IF NO WILL Exists: This question is only on financial instruments: 1. Nominee of Instruments like mutual funds and fixed deposits and Bank accounts. Does the nominee become the owner in the absence of a will (inestate case)? If nominee does not automatically become owner, is a succession certificate (or any other document) required to withdraw money from these instruments in absence of a will? 2. Second holder of financial instruments like mutual funds, fixed deposits, bank accounts. Is the second holder (either or survivor mode) the final owner if the first holder dies inestate, without a will? Thank you.
16 answers received from multiple lawyers
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1) nominee is only a trustee for legal heirs
2) bank would insist on furnishing indemnity bond , two guarantors to with draw money or furnish succession certificate from court
3) second holder is not the owner if first holder dies intestate .he is mere trustee
1. The nominee is mere trustee of the proeprty and he does not become its owner by operation of law unless he alone it sole legal heir of the person who made him nominee.
2. Second holder does not become sole or full owner of the moveable if the first holder has any other legal heri apart from the second holder .
If you post your actual dispute then further advice can be given.
Dear Concerned,
Does the nominee become the owner in the absence of a will (inestate case)?
YES thats the logic behind assigning a Nominee - the nominee becomes the beneficiary. Yes Succession certificate will be needed.
Is the second holder (either or survivor mode) the final owner if the first holder dies inestate, without a will?
Yes if these financial instruments are taken in Joint names the second owner becomes the beneficiary .
Best of Luck
1. A nominee is entitled to realise liquid assets without obtaining succession certificate. Succession Certificate is required when there is no nomination. However, a nominee is only a trustee of all legal heirs, who is under a duty to divide the assets among the heirs. Nomination does not oust the law of succession.
2. In the event of demise of first holder his share will devolve through succession. The second holder will become the absolute owner only if he/she is the sole surviving legal heir of the first holder.
I got varied answers to this question from you all. Can you explain? In the case of SHARES, google articles say the nominee becomes the full owner of the SHARES. __________________ BANK ACCOUNTS: There are two (or three) types of second holders in the bank account. 1) Joint mode -- Both first and second holders need to sign the cheque for it to be valid. 2) Either or Survivor mode - Either one can sign the cheque. So what is the legal status of second holder (sole beneficiary / not sole beneficiary) in case first holder passes away without a will? This article seems to suggest that second owner (if in either or survivor mode) is the full owner perhaps? It says the "survivor" can also get the balance transferred to his/her name (if required). https://www.relakhs.com/types-of-joint-accounts-banks-india/ Another article says the following: http://stepupmoney.com/advantages-and-disadvantages-of-joint-bank-accounts/ "Perhaps the most significant and important Advantage of a Joint Bank Account, is the Transfer of Rights of the account, even if NOT MENTIONED IN A WILL. If you would want your spouse to be able to have exclusive access to your bank account after you are not around, then a joint account would do it automatically, even if you fail to make a will, or mention it in the WILL. In case of Joint Account Holders, the surviving holder automatically gets the access to the Account in case of the others death. Even if a Will mentions that the contributions to the Account be distributed to X, Y, Z; if that account is a Joint Account, then it is solely at the discretion of the Surviving Holder, if he/she/they want to distribute it or not."
RBI circular
6. SETTLEMENT OF CLAIMS IN RESPECT OF DECEASED DEPOSITORS
To facilitate expeditious and hassle-free settlement of claims on the death of a depositor, the following guidelines may be followed:
Access to balance in deposit accounts
6.1 Accounts with survivor/ nominee clause
In the case of deposit accounts where the depositor had utilised the nomination facility and made a valid nomination or where the account was opened with the survivorship clause ("either or survivor", or "anyone or survivor", or "former or survivor" or "latter or survivor"), the payment of the balance in the deposit account to the survivor(s)/nominee of a deceased deposit account holder represents a valid discharge of the bank's liability provided:
(a) the bank has exercised due care and caution in establishing the identity of the survivor(s) / nominee and the fact of death of the account holder, through appropriate documentary evidence;
(b) there is no order from the competent court restraining the bank from making the payment from the account of the deceased; and
(c) it has been made clear to the survivor(s) / nominee that he would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to him shall not affect the right or claim which any person may have against the survivor(s) / nominee to whom the payment is made.
