While filling a form for Fixed Deposit, there are many options available for the deposit to be operated, viz. self/ single, jointly, E or S, anyone or survivor, former or survivor, etc. Each option has its own relevance depending on individual’s case. If you check the statistics for joint accounts, you will find that majority of them are being operated under the E or S option. ‘E or S’ stands for ‘Either or Survivor’. With this option checked in, any holder can operate the account but for closing the account or for making any change in the account, joint mandate of the depositors is required.
Other than the above mentioned information, you also need to mention your choice of making a nominee for your deposits. A nominee should be your relative and for one deposit, only a single nominee can be assigned so that you can make different nominees for different deposits. A nominee can even be a minor member of your family and his name can at any time be cancelled or changed by the depositor/s. Nominee is a person who is entitled to receive the amount of your deposit account after your death. This is the major benefit of assigning a nominee as it reduces the problems of your legal heirs in claiming your deposit money. For the benefits marked by this facility, it is worthwhile to make nominee. Now let us explore the various situations where E or S is better and the situations where choosing nomination is a better option:
1) The fixed deposit is operated singly. It is imperative to assign a nominee in this case. In the event of death of the depositor, the nominee, after fulfilling certain formalities and satisfying the bank as to his/ her identity would receive the outstanding balance in the account. In the absence of nomination, the legal heir of the deceased would be required to follow an intricate legal procedure to obtain the funds. Bank may also ask for succession certificate from the claimant.
2) There are only two members in the family and the account is operated with E or S instruction. Nomination is not required. The final balance along with interest, if applicable, will be paid to survivor on death of any one of the account holders.
3) There are more than two members in the family and the account is operated with E or S instruction. It will be better to assign nominee. In case of joint deposits made with operating instructions as E or S, the nominee’s right arises only after the death of all the depositors. The nominee, in the event of death of the depositor/s, would receive the balance outstanding in the account as a trustee of legal heirs.
In the event of the death of one of the joint holders, in case of a joint deposit account, bank is required to make payment jointly to the legal heirs of the deceased person and the surviving depositor/s. However, if the joint account holders had given mandate for disposal of the balance in the account in the forms such as either or survivor, former/ latter or survivor, anyone of survivors or survivor, etc., the payment will be made as per the mandate to avoid delays in production of legal papers by the heirs of the deceased.
An error in the choice of operating an account may cause severe hardships for your family members. Make your decisions prudently and rationally and secure the future of your loved ones.