All of us know death is not a pleasant topic to think or talk about, but we all have to understand that it is an eventuality. Therefore, it is important that we do our estate planning such that it is distributed as we would like it to be done.
Many people think that they can nominate someone for their investments and assets, and they have finished the task!
Yes you need a will now not later
Remember Nominee to hold but Legal heir to own
Legal heir is the ultimate, rightful owner of the property of a deceased individual (either through intestate or testamentary succession), while a nominee of the assets of the deceased, shall actually receive and hold the assets of the deceased, till the matter of inheritance or succession is decided.
However, there are exceptions to this.
| CLASS OF ASSET | DETAILS |
| Employee Provident Fund |
When one opens an EPF account, a nominee has to be given. This nominee will inherit the fund. The legal heir has no right on it. As per the EPF rules one has to appoint a family member as nominee. |
| Public Provident Fund |
The nominee gets only custody of the amount. The legal heirs are entitled to own it. |
| Deposits with a bank |
The legal heirs will get the ownership of the deposits on the death of the account holder. The nominee will be a custodian. |
| Mutual Funds |
The legal heirs get the mutual fund units. Mutual fund houses ask us to fill out a nomination form. But nominees are only custodians. |
| Shares |
On the death of the shareholder the nominee is entitled to all the rights in the shares of the company to the exclusion of all other persons. But it is advisable that the Will of the Testator should contain provisions relating to bequest of his interest in shares and, as far as possible, the legal heir should be the nominee of the Testator. |
| Life Insurance |
In case of life insurance, the claim amount goes to the legal heirs or beneficial nominees after the death of the insured. If a policy holder names his parents/ spouse/children or a combination of them as the nominee(s) they are called the beneficial nominee(s). Here nominees will be treated as the ultimate beneficiary of the monies payable by the insurer, to the exclusion of other legal heirs. However, it is not mandatory to nominate a beneficial nominee, and if the nominee is a person other than those specified above, the general rule would prevail, and such nominee would hold the monies as a caretaker/ trustee for the legal heirs. |
| CLASS OF ASSET | DETAILS |
| Employee Provident Fund |
When one opens an EPF account, a nominee has to be given. This nominee will inherit the fund. The legal heir has no right on it. As per the EPF rules one has to appoint a family member as nominee. |
| Public Provident Fund |
The nominee gets only custody of the amount. The legal heirs are entitled to own it. |
| Deposits with a bank |
The legal heirs will get the ownership of the deposits on the death of the account holder. The nominee will be a custodian. |
| Mutual Funds |
The legal heirs get the mutual fund units. Mutual fund houses ask us to fill out a nomination form. But nominees are only custodians. |
| Shares |
On the death of the shareholder the nominee is entitled to all the rights in the shares of the company to the exclusion of all other persons. But it is advisable that the Will of the Testator should contain provisions relating to bequest of his interest in shares and, as far as possible, the legal heir should be the nominee of the Testator. |
| Life Insurance |
In case of life insurance, the claim amount goes to the legal heirs or beneficial nominees after the death of the insured. If a policy holder names his parents/ spouse/children or a combination of them as the nominee(s) they are called the beneficial nominee(s). Here nominees will be treated as the ultimate beneficiary of the monies payable by the insurer, to the exclusion of other legal heirs. However, it is not mandatory to nominate a beneficial nominee, and if the nominee is a person other than those specified above, the general rule would prevail, and such nominee would hold the monies as a caretaker/ trustee for the legal heirs. |
Conclusion:
A Will is a 'supreme' document that specifies the exact intentions of the testator with respect to the succession of his properties. A Will wields the power to override or supersede any arrangements or nominations made during an individual's lifetime. It is, therefore, critical to ensure that an individual, despite making nominations, also creates a Will. When the nominee and the legal heir in all assets are as per the WILL, then there will be no surprises overall.
Sinhasi has been helping people execute their last will and testaments since 2003. Reach out to us for your estate planning and Will preparation so that basis your nominations and joint holders in your investments we ensure that no one suffers.
It will be our privilege to help you execute a Will which will ensure that your loved ones don’t run pillar to post in your absence.
Ref: Indian Succession Act 1925 | