How to Include Bank Accounts & Mutual Funds in Will (2026)

In modern urban India, financial portfolios have shifted dramatically away from physical gold and ancestral land toward liquid, market-linked financial instruments. Middle-class Indian families today hold wealth distributed across savings accounts, fixed deposits (FDs), recurring deposits (RDs), demat equity holdings, Systematic Investment Plans (SIPs) in mutual funds, Sovereign Gold Bonds (SGBs), and provident fund balances.

Yet, when creating an estate plan, drafting a proper will for bank accounts mutual funds is frequently neglected or executed with catastrophic vagueness. Account holders mistakenly believe that their bank nominees or registered Demat co-holders will automatically inherit everything without dispute.

This comprehensive guide details the governing legal frameworks under the Indian Succession Act, 1925, the Banking Regulation Act, 1949, and key Supreme Court precedents. You will learn how to describe liquid financial assets with surgical precision, utilize the residuary clause to safeguard future wealth, handle joint accounts, and expedite claim settlements for your grieving beneficiaries.

1. The Critical Legal Distinction: Bank Nominee vs. Will Beneficiary

The single most dangerous misconception in Indian personal finance is confusing a Nominee with a Legal Beneficiary. Every banking customer is urged to register a nominee when opening a savings account or investing through discount brokers like Zerodha, Groww, or Angel One. Most investors tick this box assuming it functions as a Will.

Under Indian law, nomination is purely an administrative facilitation mechanism. It gives the bank, asset management company (AMC), or depository participant (DP) a valid legal discharge from liability upon transferring the proceeds to the nominee. However, nominees do not inherit beneficial ownership.

The Foundational Precedents: Sarbati Devi & Shakti Yezdani

The Supreme Court of India has firmly established the subordinate status of nominees across multiple landmark rulings:

• Sarbati Devi and Anr. v. Usha Devi (1984 1 SCC 424): The Supreme Court held that nomination under Section 39 of the Insurance Act (and symmetrically under banking regulations) simply specifies the person authorized to collect the funds. The nominee receives the corpus merely as a trustee and holds it in fiduciary capacity for the true legal heirs or beneficiaries specified in the deceased person's Will.
• Shakti Yezdani and Anr. v. Jayanand Jayant Salgaonkar (Supreme Court, December 2023): For decades, stock market investors believed that Section 109A of the Companies Act 1956 (and Section 72 of the Companies Act 2013) granted demat nominees complete ownership of shares over legal heirs. In late 2023, a two-judge bench of the Supreme Court conclusively rejected this theory. The apex court ruled that the Companies Act and SEBI regulations cannot override general succession laws or testamentary bequests. A demat nominee is merely a caretaker who must deliver the shares to the legitimate Will beneficiaries.

To understand the full consequences of dying without a testament, read our detailed analysis on what happens if you die without a Will in India and our breakdown of Nominee vs Legal Heir in India.

2. How to Specifically Detail Financial Assets in Your Will

When drafting a will for bank accounts and mutual funds, ambiguity is the primary cause of administrative delays and probate litigation. If a Will vaguely states, "I leave all my bank money to my son," the executor must spend months corresponding with bank compliance officers, answering customer identification queries, and producing affidavits.

To ensure swift, uncontested transmission, your Will should document each category of financial holding using standard institutional identifiers:

A. Bank Savings Accounts & Fixed Deposits (FDs / RDs)

For every bank account, provide the following precise parameters:

• Full Legal Name of the Bank: (e.g., State Bank of India, HDFC Bank Ltd, ICICI Bank).
• Branch Name & IFSC Code: (e.g., Koramangala Branch, Bengaluru — IFSC: SBIN0001234).
• Account Number: Include the complete savings or current account number.
• Customer Information File (CIF) / Customer ID: Including the CIF is vital because it links all recurring deposits, fixed deposit receipts, and ancillary accounts under one customer profile.
• Percentage Allocation: Specify exact percentage shares (e.g., "60% to my spouse [Name] and 40% to my son [Name]"). Avoid indeterminate phrases like "sufficient funds for their care."
• Accrued Interest Clause: Explicitly state that the bequest includes all principal balances along with interest accrued up to the date of settlement.
• NRE / NRO / FCNR Accounts for NRIs: If you hold Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts, indicate their foreign currency status and compliance with Foreign Exchange Management Act (FEMA) guidelines.

B. Mutual Funds (Folios, AMCs & Systematic Plans)

Mutual funds can be held either in physical/Statement of Account (SOA) format via Registrar and Transfer Agents (RTAs like CAMS and KFintech) or in dematerialized form within a broker app:

• Asset Management Company (AMC): (e.g., Mirae Asset Mutual Fund, SBI Funds Management Ltd, Parag Parikh Financial Advisory Services).
• Folio Number: The unique master identifier for that fund house.
• Scheme Names & Growth/Dividend Options: Mention specific schemes (e.g., "Parag Parikh Flexi Cap Fund - Direct Plan - Growth").
• SIP Continuity & Redemption Rights: Clarify whether the executor or beneficiary should terminate active SIP mandates upon death or allow units to compound until maturity.
• RTA Aggregation Clause: Because investors often switch schemes within the same folio, include a blanket clause: "Including all existing units, dividend reinvestments, and any prospective units purchased under Folio No. [XXXXX] at the time of my demise."

