Nominee on a fixed deposit is not the same as owner
Being named as a nominee on a fixed deposit (FD) makes it easier for banks to identify who to pay after the depositor’s death. It does not turn the nominee into the automatic owner of the funds. Legal heirs and beneficiaries named in a Will continue to have legal claims on the deposit.
What “nominee” actually means
A nominee is essentially a point of contact. Banks view the nominee as the person who can receive the proceeds and help settle the account. In many jurisdictions the nominee acts like a custodian or agent, holding the money temporarily until the rightful heirs or beneficiaries are determined.
How claims on an FD are settled
- Immediate bank process: After receiving a death certificate, banks usually allow the nominee to claim the FD proceeds subject to verification.
- Legal entitlement: If there’s a Will, the executor distributes assets according to it. If there’s no Will, inheritance laws determine legal heirs.
- Required documents: Commonly needed items include the death certificate, identity proofs, claim form, and KYC documents. For contested or high-value accounts, courts may require a succession certificate or probate.
- Bank safeguards: Banks can freeze funds or ask for a court order if there are competing claims or doubts about entitlement.
Common scenarios and what they mean
- Single depositor with nominee: Nominee can collect proceeds but may have to pass them on to legal heirs.
- Depositor with a Will: The Will’s executor is responsible for distributing assets. Nominee’s role is secondary.
- Joint accounts: Rights depend on how the account was opened (jointly operated vs. survivor clause).
- Minor nominee: Banks typically require a guardian to act until the minor reaches adulthood.
- Nominee predeceases depositor: The depositor should update nomination. If not updated, the bank follows local rules or court directions.
Practical steps for nominees and legal heirs
- Gather the death certificate and the FD receipt or account details.
- Contact the bank immediately to understand their claim procedure and required forms.
- If there’s a Will, submit probate or the executor’s documents as requested.
- If there’s no Will or disputes arise, consider obtaining a succession certificate or legal heir certificate from the competent authority.
- Keep clear records and copies of all communications with the bank.
- Seek legal advice when claims are contested or for high-value deposits.
When disputes happen
Disputes between nominees and legal heirs are often resolved through negotiation, mediation, or litigation. Banks aim to avoid wrongful disbursal and may require court orders in complex cases. Preserving documentation and acting promptly reduces delays and legal costs.
Bottom line: A nomination simplifies access but does not override inheritance rights. Nominees, heirs and executors should follow bank procedures and, where needed, seek legal guidance to ensure funds are distributed correctly.