6.2 It may be noted that since payment made to the survivor(s) / nominee, subject to the foregoing conditions, would constitute a full discharge of the bank's liability, insistence on production of legal representation is superfluous and unwarranted and only serves to cause entirely avoidable inconvenience to the survivor(s) / nominee and would, therefore, invite serious supervisory disapproval. In such case, therefore, while making payment to the survivor(s) / nominee of the deceased depositor, the banks are advised to desist from insisting on production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee, irrespective of the amount standing to the credit of the deceased account holder.
2) as per said circular survior is not the absolute owner but mere trustee
Sorry , I can not agree to the information you found online.
If there is joint a/c holder then on death of one holder his half share devolves upon his own legal heirs . In other words on death of one holder of joint a/c the other one does not become its sole owner.
This supposition as made in your subsequent post is wholly without any basis of law at all.
Does the nominee become the owner in the absence of a will
Under such situation, the nominee shall be a trustee to receive the claim amount on behalf of the legal heirs and to disburse the same to them. This is law involved in it.
If nominee does not automatically become owner, is a succession certificate (or any other document) required to withdraw money from these instruments in absence of a will?
Nominee can receive and disburse the claim amount equally to the legal heirs.
Is the second holder (either or survivor mode) the final owner if the first holder dies inestate, without a will?
In the either or survivor arrangement, the survivor becomes the absolute owner of all the account opened under this arrangement or type of account.
So what is the legal status of second holder (sole beneficiary / not sole beneficiary) in case first holder passes away without a will?
Under E or S the survivor becomes the absolute owner or holder of the account and he can exercise full rights absolutely.
This article seems to suggest that second owner (if in either or survivor mode) is the full owner perhaps?
It says the "survivor" can also get the balance transferred to his/her name (if required).
The amount remains in the same account, the survivor becomes the owner of the entire amount individually upon the demise of the joint account holder under E or S type of account
The will is a different subject to that of the joint account.
The joint account unless it is cancelled by the joint holders, shall be effective and the will cannot over rule the provisions of E or S type of account.
Thank you all BUT I have got mixed answers..... to my question on the legal status of ownership of money by second holder of bank account, on the demise of first holder, in case there is no Will OR in case a certain bank account is not mentioned in the Will. Can you please explain your points of view once again citing the applicable laws/clauses/acts/circulars, that will have legal standing in a court? 1. Legal status of second holder in 'Either or Survivor' mode of bank account. Is second holder full and final and indisputable owner of money after demise of first holder? 2. Legal status of second holder in 'Former or Survivor' mode of bank account. Is second holder full and final and indisputable owner of money after demise of first holder?
1) second holder is not the indisputable owner of money on demise of first holder
2) he is mere trustee for the legal heirs of the first holder
3) I have already reproduced RBI circular on this regard
4) similar is the position in respect of your second query
Ajay - What you just said, does it not conflict with this following 'deceased claim' form? See Clause B in this form of Allahbad bank. It does not even ask for ID papers to delete the name of the deceased holder. It is not clear though whether this is about deceased first holder or deceased second holder. ________________________________________________________ Application for Deceased claim: (To be used when account has nomination or is a joint account with survivor clause) From ................................................................... ................................................................... ................................................................... To The Branch Manager, Allahabad Bank .............................................................Branch Dear Sir, Re: Deceased Account Late Shri/Smt. ...................................................... Account No(s) ....................................................... I/We advise the demise of Shri/Smt. .....................................................on …………………………... He/She holds the above account(s) at your branch. The account is in the name(s) of : ....................................................................................................................................... A. In case of Nomination I,...................................................................son/daughter…………………………………………… of Shri ..............................................................residing at…….........................................................am (i) the registered nominee in the above account(s). (ii) the person authorized to receive payment on behalf of Master / Miss......................................................... who is the nominee in the above account(s) and is a minor as on the date of this claim. Please settle the balance in the account in the name of the nominee. I/we receive the payment as trustee(s)of the legal heirs of the deceased. B. In the case of joint account I/We request you to delete the name of deceased person and continue the account in my/our name(s) with same mode of operations. I/We submit photocopy of the following document(s) together with originals. Please return the original to us after verification. Death Certificate issued by ................................................................... Identity proof (required in nomination cases) ................................................................... Place: Yours faithfully, Date: Claimant(s)
1) if account is in joint names on death of principal holder the second holder takes money as trustee only
2) read RBI circular cited by me for better clarity on the legal position
1. Legal status of second holder in 'Either or Survivor' mode of bank account. Is second holder full and final and indisputable owner of money after demise of first holder?
