What happens if a bank account holder or depositor dies?

What happens if a bank account holder or depositor dies? Who can access deceased person’s savings account or deposits? What is the procedure to claim balance?

Death is inevitable for all of us. At the same time, opening a bank account is a common thing for all of us (whether we earn or not). In such a situation, what happens if a bank account holder dies? Let us try to understand this aspect in detail.

How many of us thought of a situation where we are not here and in that case who will be the authorized person to operate our savings account? What is the procedure to claim such accounts? Whether your family members aware of this process?

Can You Withdraw Money From The Account Of A Deceased Person?

We as humans always look for the easiest ways. This applies here too. As a family member of a deceased person, we may be aware of the ATM card PIN or Internet banking login details. Hence, many think that rather than informing the bank about the death and following the bit lengthy process of claiming the money, why not withdraw the money from the account and then let it be idle forever?

You can do so. However, it is an OFFENCE (if you are not a joint account holder of the account). Never take such illegal routes. Even if you are aware of ATM PIN and internet banking login credentials, legally you must not do so.

Instead of this, follow the below steps to claim the amount available in the bank account of the deceased.

What happens if a bank account holder or depositor dies?

The below steps are important and must follow procedures in case of a deceased person’s bank account.

# Step 1 – Intimate the Bank

Immediately after the death, intimate the bank about the death of the account holder by submitting the relevant proof like a death certificate.

Upon receiving the intimation, such an account will be converted into a dormant account for further transactions. However, few credits like dividends may continue to be credited. If you are not a nominee of the account or not the legal heir, then the bank may inform the nominee about the death of the account holder.

# Step 2 – Submission of documents

Whether you are a nominee, joint account holder, or the legal heir of the deceased, you have to submit the below-mentioned documents. Do remember that few banks may ask the additional documents based on the balance available in the account. Hence, don’t consider the below list as an exhaustive list of documents.

• Claim Form
• Proof of death of depositor issued by appropriate authority ;
• Proof of identification of nominee(s) / survivor(s);
• Stamped receipt for amount received signed by Nominee / Survivor(s) / person on behalf of minor nominee
• FIR copy (if death is due to accident)
• Nominee KYC documents (Photo, PAN card, and Adhaar card)
• WILL (if the nomination is not mentioned)
• If WILL is not present, then the succession certificate from the court.

In the case of joint accounts, the survival account holder has to inform the bank about the death of the 1st account holder. The second holder has to submit documents like – the application form, death certificate of the deceased 1st account holder, and KYC details of the 2nd account holder.

# Step 3 – Settlement of claims by banks

Finally, after receiving the intimation about the death of the account holder and accepting the required documents, the money available in bank accounts will be settled as below.

– Single Savings Account

If a nomination is present, then the balance amount will be paid to the nominee on verification of the nominee’s identity and Proof of death of the depositor.

If a nomination is not present, then the balance amount will be paid to the legal heir(s) (or any one of them as mandated by all of the legal heirs) on verification of the authority of the legal heir(s) and proof of death of the depositor.

– Joint Savings Account

If the nomination is present or not, then the balance amount will be paid jointly to the survivor(s) and the legal heir(s) of the deceased joint account holder (or any of them as mandated by all the legal heirs) against their joint claim on verification of the authority of the legal heirs and proof of the death of the depositors.

In the event of the death of both / all joint account holders, the balance amount at the time of death of the depositors will be paid to the nominee on verification of the nominee’s identity and proof of death of all depositors.

– “Either or Survivor”/“Former or Survivor”/ “Anyone or Survivors”/ “Latter or Survivor” Savings Account

If the nomination is present, then in the event of the death of one (or more but not all) of the depositors, the balance amount will be paid to the survivor(s) on verification of proof of death of the depositors.

In the event of the death of both/all the joint depositors, the balance amount will be paid to the nominee on verification of the nominee’s identity and proof of death of all depositors.

If the nomination is not present, then in the event of death of one (or more but not all) of the depositors, the balance amount will be paid to the survivor on verification of proof of death of the depositors.

