A frequently raised question regarding funds deposited in bank accounts is: who ultimately holds the rightful claim to the money if both the account holder and their designated nominee pass away? The Reserve Bank of India (RBI) and banking laws provide clear guidelines to address this scenario, ensuring that even under such circumstances, the funds are securely transferred to the rightful beneficiary.

According to the regulations, if both the account holder and the nominee pass away, the funds deposited in the bank are disbursed to the legal heirs of the deceased. The role of a nominee is merely that of a trustee—meaning they serve as a conduit to transfer the funds to the actual heirs, rather than being the ultimate owner of the money. This principle was upheld by the Supreme Court in 1984 in the case of *Sarbati Devi vs. Usha Devi*. In the absence of a designated nominee, the legal heirs acquire direct rights to the property—specifically, the funds in question.

**How ​​is the Heir Determined?**
The next question arises: if the funds are to be disbursed to an heir, what are the rules for identifying that heir? The identity of the heirs is established through two primary methods. If the deceased had executed a Will, the assets are distributed in accordance with the provisions of that Will. Conversely, in the absence of a Will, the relevant succession laws—such as the Hindu Succession Act, 1956—come into effect to determine who holds the legal claim to the property. Since succession laws vary across different religious faiths, the determination is made in accordance with the specific laws applicable to the deceased's religion.

In such situations, the heirs must file a claim with the bank to receive the funds. To do so, they are required to submit documents such as a death certificate, proof of identity, and a Legal Heir Certificate or Succession Certificate. The bank may also require the completion of additional formalities, in accordance with its internal regulations, to ensure that the funds are indeed being disbursed to the rightful claimant.

**When Does an Account Become Unclaimed?**
If no individual comes forward to claim these funds for an extended period, the account is subsequently classified as an "unclaimed" account. According to RBI regulations, funds that remain unclaimed for a period of 10 years are transferred to the Depositor Education and Awareness Fund (DEAF). However, even after this transfer, the rightful heirs can still file a claim at any time—provided they submit the necessary documents—and recover the money.

The RBI has directed banks to ensure that the claims process in such cases remains simple and transparent, thereby sparing customers and their families from facing unnecessary hassles. This is precisely why it is considered crucial to update one's nominee details promptly and to keep all essential documents organized.

**Who Receives the Money If No Nominee Is Designated?**

If you did not designate a nominee at the time of opening your bank account, the legal heirs of the account holder are entitled to the funds held in the account following the holder's demise. Typically, this right vests with the parents, spouse, or children of the deceased. However, to claim the money, the claimant must submit the requisite documents to the bank to establish their status as the deceased's legitimate heir. This entails submitting identity proofs, proof of relationship, or other legal documents to ensure that the funds are disbursed to the correct individual.

The procedure differs in the case of a joint account. If one of the account holders passes away, the surviving account holder retains full operational control over the account and holds the sole right to its funds. To facilitate this, the surviving holder is required to submit the deceased's death certificate to the bank. Once the documents are submitted, the bank updates its records and removes the deceased's name from the account.

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