to whether or not they have a legal claim to these assets. In this context, the law stipulates that if their parents are deceased, the grandchildren possess full rights to the property.
Nominees in Fixed Deposits (FDs)
While a Fixed Deposit (FD) typically includes a nominee, it is important to note that the nominee is not the legal owner of the funds. They function merely as a trustee, whose responsibility is to receive the money and distribute it among the actual legal heirs. In other words, while the funds are transferred to the nominee, they cannot retain them for themselves. Banks typically require the nominee to submit a death certificate, an affidavit, an indemnity bond, and KYC documents.
If there is no nominee
If there is no nominee in an FD, or if the nominee has already died, the FD does not expire. In such cases, legal heirs can claim the deposit directly from the bank. This typically requires the depositor’s death certificate, succession certificate or legal heir certificate, affidavit and indemnity bond, and KYC documents from all heirs.
Why is there a delay?
The question now arises as to why such a delay occurs. Banks do not act on sentiment. They release funds as per regulations. In most cases, delays occur due to incomplete paperwork.
Lessons for Families
Legal experts commenting on this case state that a simple will, proper nominations, and clear documentation of investments can spare the next generation significant stress and expense.