C. Demat Accounts & Equity Shares

In modern trading platforms such as Zerodha (Kite), Groww, Upstox, or ICICI Direct, your stocks and Exchange Traded Funds (ETFs) do not sit with the broker. They are held electronically with one of India's two national depositories: NSDL or CDSL.

To properly bequeath shares, do NOT list individual company stocks one by one unless you wish to bequeath specific shares to separate individuals. Company share counts change frequently through stock splits, bonus shares, rights issues, and mergers. Instead, identify the repository container:

• Depository: CDSL (Central Depository Services India Ltd) or NSDL (National Securities Depository Ltd).
• Depository Participant (DP) Name: (e.g., Zerodha Broking Ltd).
• 16-Digit Demat Account Number: Comprising the 8-digit DP ID (e.g., 12081600) and the 8-digit Client ID / Beneficiary ID.
• Scope of Bequest: State that the bequest includes all listed equities, Sovereign Gold Bonds (SGBs), Real Estate Investment Trusts (REITs), and cash balances lying in the linked trading ledger.

D. Provident Funds: EPF vs. PPF Legal Nuances

Provident fund balances require special legal care because their statutory regimes differ fundamentally:

• EPF (Employees' Provident Fund): Governed by the Employees' Provident Funds Scheme, 1952. Under Paragraph 61 of the EPF Scheme, an employee who has a family (spouse, children, dependent parents) can only make an EPF nomination in favor of family members. A testamentary bequest in a Will attempting to pass EPF corpus to an outsider or third party cannot override this statutory limitation.
• PPF (Public Provident Fund): Governed by the Government Savings Promotion General Rules, 2018. Although a nominee is appointed at the post office or bank branch, the High Courts and Supreme Court have affirmed that PPF proceeds form part of the deceased's general estate and can be bequeathed via a Will to any designated beneficiary.

3. The Power of the "Residuary Clause": Your Future Wealth Safety Net

A fatal mistake made by self-drafted testators is attempting an exhaustive list of assets without adding a Residuary Clause. Over a typical 10 to 30 year lifespan, financial portfolios are dynamic:

• Fixed deposits mature and are converted into new FD numbers at different banks.
• Old savings accounts are closed and new digital savings accounts are opened.
• Dividends and bonus shares accumulate in new trading portfolios.
• You may inherit unexpected ancestral funds or receive insurance bonuses.

Under Section 102 and Section 103 of the Indian Succession Act, 1925, if an asset is not expressly mentioned in your Will and there is no residuary legatee named, that omitted asset suffers from partial intestacy. The unlisted bank accounts will not go to your primary beneficiary; instead, they will be frozen by bank managers and subjected to protracted legal heir distribution under personal succession laws.

By including this single paragraph, you eliminate the tedious necessity of updating your Will every single time you open an account or purchase a new investment.

4. Joint Accounts: "Either or Survivor" vs. "Former or Survivor"

Millions of married couples in India maintain joint savings accounts and joint fixed deposits with operational mandates like "Either or Survivor" (E or S) or "Former or Survivor" (F or S). What happens to the money when the first holder passes away?

The Reserve Bank of India issued clear operational directives in its Master Circular on Customer Service in Banks:

• Operational Mandate: In an "Either or Survivor" account, upon the death of the primary holder, the surviving joint holder is legally entitled to operate the account and withdraw the entire balance without producing a Succession Certificate or Will. The bank obtains a complete discharge.
• Beneficial Ownership Reality: However, operational authority does not extinguish the legal claims of the deceased's estate. Under Indian civil jurisprudence, if the deceased holder was the sole source of funds in that account, the money forms part of the deceased's estate. If the deceased's Will leaves their movable wealth to their dependent mother or children from an earlier marriage, the surviving co-holder is legally accountable to pay over the deceased's proportion to the Will beneficiaries.
• Eliminating Spousal Friction: To prevent bitter intra-family litigation between a surviving spouse and other legal heirs, your Will must explicitly state whether joint account balances are intended as an outright gift to the surviving holder or are subject to estate distribution.

5. Step-by-Step Claim Procedure for Beneficiaries Post-Demise

When the testator passes away, how do the nominated executor or beneficiaries actually interact with banks and fund houses? Follow this structured protocol:

