Nominee vs Legal Heirs for Fixed Deposits

A nominee differs from a legal heir in many aspects. Consider an example where ‘Person A’ opens an FD account and nominates ‘Person B’ as a nominee. 


Upon ‘Person A’s’ demise, ‘Person B’ claims the money by submitting the former’s death certificate. ‘Person B’ will have to pass on the sum to a legal heir of the deceased, ‘Person C’. In a legal dispute, a legal heir’s claim always supersedes that of a nominee. 


However, to grasp how legal heirs are more likely to be entitled to FDs, you must understand the definitions of both these terms.


Read on to know more about the appointment of a nominee vs a legal heir and certain scenarios that you might find yourself in. 

What is a Nominee?

When looking at the definition of a nominee in bank fixed deposit, the term custodian becomes relevant. A nominee is appointed by the FD account holder so that the maturity amount reaches their family members.


In this sense, a nominee is the custodian of the fund, and it alone does not entitle them to ownership of the funds. However, account holders can also appoint the same person as the nominee and legal heir.

What is a Legal Heir?

A legal heir, on the other hand, is an individual entitled by law to inherit and own the invested amount. A legal heir is appointed through a signed legal will with applicable personal law. 


This will and testament should state that said individual is the recipient of the deceased individual’s wealth and all the benefits that are associated with it. 


In the case of the legal heir vs nominee in bank fixed deposit, therefore, the money would be directed towards the legal heir.

What Happens If No Nominee or Legal Heir is Appointed?

So, what happens when a fixed deposit account holder fails to create a will and testament prior to his/her death? When there is no clear understanding of who the legal heirs are, the prevailing laws of inheritance that govern Indian courts take precedence.


The applicable laws are used to determine who will inherit the deceased individual’s estate. This means that decisions could be made in accordance with personal laws. 


Upon the depositor’s death, the matured FD sums go to the nominated person. These need to be handed over when the legal heir makes their claim. In other words, the nominee forfeits the amount in the legal heir’s favour. 


However, if no successor comes to assert ownership of the FD, the nominee can keep it.

Who receives the Maturity Amount - Nominee or Legal Heir?

As mentioned above, the legal heirs are entitled to receive the FD returns upon their maturity. In order to better understand the difference between the two, go through this table comparing the terms nominee and legal heirs.



Legal Heir


A nominee is a person appointed as the guardian of the FD funds. 

A legal heir is an individual who is rightfully entitled to FD returns


A nominee does not own the assets and safeguards them until a legal heir claims it 

The ownership of the FD account lies with the legal heir of the deceased person


Upon maturity, the banks transfer the amount to nominees who are responsible for keeping it until somebody claims it

A legal heir is entitled to get the sum after the demise of the depositor

Lack of a Will or Testament

The nominee remains the custodian of the funds and is responsible for transferring them to the depositor’s family members

Legal heir will be determined based on the applicable laws 

What Happens if No Instructions are Left Behind?

In case the deceased depositor has left no instruction, the lender will contact the close relatives. If no connection can be established, they park these funds until a legal heir comes to claim the money. 


In the future, if someone wants to claim this amount, they will need to show proof of any relation to the depositor to the bank.  

What Role Does the Bank Play in this Process?

In case of the death of an FD account holder, the bank transfers the funds to the nominee upon its maturity. The legal heir can then directly claim the same from the nominee. 


However, the legal heirs can directly claim the amount from the issuer bank if the depositor does not appoint a nominee. If both nominee and legal heir are not mentioned, the bank generally gets in touch with the family members of the depositor.

Exception Rule for Nominee and Legal Heirs

In most cases of investments, legal heirs are taken to be the owner of an asset. However, there is an exception to this rule. With respect to investments in shares, a nominee can own these funds until a signed legal will is produced.   


In order to learn more about fixed deposits and details pertaining to a nominee in bank fixed deposit, visit Bajaj Markets.


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FAQs on Nominee vs Legal Heirs

What are the benefits of appointing a Nominee?

By appointing a nominee, you gain a custodian who will ensure that your legal heir receives the benefits associated with your estates.

What happens if the deposit holder does not add a nominee?

If a nominee is not appointed by a deposit holder, the legal heirs will directly inherit the estate. The prevailing laws of inheritance that govern Indian courts take precedence and are used to determine who will inherit the deceased individual’s estate.

What happens if no legal heir claims assets?

If a legal heir does not claim the assets, succession will be determined through personal laws. The assets can be claimed by the legal heir as per the applicable laws. 

What if the legal heir has given up their rights?

If a legal heir gives up their rights to inheritance, their children cannot claim a stake in the money in that fixed account.

What happens if a man leaves the property without a will?

If a deceased individual holding assets has not created a will prior to their death, the laws pertaining to inheritance will come into effect.

What are the details of a nominee?

Upon the depositor’s demise, the bank transfers the assets to the nominated person. A nominee safeguards this sum and passes it on to the legal heir.

Can a nominee claim a fixed deposit?

Yes, nominees can claim a fixed deposit on the depositor’s demise by producing a death certificate to the Bank

Who can be a nominee in a fixed deposit?

A nominee is just a guardian of the fund for which you can nominate any of your family members or friends.

What is the difference between a legal heir and a nominee?

A nominee is just responsible for holding the FDs till a legal heir lays claim to them. On the other hand, a legal heir is entitled to own that FD account and its returns.

What happens to the FD when the primary holder dies?

If the primary holder dies, their FD account will continue to accrue interest till the time of its maturity. After which a nominee or legal heir can claim it. A legal heir can also prematurely withdraw certain types of bank FDs.

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