In the event of the death of both/all the joint depositors, the balance amount will be paid jointly to the legal heirs (or any one of them as mandated by all the legal heirs) on verification of the authority of legal heirs and proof of death of all depositors.

– Single Owner Term Deposit (Premature Termination)

If a nominee is present, then the premature termination of the term deposit account as per the terms of the contract will be permitted at the request of the nominee on verification of the nominee’s identity and Proof of death of the depositor.

If a nominee is not present, then the premature termination will be permitted on a joint request by all legal heirs (or any of them as mandated by all the legal heirs) as per the terms of the contract on verification of the authority of the legal heirs and proof of death of the depositor.

– Joint owners of Term Deposit (Premature Termination)

If a nomination is present, then premature termination of the term deposit will be permitted against a joint request of the survivor(s) and the legal heir(s) (or any one of them as mandated by all legal heirs) as per the terms of a contract on verification of the identity of the legal heirs and proof of death of the depositor.

In case of the death of all the depositors, then the Premature termination of the term deposit account as per the terms of the contract will be permitted at the request of the nominee on verification of the nominee’s identity and proof of death of all the depositors.

If a nomination is NOT present, then premature termination of a term deposit will be permitted against a joint request by the survivor(s) and the legal heir(s) of all the deceased depositors (or any one of them as mandated by all legal heirs) as per the terms of a contract on verification of the authority of legal heirs and proof of death of the depositor.

In case of the death of all depositors, premature termination of a term deposit will be permitted against a joint request by all legal heirs of the deceased depositors (or any one of them as mandated by all legal heirs) as per the terms of the contract on verification of the authority of legal heirs and proof of death of depositors.

– “Either or Survivor”/“Former or Survivor”/ “Anyone or Survivors”/ “Latter or Survivor” Term Deposit (Premature Termination)

If a nomination is present, then in the event of the death of all the joint depositors, the nominee will have the right to seek premature termination of the term deposit account as per the terms of the contract on verification of the claimant’s and Proof of death of all depositors.

If a nomination is not present, then in the event of the death of one (or more but not all) of the depositor(s), the balance amount will be paid to the survivor(s) after a premature termination of the term deposit account on verification of proof of death of the depositor/s, only if, there is a joint mandate from all the depositors to this effect given either at the time of placing the fixed deposit or subsequently during the tenure of deposit or there is a suitable clause in this regard in deposit account opening form which is accepted and signed by all the depositors at the time of opening of fixed deposit account.

In the event of the death of one (or more but not all) of the depositor(s), the balance amount will be paid jointly to survivor(s) and the legal heir(s) of the deceased joint account holders (or any of them as mandated by all the legal heirs) against their joint claim on verification of authority of the legal heir(s) and proof of death of depositor(s), if there is no joint mandate from all the depositors/ suitable clause in account opening form to this effect as stated in clause (a)
above.

– Single Owner Term Deposit (Payment on Maturity)

If a nomination is present, then the balance amount will be paid to the nominee on verification of the nominee’s identity and Proof of death of the depositor on maturity of the deposit.

If a nomination is not present, then the balance amount will be paid to the legal heir(s) (or any one of them as mandated by all of the legal heirs) on verification of the authority of legal heir(s) and proof of death of depositor on maturity of deposit.

– Joint Owners Term Deposit (Payment on Maturity)

If a nomination is present, then in the event of the death of one (or more but not all) of the joint account holders, the balance amount will be paid jointly to the survivor(s) and the legal heirs of the deceased joint account holder (or any one of them as mandated by all the legal heirs) on verification of the identity of the legal heirs and proof of death of the depositor on the maturity of the deposit.

In the event of the death of both / all the joint account holders, the balance amount at the time of death of the depositors will be paid to the nominee on verification of the nominee’s identity and the proof of death of all depositors on the maturity of the deposit.

