What Happens To A Bank Account After Death?

• Bank freezes accounts upon death notification; ATM/net banking stops for security.
• Nominee receives funds but acts as trustee; legal heirs retain ownership rights.
• Unclaimed funds go to RBI's DEA Fund after 10 yrs; claimable via udgam.rbi.org.in.

It is an uncomfortable topic to talk about, but it is also something that matters deeply for your family’s financial security. When a person dies, their

bank account doesn’t automatically transfer to their spouse, children or parents. Banks follow a defined process that involves nomination, legal documentation, and verification before releasing the funds. Understanding these rules may help you plan ahead and ensure your family doesn’t face problems in claiming your money later.

Bank freezes account

Once the bank is officially informed of the account holder’s death, it freezes the account to prevent unauthorised transactions:

• All ATM, cheque, and net banking facilities are deactivated.
• Standing instructions such as EMIs, auto-debits, or SIPs are stopped.
• This way, the funds remain safe until rightful ownership is claimed.

Role of nominee

If you have registered a nominee while opening your account, things become much simpler.

A nominee is the person you authorise to receive the funds in the event of your death. This could be your spouse, child, or parent.

However, it’s important to note that the nominee is not necessarily the owner of the money; they act as a trustee for the legal heirs and must distribute the funds according to inheritance laws. So, while the nominee can withdraw the funds easily, ownership rights may still rest with the legal heirs (as per succession laws or will).

If there’s no nominee registered

If no nominee is registered, the process becomes more time-consuming.

1. The legal heirs, usually the spouse, children, or parents, must approach the bank with:
2. Death certificate of the account holder.
3. Legal heir certificate or succession certificate issued by a competent court.
4. Identity proof and relationship documents.

Once verified, the bank releases the funds in proportion to the legal heirs’ entitlement.

Joint account holders

If the deceased person had a joint bank account, the rules depend on the type of account:

• Either Survivor Account: The surviving holder continues to operate the account.
• Joint Account: The account is frozen until legal procedures are completed.
• In an either-or Survivor setup, the survivor can immediately access the funds, which makes this a popular choice for couples or elderly parents with children.

Unclaimed bank accounts

If the family doesn’t claim the funds, the account turns inoperative after two years of inactivity.

After 10 years, the balance is classified as “unclaimed deposit” and transferred to the Depositor Education and Awareness (DEA) Fund maintained by the RBI.

You can still claim it later by visiting the bank with valid documents, as the RBI allows trace and refund through the official udgam.rbi.org.in portal.

Fixed deposits and joint investments

For fixed deposits, the same rules apply; nominees or legal heirs can claim the maturity amount after producing relevant documents. If FDs are held jointly under Either or Survivor mode, the survivor can close or renew them independently.

How to make things easier for family

• Always register a nominee for every savings account, FD, and mutual fund.
• Keep records updated, especially contact details and KYC.
• Inform your family where your accounts and investments are held.
• Write a simple will to avoid confusion and disputes later.

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