Accessing bank account of an incapacitated person isn't easy

An account holder should use the 'either or survivor' option or give power of attorney to critical members of the family

Recently, the Bombay High Court allowed a woman to operate the bank account of her husband who was in coma. As there is no legal provision in banking to deal with such a situation, the wife had no option but to approach the judiciary to be appointed her husband’s guardian.

Anyone can face a similar situation where the breadwinner is comatose, incapacitated, bedridden or is critical after an accident. “By following one simple step, an individual can give access to all financial accounts to his or her partner. An individual can opt for ‘either or survivor’ option,” says Malhar Majumder, a Kolkata-based financial planner.

In this case, the breadwinner is the first account holder and the partner is the second. Both can operate the account. The signature of any one of the two is valid for transactions. Majumder says this works for all financial accounts, except for an insurance policy. An individual can opt for this option in banking, mutual funds, share trading account and so on.

There is also an option called “former or survivor”, wherein only the main account holder can operate the account. Only on his death, the second account holder can independently operate the account after submitting the required papers with the bank. In a joint account, however, the signature of both the parties are mandatory for a transaction. If one is unavailable, the transaction cannot happen. “If a person has met with an accident and is critical, the bank can also release funds for the treatment,” says Jose K Mathew, executive vice-president and head of retail business at The Federal Bank. But the funds will be released for treatment or operation related to the accident only and on submission of the required paperwork.

If the person is too ill to sign for banking transactions, transactions can still happen by using the thumbprint. But there needs to be two witnesses present when the account holder is giving the thumbprint. One of the two witnesses needs to be a bank official. Those who are not even in a position to provide a thumb impression, a toe impression can be used or "a mark can be obtained on the cheque/withdrawal form”, in the presence of two witnesses, according to the Reserve Bank of India’s guidelines.

But there are cases when the account holder may not have a partner to opt for the “either or survivor” option. In such cases, the individual can keep a power of attorney authorising someone trustworthy to operate his bank account. “The account holder has to execute what is called as a specific power of attorney (PoA). On the death of the account holder, the authorised person loses all the power and the PoA is revoked,” says Nishit Dhruva, managing partner at MDP & Partners. 

On the death of the person, the funds will have to be passed to the legal heirs irrespective of whoever is the nominee. “According to various Supreme Court rulings, a nominee is more like a trustee who acts as an agent on behalf of the legal heirs. On death of an individual, the estate will be passed on to the legal heirs in accordance with the inheritance laws,” says Ajit Warrier, partner at Shardul Amarchand Mangaldas.

If the account holder is missing, getting hold of the account can be difficult for financial transactions. According to the Section 108 of the Indian Evidence Act, presumptions of death can be made only after seven years from the date on which the person has been reported as missing — that is, the date of filing the First Information Report (FIR). Even for life insurance, family members need to wait for seven years before getting the claim.