The purpose of this option itself is to confirm that the survivor shall automatically acquire the status as a single holder to operate and enjoy the benefits of this account. Thus the survivor shall become the owner which is within the provisions of law governing this position.
2. Legal status of second holder in 'Former or Survivor' mode of bank account. Is second holder full and final and indisputable owner of money after demise of first holder?
The answer to the question repeated in a different form is the same as given above.
See Clause B in this form of Allahbad bank.
It does not even ask for ID papers to delete the name of the deceased holder.
It is not clear though whether this is about deceased first holder or deceased second holder.
Your query appears to be that you are confused with the provisions as mentioned in the clause B referred by you.
The clause clearly mentions about the documents required, for your information the clause is repeated below:
"""I/We submit photocopy of the following document(s) together with originals. Please return the original to us after verification.
Death Certificate issued by"""
From the above it can be seen that you are required to submit certain documents including the death certificate of the deceased holder.
What else do you want to clarify when the position of law is very clear?
Mr Kalaiselvan, what you say seems to be what the Bank form suggests. That after passing away of the first holder, the second holder becomes the full, final, undisputed holder. I have seen internet articles suggesting that even the WILL cannot take away the ownership of second holder, after the passing away of first holder. However a RBI circular, posted by Ajay, seems to be suggesting differently: Clause (c) from RBI circular: (c) it has been made clear to the survivor(s) / nominee that he would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to him shall not affect the right or claim which any person may have against the survivor(s) / nominee to whom the payment is made. ________________________________________ How do you interpret this clause? Is there any law that supersedes this RBI circular?
on death of first holder second holder receives payment only as trustee for benefit of legal heirs
the second holder is not the absolute owner of money lying in said account
This is again the interpretation of law.
The RBI circular is not law.
The RBI circular referred herein above is in the situation of a nominee claiming the death claim amount of the deceased depositor.
Your query is about the account which is operated under E or S basis. Here there is no question of individual nominee.
Nomination can be made to such type of accounts too but that nominee will be for both for the circumstances arising when both the account holders meet their unfortunate death together or simultaneously for eg. due to accident etc.
In fact such nominee also cannot take away the money by himself/herself, the nominee after receiving this claim amount has to disburse the same to the legal heirs of both the deceased.
Therefore please be convinced about the provisions of law in respect of a bank account being operated on the E or S basis and the purpose of the same. .
Ajay thank you for your answer. Mr Kalaiselvan, thank you for the answer. It is understandable that nominee is not the final owner. Perhaps second holder is undisputed owner in case there is no nominee or if nominee and second holder are the same person? Is all this specified in some bank act? Finance Act? Case law? Any law/act/case law that you would present to a real court. Thank you.
Mandate given to bank does not over ride succession law applicable to parties
2) In the present case since mother is Hindu on her demise intestate provisions of Hindu succession act would be applicable
3) both movable and immovable property would devolve on her class 1 legal heirs
Nominee and the second holder cannot be the same person. There is no provision for that.
In a jointly held account, both the account holders shall nominate a single person for the event as mentioned in my previous post, in the E or S type of account.
If there is a dispute then the relevant act or law shall emerge by which you will come to know what is to be done next as per the provisions of the law referred therein.