As a part of financial closure, various financial accounts — with banks, brokerages, mutual fund houses, insurance — must be closed or transferred. This must be done by the co-account holder, nominee or legal heir, as applicable, by submitting relevant application forms and requisite documents.
Bank accounts The procedure for closing the sole account in the name of the deceased person and claiming refund of the balance amount is fairly standardised across banks. For instance, if the nomination has already been registered with the bank, the nominee can make a claim for closing the account.
Once the nominee submits the claim form, the branch will verify the photocopy with the original death certificate, nomination number as registered in their core banking system and nomination register.
In addition to this, one needs to provide two witnesses. They may be a magistrate or Judicial official, a Government or bank official or any two persons acceptable to the bank. In case the nominee is a minor, an application must be submitted by the person appointed to act on behalf of the minor.
In case of joint accounts with survivorship clause, the application must be made by the survivor. The account will be updated to exclude the name of the deceased.
For joint account without survivorship clause, the account may need to be closed and the balance may be paid to both the survivors and the legal heirs. If there is no Will, banks may consider the option of indemnity. In this case, all the legal heirs together should provide proof of their right to the asset and absolve the bank of any future claims on the asset.
In case the deceased individual’s account neither has survivorship clause nor nomination, the settlement will be made only to the legal heirs.
Time deposits such as FD can be held till the maturity period without any change by the survivor. The FD can also be split into multiple certificates — by the legal heir, nominee or representatives — without attracting any penalty for premature withdrawal. If a bank locker was maintained, the nominee can access the locker and remove the contents after providing death certificate and proof of identify.
If there is no nomination, the legal heirs should establish their right to the bank. An inventory of articles is prepared by the bank, in the presence of the nominee or legal heir and two witnesses.
Check before closing It is a good idea to ensure that standing orders for payments from accounts you want to change or close are shifted to another account. For instance, check for services — such as electricity, phone, subscriptions, housing maintenance, charitable donations — that may have been paid from this account automatically and update these to a new account, to avoid payment rejections and fines.
Likewise, automatic credits — such as bond or post office investment interest or rentals — that come into the account also need to be shifted to another account.
Mutual Funds Mutual fund units can be transferred by the other unit holder, nominee or legal heir. The procedure is identical to that of a bank. For joint ownership, the surviving unit holder must submit required documents and claim form along with bank account and KYC details of the new unit holders. For sole accounts, the nominee must submit a letter requesting transmission of units.
If there is no nominee, the procedure may be simple, for smaller investments — a document that establishes the claimant’s relationship may be sufficient. For larger amounts, more detailed documentation — a notarised copy of the probated Will or legal heir certificate or Succession Certificate — may be needed.
The investment limit beyond which the procedure differs may vary across fund houses. For instance, while HDFC Mutual Fund has ₹5 lakh as the threshold limit, it is ₹2 lakh for SBI Mutual Fund.
Ounce of prevention
The procedure to follow if there is no nominee is quite tedious and requires lots of documents. So, it is best to do the nominee registration right at the time of opening an account or making an investment.