After a person dies, the distribution of his assets occurs as per the will. So, how is his bank account managed? Also, in case there is no will, the whole estate goes to the government. But, there is a process to that too. So, in this article we will read all about What Happens After The Death Of Bank Account Holder?
You can’t control death, but when people are relying on you for their financial needs. Hence, one can at least take precautions. These precautions come in the form of financial steps. The family has to present the certificate of the person’s death to the bank. Most of the time, the bank would be unaware of a client’s death. Hence, it is the duty of the family to notify the bank officials.
In Cases Where The Bank Knows About The Client’s Death
The bank gets notified of the client’s death by presenting a valid death certificate. Then, the bank would freeze the assets of a customer, i.e., the deposits, the accounts, credits, cards, loans, etc. A bank has to take further actions or give permissions to only those who have the authority to do so. The person having the authority to act on behalf of the deceased can give or take instructions. These come to the bank on behalf of the deceased.
Now, they can’t give away information too. They can only give away information to those who have the authority to request it. A person when mentioned by the holder earlier for any access to the account or information related to it. The bank has the duty of confidence with their clients that don’t get over after their death. Hence, the next of kin or any other relative cannot give advice or instructions to the bank. The only person eligible is the manager of the account.
One would have to get probate from the court to handle the account. The High Courts would give Letters of Administration. Then executors or administrators would be able to deal with the account of the dead person. On acquiring these letters, the administrators have to set up the estate of the deceased.
To bring change to the funds in any way, one needs probate or Letters of Administration. A person nominated by the dead person has the authority for every step.
In case there is a nominee present, he/she would have to go to the bank with the Death Certificate and his own details. After validating his own details, the account remains dormant for over a year. Then, the person gets access to the account.
Documents That A Nominee Requires
There are certain documents a nominee needs to present :
- An application, stating the situation
- Notified death certificate
- FIR copy ( if there was an accident, etc involved)
- Relationship with the dead person along with proof
- His own KYC documents
When all these are available, the nominee’s access gets approved. This is a time taking process, and the time differs from bank to bank. There are cases where no nominee is present, and no one else has. When you open an account, you have the option to either input a nominee or exclude it. This is up to you.
It is beneficial if you input a nominee. If you don’t, things might get complex in such situations. The bank officials keep advising their elderly customers to appoint nominees. This helps to prepare for the worst.
So, in case there are no nominees then, there are different scenarios to be noted.
i. In Case There Is A Joint Account And With Either Or Survivor
After producing a valid death certificate, the amount in the account goes to him. This means that he can choose to continue with the account or close it.
The certificate of death is enough to erase the deceased person’s name off the account. Then, the survivor is the sole controller of the account and can choose to do what to do with it.
ii. In Case If There Is A Nominee Appointed By The Deceased Person
If that deceased person has appointed a nominee then, he or she gets called out. This is the validation process for nomination. It would check the originality of the birth certificate.
Thereafter, the nominee becomes the sole controller of the funds and the account. In cases of dispute and there is a WILL present, then the whole process becomes tedious and long. It won’t be easy to take hold of the account in such cases. The presence of at least two witnesses is necessary. This ensures that the bank passes the account to the nominee.
iii. If There Is No Nominee
The legal heir is the person responsible for the account’s heir. If his or her name is in the WILL, proper documentation is the need of the bank. If not then, a succession certificate could work.
This certificate proves that you are the next of kin to the deceased person. You then have the right to access the account of the deceased. The succession certificate is then verified. Then, the entire funds get transferred into the saving accounts of the next of kin.
In Cases Where The Bank Isn’t Notified Of The Death Or Lack Of Proper Document
In India, it is a common practice where parents invest money in bank saving accounts. This money is for the sole purpose of their family in times of emergency.
But who has seen death? If the sole holder of the account dies and there’s no mention anywhere of the account, the money goes to the bank. Many accounts get closed and the money enjoyed by the bank or government. This is not beneficial to the family of the deceased in any way. The bank should take responsibility in case a person dies. If the deceased never told anyone in his family about the account, the bank takes up all the money.
The bank has the authority to use the money. It can use it for moral events like charities or consume it as profit. Many accounts have unclaimed money in them, wherein the only person who knew is dead. In such cases, if you have access to the deceased’s ATM card and PIN, you should consider withdrawing the cash. It would be a lot easier.
The Whole Process And Document Details
There are many processes, developments, and documents involved when you perform death claims. You can’t inherit the properties, assets, or savings bank account of a person. There are many people suffering due to a lack of awareness. They are not made aware by their parents during account creation. Hence, they suffer.
