deposits are a popular investment option especially among the retired citizens
who live on regular income. To avoid uncomfortable situations and running
around. investors and their family members should be aware of the claim process
in case of death of the deposit holder. Death is a certainty and to avoid
inconvenience of cumbersome process of claiming maturity proceeds of a fixed
deposit, it is advisable to take care of this aspect right at the time of
investing in a fixed deposit. But before that, let’s understand the different
options and the consequences, in which a fixed deposit investment can be held.
holding with “Anyone or Survivor” option This is the most preferred and
convenient option for ensuring that survivors do not have to face any problem
in claiming the deposit amount on maturity. If the first holder or the joint
holder dies, the surviving holder has to inform the company about the same and
submit a copy of death certificate. On receipt of the same, company will delete
the name of the deceased deposit holder and the surviving person shall receive
the proceeds on maturity. Please note that deposit does not become payable to
surviving depositor on the date of death itself.
HOLDING WITH “EITHER OR SURVIVOR” OPTION
option, if the first holder dies, then the survivor can claim the deposit
amount on maturity by following the same procedure as explained above. However,
if the second holder dies, first holder can request the company to delete the
name of deceased joint holder and replace it with another name of his choice.
HOLDING WITH “JOINT HOLDING” OPTION
option, deposit proceeds will be paid to the first holder only when both the
joint depositors sign on the FDR as discharge of the same. However, in case of
death of one of the joint depositor, the surviving depositor will be entitled
to receive the proceeds by following the same procedure as explained above.
HOLDING WITH “NOMINATION” OPTION
the deposit is held in a single name and one or more persons are nominated to
receive the proceeds in unfortunate event of death of single depositor, the
maturity proceeds will be paid to the nominee(s) as a Trustee(s) of the
depositor. In case the single depositor has made a separate Will for settlement
of his assets, the nominee(s) will be bound to honour that.
HOLDING WITHOUT “NOMINATION” OPTION
the most risky and avoidable option as in case of unfortunate death, the
survivors or the heirs of the deceased investor will have to complete several
cumbersome formalities, like producing a Will or a Succession Certificate to
claim the deposit amount.
maturity proceeds will not be taxed in the hands of the final recipient as
there is no estate duty in our country as per the current tax laws in force.
However, the interest amount if any will be added to the recipient’s income and
will be taxed accordingly.
It may be
noted that deposit amount will be payable only on the date of maturity and not
earlier on the date of death. However, the surviving person or the legal heir
can request the company for a premature payment of the deposit and this is the
prerogative of the company to accept or decline such request.
the right mode of holding goes a long way in making smooth transfer of money to
one’s heirs. Opt for the right mode and make proper nominations. Keeping your
family members aware of the process too helps.