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Nomination rules you must know, if you love your family

Firstly, people are often very lazy with their nominations.

Secondly, people are often very lazy with their Wills too.

Thirdly, different nomination rules apply to different financial products.

As such, if you sincerely care that your near and dear ones inherit your wealth as per your wishes — and more importantly as conveniently as possible — you cannot afford to be ignorant of the following rules and regulations.

Nominations help your family to access your assets immediately and easily, even while the legal formalities are being completed. In the absence of a nominee, your family will have to run around courts to get the Succession Certificate before they are allowed to take control of your money.

However, contrary to popular perception, nominee does not automatically become the legal owner even though he may be the legal heir and would ultimately own the assets. No. The legal heirs and their shares are decided based on the Will or if there is no Will, as per the relevant Succession Laws.

Bank Accounts and Fixed Deposits
Nominees are the only caretaker of these amounts. Their right is limited merely to receiving the money from the bank subsequent to the death of the account-holder. Being appointed as a nominee does NOT make them the inheritor of your money. Only if the Will says so (or as per the Succession Act, if there is no Will), does a person legally inherit the money lying in your bank accounts and fixed deposits.

Public Provident Fund
Again the nominee in your PPF account is only the trustee who is responsible for transferring the money to the legal heirs. By the way, if you don't nominate someone, PPF rules allow your legal heirs to immediately withdraw Rs.1 lakh by producing a letter of indemnity, death certificate etc.; with the balance amount being paid when they receive the Succession Certificate.

Insurance / Property / Mutual Funds
Yet again the nominee is only the trustee who is responsible for transferring the assets to the legal heirs.

This is a different ball game. As per the laws, unless their is a Will, the nominee becomes the legal owner of your shares. In other words, unlike other assets discussed earlier, herein the shares remain with the nominee if you die without a Will. The provisions of Succession Laws will not apply in the case of shares.

So, now that you are aware of the rules, is there any excuse for you to delay completing your nomination formalities and writing your Will?

You may also like to know the pros and cons of Will vs Trust.

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