Why You Must Have a Nominee for Your Fixed Deposit Investment
Ashish Seth, a banker had set up a Fixed Deposit (FD) of Rs 10 lakh. Unfortunately, within a year, he suffered a massive cardiac arrest and passed away. He had appointed his daughter, Maya, as his nominee. The Fixed Deposit (FD) was for three years. When it matured, Maya received the principal amount and the interest in her account.
It is important to have a nominee for your FD. A nominee acts as the custodian of your FD. Their job is to take charge if anything happens to you. Read on to know the role of a nominee in an FD. Find out why it is important to appoint one.
Fixed Deposit Nominee:
So, who is an FD nominee? A nominee is a person the FD holder appoints when opening the account. The FD holder puts down the name of the nominee in the opening form. The nominee may or may not be related to the FD holder. But he or she should be a trusted person. He or she must be responsible enough to handle the FD dealings if the account holder dies. Commonly, the FD holder appoints the next of kin as the nominee. This could be a spouse, a child, a parent, or a sibling. There can only be one nominee per FD.
The Role of a Nominee:
Now, let us understand the role of an FD nominee.
- Custodian: The nominee is in charge of your FD in your absence. But, what if you are around? Then the nominee has no right over the FD or any matter related to it.
- Take charge in absence: Suppose a legal matter related to the FD arises when you are away from your current location. The nominee can take charge and sort out the matter. Suppose the FD holder dies before it matures. Then the nominee has to complete the documentation first. Then he or she may collect the pending amount upon maturity.
- Contact person: The nominee also serves as the contact person when the FD holder is unavailable. This may be due to geographic constraints or due to the demise of the FD holder.
Importance of A Nominee:
It is important to appoint a nominee for your FD. Without one, there may be a tussle for your money after you are no more. Your family members may find themselves locked in a legal battle to claim the amount. This can lead to a lot of confusion, animosity, and bitterness. All this is avoidable. So, it is vital to appoint a nominee.
Points to Remember When You Appoint A Nominee:
- Fill in the name of the nominee in the FD account opening form.
- The nominee must be an individual. You cannot name a trust, a group, or a club as a nominee.
- Suppose it is a joint FD account. Both account holders must agree on the nominee.
- The nominee may only be eligible to get the amount if both the account holders die. Suppose one of them dies. Then the surviving account holder might be in charge of the account.
- What if you do not appoint a nominee while opening the FD account? You can always do so later on.
Additional Read : All You need to know about Fixed Deposit
In a nutshell:
It is important for you to appoint a nominee for your FD account. Life is unpredictable. But you can ensure that your finances and your family remain protected after you pass away. Appointing a nominee makes it easier for everyone. So, make sure you appoint a nominee when you set up an FD. Do you have an existing FD and no nominee for it? Appoint one right away.