If a person holding any kind of Investments, Deposits of holding Lockers with Banking or Financial Institution “DIES”, then the Family not only suffers the loss of the Departed Soul but they also suffer due to the hassle caused by the lengthy process and non-availability of required information.
The legal heirs or family members of the Deceased, have to go through a number of procedures and formalities while claiming the Investment, Deposits, Lockers, Assets or Property and have to complete the list of related documents and submit along with undertakings and proofs as required.
Reserve Bank of India have laid certain guidelines, circulated to all Banking and Financial Institutions to ease out the process, facilitate expeditious and hassle-free settlement of claims on death of the depositor or investor.
Types of Accounts and Investments with Banking and Financial Institutions:
There are many options a person can invest in, below are few of them, and once the asset holder demise, their immediate heirs or family member need to claim these assets.
- Saving bank accounts
- Fixed deposits
- Mutual Funds
- Life Insurance Policies
- Bank lockers
- Bonds (If any)
- Stocks and Shares
- Post Office Deposits
- PPF (Public Provided Funds)
- EPF (Employee Provided fund)
- NSC (National Saving Certificate)
- Real Estate Property
Most Common Mistakes made by Investors while Investing:
These are common mistakes done by Investors or Asset Holders while making an investment or purchase decision. This may happen due to ignorance, casual attitude, non-awareness etc.
- Nomination Section is not filled when accounts are opened or investments are made.
- KYC of nominee are not submitted / updated from time to time or when asked.
- In case of demise of nominee, change of nominee is not done.
- All Accounts, Investment Receipts, Investment Document or Asset related papers and documents are not kept in organized manner at an accessible place.
- Account or Asset Holder do not leave a will with the help of lawyer.
- A Will is made but not registered.
- Sometimes family members are not been aware of the Assets and Investments and even the Will.
- Most of the communication with family members on Assets and Investment is either not done or done on verbal basis. Without sharing the documents or records of the same.
Process of Claim settlement:
1. Accounts and Investment with Survivor/Nominee Clause:
When Depositor / Investor have done proper Nomination or the Investment is made jointly with a Survivor Clause (like ‘either or survivor’, ‘anyone or survivor’, ‘former or survivor’, or ‘later or survivor’), the payment / transfer of assets / balances in the account to the Survivor / Nominee of a deceased investor / account holder will include the following responsibilities from Bank / Financial Institution to be executed:
- Exercise due care and caution to establish the identity of the Survivor / Nominee with appropriate documentary evidence.
- No order from Court / Competent Authority restraining from making the payment / transfer of asset.
- Make clear to Supervisor / Nominee that the Asset / Funds he will be receiving as trustee for all the legal heirs of the deceased.
- Bank Should ensure to take all necessary documents / written undertaking / bond of indemnity or surety from Survivor / Nominee before transfer of funds / asset.
2. Accounts and Investments without the Survivor / Nominee Clause:
If diseased for any reason did not opted for Survivor or Nominee Clause then Banks and Financial Institutions need to follow the RBI prescribed procedure, which is hassle free and easy to follow:
- Accounts and Investments where Survivor / Nominee is not mentioned: In such cases Banks and Financial Institutions have a simplified procedure for repayment of funds / deposits to the legal heirs. Banks and Financial institutions must also understand the risk involved in the process, therefore they need to follow the process diligently and do proper documentation and KYC check.
- Premature Termination of Term Deposit or Investments: In case of account holder being deceased, premature termination of Term Deposit and other Investments are allowed without any penalties whatsoever.
- Inflow of Funds in the name of Deceased Account Holder: In case of inflows it can be treated as either of the two ways, (a) An account can be opened in the name of deceased as “Estate of Shri……………, the deceased”, and all the inflows can be allowed to be credited in these accounts and no withdrawals are made allowed; (b) Bank then can return these funds to the transferrer and ask them to effect another payments towards the legal heirs through negotiable instruments.
- Safe Deposit Lockers / Custody Articles: In case of Deposit Lockers and Custody Articles, Banks and Financial Institutions have to follow a detailed prescribed procedure and must not create hassle for the nominee / legal heirs.
1. To Prove the Legal Representation, Banks and Financial Institutions accept the document issued by the Court of Law entitling the legal heirs of the deceased to present their claim for the balance in account / deposits / investments. These documents represent legal representation:
- Succession Certificate
- Wills and Probate
- Letter of Administration
- Order of the Administrative General attached to the High Court
2. For the Claim Procedure, these documents needs to be submitted by the legal heir(s)s of the diseased:
- Application / Claim Form and Declaration stating that the account holder has passed away
- Notarized Death Certificate
- FIR copy (if deceased is passed in the accident)
- Authentic photo id proof (such as Aadhaar Card, Pan Card, Driving License etc)
- Relationship Proof with the deceased
- Survivor / Nominee / Legal Heir(s) KYC documents (if required)
- Account details of the Claimant(s) (If available)
- Letter of undertaking / disclaimer
- Other documents as required by the Bank / Financial Institutions
Time Lines for Settlement of Claims:
Banks / Financial Institutions have to settle the claim within a period not exceeding 15 days from the date of receipt of the claim subject to the submission of documentary evidence and proof of death of the depositor, suitable identification of claimants and proper KYC / satisfaction of the Bank / Financial Institution.
For Further details on claim procedure of Specific Bank / Financial Institution, Please visit the website of that Bank / Financial Institution of visit their local Branch / Office.