Losing a loved one is an emotional and difficult experience, and dealing with the financial aspects can add to the stress. One common issue that families face is claiming the Fixed Deposit (FD) amount after the account holder’s death. Fixed deposits are considered a safe and reliable investment, but the process of claiming the FD amount after the death of the account holder can seem complicated.
This blog will guide you through the detailed steps to claim a Fixed Deposit after the death of the depositor, the necessary documentation, and some important considerations to keep in mind.
What Happens to a Fixed Deposit After Death?
When a fixed deposit account holder passes away, the FD is no longer a live investment under their name. The financial institution where the FD was held will not allow any premature withdrawals or closures without verifying the death and ensuring the legal heirs are properly identified.
The process can vary depending on the type of FD (whether it’s an individual or joint account) and the policies of the bank or financial institution. In most cases, however, the legal heir or nominee has the right to claim the amount.
1. Understand the Types of Fixed Deposits
Before we get into the process, it’s important to understand the different types of Fixed Deposits:
Single Deposit: In this case, the FD is held under a single person's name. The nominee or legal heir will need to step in to claim the amount after the account holder’s death.
Joint Deposit: If the FD is held jointly, the surviving account holder (joint holder) may be able to claim the deposit directly. If there are more than two joint holders, the procedure will depend on the bank’s policy.
Nominee vs. Legal Heir: In case of death, the nominee is typically the first person to be considered for claiming the amount. If there is no nominee, the legal heir(s) of the deceased can make the claim.
2. Steps to Claim Fixed Deposit after Death
Step 1: Inform the Bank of the Death
The first step is to notify the bank or financial institution where the FD is held. This can be done by visiting the branch where the FD was opened. The bank will guide you through the formalities and provide a claim form.
Step 2: Submit the Required Documents
To process the claim, you will need to provide the following documents:
Death Certificate: This is the most important document required to prove the demise of the account holder. The death certificate can be obtained from the local municipal corporation or the relevant authority.
Claim Form: The bank will provide a claim form that must be filled out. It may ask for details like the FD account number, nominee details, and other personal information.
Nominee Details (if applicable): If a nominee is listed in the FD, they will need to submit proof of their identity (e.g., Aadhaar card, PAN card) to establish their claim.
Proof of Identity and Address: A government-issued photo ID (Aadhaar card, passport, voter ID) and proof of address (recent utility bill, ration card, etc.) of the claimant or legal heir.
Legal Heir Certificate or Succession Certificate (if no nominee): If the FD doesn’t have a nominee, the legal heir(s) will need to provide a legal heir certificate, which can be obtained from the local court or a revenue officer. In some cases, a succession certificate may also be required, particularly if there is a dispute or if the deceased's estate includes substantial property.
FD Receipt/Certificate: If you have the original FD receipt or certificate, it will be required for the claim. If it’s lost, the bank will typically provide an option to get a duplicate.
Step 3: Verification of Documents
Once you’ve submitted the required documents, the bank or financial institution will verify the information. If everything is in order, the process will move ahead. The bank may also ask for additional documents or clarification depending on their policies or specific circumstances.
For Nominee Claims: If the nominee is a family member or relative, the bank will typically process the claim smoothly, provided all documents are in order.
For Legal Heir Claims: In the absence of a nominee, the legal heirs will need to follow the bank’s guidelines. This might involve a more detailed verification process, and the bank could ask for documents such as a Succession Certificate (issued by a court) or a Family Settlement Deed.
Step 4: Process of FD Closure or Transfer
Once the documents are verified and all formalities are completed, the FD account will either be:
Closed: The amount (principal + interest) will be paid to the nominee or legal heir.
Transferred: If the FD was held in joint names, the FD might be transferred to the surviving account holder’s name, depending on the terms and conditions of the account.
In most cases, the bank will disburse the amount to the claimant through a cheque, or they might credit it to a bank account (if the claimant has an account with the same bank).
Step 5: Payment of Tax
TDS on FD: If the interest earned on the FD exceeds ₹40,000 (₹50,000 for senior citizens), the bank will deduct TDS (Tax Deducted at Source) on the interest income before disbursing the FD amount. However, if the nominee or legal heir is not liable for income tax, they can submit a Form 15G/15H (for non-taxable income) to the bank to avoid TDS deduction.
Income Tax Return: If the FD interest is taxable, the legal heirs may need to include the FD interest in their income tax returns. If the deceased was liable for tax, the legal heirs may need to file an income tax return on their behalf for the year of death.
3. Common Challenges and Solutions
No Nominee: If there is no nominee and no legal heir certificate, the process can become complicated. In such cases, the bank may require additional legal documentation like a succession certificate.
Disputes Among Legal Heirs: If there’s a dispute among the legal heirs over the FD claim, the matter may need to be resolved legally through the court, which can delay the process.
Lost FD Receipt: If the FD receipt is lost, the bank may ask for an affidavit and a copy of the FD statement. Some banks also offer a process to retrieve the details of the FD online if you have access to online banking.
4. Conclusion
Claiming a Fixed Deposit after the death of the account holder involves several important steps, but with the right documents and understanding, it’s a relatively straightforward process. Always keep your FD details up-to-date and ensure that a nominee is named to avoid complications for your family members in case of an emergency.
If the process feels overwhelming, it’s advisable to consult a financial advisor or a lawyer to help navigate through the legalities and ensure that all aspects of the claim are handled smoothly.
By following the steps mentioned above and providing the necessary documentation, you can ensure that the rightful heir can claim the FD amount without any issues.
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