Hyderabad: Wealth creation plays a crucial role in our lives. At the same time, transferring that wealth to rightful heirs without any hitches is equally important. Nomination is the one and only way to reach all of hard earned property to one's family members after their passing away. A nominee may not be an heir. But nominees are obligated to hold the assets and pass them on to legal heirs. The property rules permit an owner to nominate one or more people to receive and hold wealth.
We can use this nomination facility for life insurance policies, fixed deposits in banks, shares in demat, mutual funds and so on. It is mandatory to give details of nominee or nominees for all financial investments. However, there are many intricacies to be carefully examined and followed before using this nomination facility.
Usually, a nominee will become the trustee for all the property once its owner passes away. It doesn't mean that the nominee concerned will automatically get total legal rights on the wealth. The nominee's immediate duty is to protect the wealth until a legal heir is established. Different types of nominees may be there for different types of wealth and accounts.
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A person can nominate different persons for fixed deposits, mutual funds and savings accounts. Some others can be nominated for life insurance policies. Two or more persons can also be nominated depending on the type of property. More than one nominee can be mentioned for mutual funds, life insurance policies and the like.
A property owner determines what percent of wealth should be transferred to each nominee. Mostly, one nominee is allowed for bank accounts. Whereas, in mutual funds, a maximum of three nominees can be mentioned in one folio. This nomination will apply to all policies in that folio. A nominee need not be a legal heir. If nominees are legal inheritors, then they can take back the property lawfully.
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In the absence of a nominee, it would not be possible to claim property immediately. This will become more difficult if there is no will. Life insurance policies require details of nominees compulsorily. Otherwise, inordinate delay may be caused by the time legal heirs are found and compensation is given to them. Only a trusted person should be proposed as a nominee.
Take a look at your overall investments. Check whether nominees are mentioned for the bank savings accounts, fixed deposits, demat accounts, insurance policies, small savings and all such investments. If needed, confirm nominees once again to make any changes required. Leaving a will along with nominations will avoid any future dispute.