The documents involved in such a process are :
1. The Death Certificate
The most crucial and important document. A valid and proper Death Certificate of the deceased should be valid. Under the Registration of Births and Deaths Act, 1969, you have to register a death. This must happen within 21 days of the passing away.
This certificate is very essential for every process related to the account. Issuing of these certificates come under the Municipal or Gram Panchayat.
2. Claim Application Form
Filled at the time of claim, this is a very important form. You have to give you details to claim the savings account of the deceased. You have to give an analysis of your KYC and assets in the form.
3. The Probate of Will
This is also necessary to instate a recognized person to inherit the account. This is also another important aspect that you have to be ready for. It authenticates the WILL and that your claim is valid.
4. Succession Certificate
If there is no WILL, you will have to include this. This is also applicable in cases of absence of nominees for the account. The succession certificate proves that you are a valid legal heir and have all the rights. If you don’t have this too, then you’ll have to lawyer up.
A Few Special Terms Related to Deceased Accounts
There are a few things that every person opening an account should know. Death is unforeseen and inevitable. One should always be broad-minded of his financial situations. So, given below are a few key terms for the proper handling of your finances in your bank accounts.
1. Joint and Pay-On Death Accounts :
These are accounts wherein two or more people have access to it. Joint accounts, as described above, are not considered shut when one dies. The other survivor gets the entire access. Then, it’s his decision what to do with it.
Now, pay-on-death accounts are similar except there is only one person with access. The other person mentioned gets access in case the former dies. Then, the funds and resources are all named under the person mentioned. Though validation is a necessity in this case.
2. Powers of Attorney on account of the Deceased :
These powers end as the person dies. The ones holding this power no longer have this after the bank gets notified of the person’s death. This means that the person who used to access the account while the holder was alive has no control anymore.
3. Trustees Of The Deceased Person’s Account :
Any trustee that the deceased person named before his death has the authority to access. He has a fiduciary responsibility. He has to act under the best interests of the beneficiaries. The trustees need proper, verified documents to prove their authority.
Trustees can exercise control but only if appointed. If there are no trustees appointed, the next of kin or the nominee has the most control over the account.
4. Deceased Alert :
As soon as the bank gets notified of the person’s death, the card companies are too notified by the bank. This has a term called the deceased alert. This is an alert to the companies. Any transaction or such made further on the deceased’s name is fake.
These alerts are very important for identity theft. Furthermore, these alerts deny any kind of transaction. Any transaction after the notification by the next of kin.
Now, there are also estate plannings that people do. This prevents any inconvenience to their family in the event of their demise. This is very important and also much convenient. More people should resort to such schemes and plan and be ready for bad times.
It should be our responsibility to ensure that our loved ones don’t suffer because of us. Everything in this article related to the account of a deceased person is important. You should take care of everything and not wait for the situations to arise and then act.
Mistakes One Makes While Account Creation
There are many common mistakes that people make while creating an account. This is because of their casual behavior or lack of vigilance. Hence, after their passing, their family suffers :
- Not mentioning a nominee in the account creation.
- Not changing the expired nominee.
- Important document are not kept safely.
- No WILL
- WILL gets initiated; the registration process gets left out.
- WILL gets initiated, registration is complete too but, no one is aware of its existence
These mistakes often cause instability to the loved ones of the deceased person. These are very nubile mistakes.
How Can One Claim Bank Account Of A Deceased Person?
Below are a few steps to follow if you want to claim the bank account of a deceased person, and you have the beneficiaries of payable on death.
Time needed 2 minutes
1. Visit Bank
Call or visit the bank staff in order to start the process of claim.
2. Prepare Required Documents
You should have your ID issued by the government and a copy of the death certificate of the deceased person. You either have to show these physically at the bank or submit the copies digitally.
3. Fill The Details
Fill out all the paperwork and forms of the bank, which were previously signed by the deceased person, and give a statement that you shall inherit his/her account.
4. Get Money
At the end, you have to withdraw all the money or move all the amounts into a new account at the same bank.
Frequently Asked Questions :
1. What if the nominee is a minor?
If the nominee is minor then, the appointed or actual guardian of the minor acts as the nominee for the time being. Then, he has to perform the duties of the nominee. This means, after death, he will have to present the certificate.
2. What is Legal representation?
These come under the jurisdiction of a Court of Law. This means that the legal heir inherits the assets/debits of the person who has passed away.
3. What are settlement Claims of missing people?
A lapse of seven years is necessary for consideration after the death of a person. This means that if a person is missing for 7 years, he or she is dead. Hence, the process of inheritance is evoked.