When opening an FD, banks require nomination to ensure smooth transfer of funds in case of the depositor’s death. A nominee is the person who can claim the deposit proceeds from the bank; however, the nominee does not automatically become the owner of the funds. The legal heirs—individuals entitled under succession laws or a will—have the right to the deposit. The nominee acts as a trustee for legal heirs. To avoid disputes, maintain updated nomination details and consider drafting a will specifying beneficiaries. If the nominee and legal heir are different, legal heirs may need to claim their share through legal procedures.
Nominee vs. Legal Heir
| Aspect | Nominee | Legal heir |
|---|---|---|
| Role | Custodian/trustee of funds | Ultimate beneficiary as per law or will |
| Appointment | Chosen when opening FD | Determined by succession law or will |
| Rights | Can receive money from bank | Can claim ownership through succession laws |
| Importance | Ensures smooth payout | Ensures rightful distribution of estate |
Ensure your FD nomination is updated and align it with your estate plan. Consult a legal professional if necessary to prevent inheritance disputes.