If a nomination is not present, then in the event of death of one (or more but not all) of the joint account holders, the balance amount will be paid jointly to the survivor(s) and the legal heir(s) of the deceased joint account holders (or any of them as mandated by all the legal heirs) against their joint claim on verification of authority of the legal heirs and proof of death of the depositor(s) on maturity of the deposit.

In the event of the death of both / all the joint account holders, the balance amount will be paid jointly to the legal heirs of all the deceased depositors (or any one of them as mandated by all legal heirs) on verification of the authority of the legal heirs and proof of death of all depositors on the maturity of the deposit.

– “Either or Survivor”/“Former or Survivor”/ “Anyone or Survivors”/ “Latter or Survivor” Term Deposit (Payment at maturity)

If a nomination is present, then in the event of the death of one (or more but not all) of the depositors, the balance amount will be paid to the survivor(s) on verification of proof of death of the depositors on maturity of deposit or as agreed at the time of opening of deposit.

In the event of the death of all joint depositors, the balance amount will be paid to the nominee on verification of the nominee’s identity and proof of death of all depositors on the maturity of the deposit or as agreed at the time of opening of the deposit.

If a nomination is not present, then in the event of death of one of the depositors (or more, but not all), the balance amount will be paid to the survivors on verification of proof of death of the depositors on maturity of deposit or as agreed at the time of opening of deposit.

In the event of the death of all joint depositors, the balance amount will be paid to the legal heir(s) of all the deceased depositors (or any one of them as mandated by all the legal heirs of joint holders) on verification of the authority of legal heirs and proof of death of all depositors on the maturity of the deposit.

What about HUF Accounts?

In the event of the death of the Karta, the account is settled as below.

a) Obtaining affidavit cum indemnity from surviving members and legal heirs with two sureties confirming their acceptance to one of the members as a new Karta. Banks shall allow the new Karta to continue to operate the existing account on the basis of such documents, in HUF accounts having balances up to Rs. 1 Lakh.
b) A similar procedure to be followed in cases where the account is to be closed and the balance in the account is to be paid to the new Karta.

Few points to be noted –

• Usually, banks will settle within 15 days of receiving all the documents. However, if there is no nomination or without a survivor, then it may be delayed up to 30 days.
• In the case of joint deposits where one or all depositors have expired, on the maturity of the deposit, the bank will pay interest at the contracted rate till the date of maturity of the deposit.
• In case of premature withdrawal by legal heir or nominee, the bank will pay the “applicable rate of interest on the date of acceptance of deposit for the actual period for which deposit has remained with the bank or contracted rate of interest, whichever is lower shall be applicable” without charging penalty.
• If the deposit is claimed after the maturity, the Bank will pay interest at the Saving Bank Rate applicable from the date of maturity, up to the date of payment.
• If the death of the depositor happened before the maturity of the deposit but the nominee or legal heirs claiming it post maturity, then the Bank will pay interest at the contracted rate, till the date of maturity and thereafter at simple term deposit interest applicable as on the date of maturity, for the period for which the deposit remained with the Bank, beyond the date of maturity.
• In the event of the auto-renewal system of term deposits for the same tenor (as of the maturing deposit) at the then prevailing rate of interest applicable as of the date of maturity, the Bank will pay interest at the contracted rate/ prevailing rate up to the date of maturity span of such auto-renewal period, during which depositor has expired and thereafter simple term deposit interest at the applicable rate for the period (as on the date of renewal/ maturity), upto the date of payment.
• Do remember that the nominee acts like a trustee for the asset. He can’t claim the ownership. He has to distribute the asset as per the legal heir structure.
• Check nominations for all your accounts. If you have not been nominated, then better to nominate immediately. Just to avoid confusion and legal tussle, better a nominee should be within your legal heir.
• Having a joint account is an advantage here as if in the event of the death of one account holder, then by default the surviving account holder may take control of the assets.

Conclusion – It is clear from the above rules that having a nomination or joint account is most important. Hence, please check to all your savings accounts and bank fixed deposits. Share this information with all your known. Let me know if you have any questions.