1. Obtain Official Death Certificates: Procure at least 15–20 original certified copies of the Death Certificate from the municipal corporation or local registrar of births and deaths. Every financial institution requires an original or notarized true copy.
2. Freeze Operational Access: Promptly notify the bank and depository participants of the demise in writing. This halts unauthorized ATM withdrawals, net-banking transactions, or automated debit mandates that could complicate accounting.
3. Claiming Bank Deposits via Standard Claim Form (Form 14):
   • For accounts where a nominee exists, banks settle claims swiftly under RBI guidelines within 15 days upon submission of the death certificate, nominee KYC, and standard claim application.
   • Where accounts are claimed by a Will beneficiary who is not the nominee, the claimant must submit the Will, an Indemnity Bond (Bank Annexure B), No-Objection Certificates (NOCs) from other legal heirs, and two third-party guarantors of acceptable financial net worth.
   • For claims below internal bank thresholds (often up to ₹5,00,000 or ₹15,00,000 depending on the bank's board-approved policy), banks settle without demanding a court Probate or Succession Certificate.
4. Transmitting Mutual Funds via MFCentral or RTAs:
   • Submit Form T3 (Transmission Request Form for succession/Will cases) to CAMS or KFintech.
   • Attach self-attested KYC documents, bank account verification (cancelled cheque) of the new claimant, and a notarized copy of the Will.
   • For portfolios exceeding SEBI's threshold (currently ₹5 Lakh without nomination), a legal heir certificate or probate copy may be requested.
5. Transmitting Demat Securities:
   • Submit a Transmission Request Form (TRF) to the Depository Participant (Zerodha, Groww, etc.).
   • Provide Client Master Report (CMR) of the beneficiary's active demat account so the equity shares can be moved electronically via off-market transfer without incurring capital gains tax.

6. Nominee Rights vs. Will Beneficiary Rights: Statutory Comparison

To appreciate how Indian courts and banking regulations treat competing claims, examine the comparative statutory matrix below:

Legal Dimension	Bank / AMC Nominee	Will Beneficiary (Legatee)
Governing Statute	Banking Regulation Act 1949 / Companies Act 2013	Indian Succession Act, 1925 (Sec 57 & 63)
Legal Status	Trustee / Temporary Custodian / Fiduciary Agent	Absolute Beneficial Owner of the corpus
Bank Discharge Function	Releases the bank from third-party liability	Establishes conclusive ownership title in court
Can They Legally Spend the Funds?	NO. Accountable to legal heirs and beneficiaries	YES. Free to consume, invest, or transfer funds
Effect in Case of Conflict	Overridden by the testamentary disposition of the Will	Prevails conclusively under Supreme Court precedents
Supreme Court Authority	Sarbati Devi (1984); Ram Chander (2010)	Shakti Yezdani v. Salgaonkar (Dec 2023)
Need for Succession Certificate	Exempt from Succession Certificate for bank release	Usually exempt if Will is accepted or probate produced

7. Key Practical Rules to Make Your Financial Will Bulletproof

Before finalizing your document, verify these five practical drafting principles:

• Never Write Account Balances: Do not write, "I give my ₹2,45,000 in SBI Account to my brother." Balances change constantly due to daily expenses, UPI transfers, and interest credits. Always specify percentages (e.g., "100% of the balance in my SBI Account").
• Appoint an Able Executor: The executor is the legally appointed manager of your estate. Name a trusted family member, close professional friend, or chartered accountant who understands digital banking and knows where your financial passwords and documents are filed.
• Synchronize Nominations with the Will: While the Will overrides the nomination, conflicting entries create friction. If your Will leaves an FD to your daughter, update the bank nomination to name your daughter as well. When the nominee and the Will beneficiary are the exact same individual, the bank releases funds immediately with zero disputes.
• Ensure Valid Attestation: Under Section 63 of the Indian Succession Act 1925, your Will must be signed in the physical presence of two independent witnesses who must not be beneficiaries under the Will. Learn more about who can legally be a witness to a Will in India.
• Plain Paper Validity: You do not need expensive green stamp paper or judicial stamp duty. A Will on simple A4 white paper is 100% enforceable across India. Read our guide on why stamp paper is not required for a Will.

Frequently Asked Questions (FAQs)

Does a Will override a bank account nominee or mutual fund nominee in India?

Yes, absolutely. Under Indian law and landmark Supreme Court rulings in Sarbati Devi (1984) and Shakti Yezdani (2023), a nominee is only a temporary custodian or trustee appointed to collect funds from financial institutions. The nominee does not obtain beneficial ownership. The person named as the beneficiary in your Will is the true legal owner and has full legal right to inherit the bank balances, fixed deposits, mutual funds, and demat shares.

Do I need to rewrite my Will whenever my bank balance changes or I purchase new mutual fund units?

No. You do not need to update your Will every time your account balances fluctuate or you execute new SIP transactions. By including a properly drafted "Residuary Clause" under Section 102 of the Indian Succession Act 1925, all present and future bank accounts, accumulated interest, newly issued shares, dividends, and rolled-over fixed deposits automatically pass to your designated residuary beneficiaries without requiring amendments.

Is probate mandatory for claiming bank accounts and mutual funds under a Will in India?

In the majority of India, probate is not mandatory for claiming movable financial assets like bank accounts and mutual funds. Under Section 213 read with Section 57 of the Indian Succession Act 1925, probate is mandatory only for Wills executed by Hindus, Buddhists, Jains, or Sikhs within the historical presidential towns of Mumbai, Kolkata, and Chennai, or if immovable properties covered by the Will are situated there. For movable financial assets elsewhere, banks and asset management companies settle claims upon submission of the registered or unregistered Will, death certificate, KYC documents, and standard indemnity bonds.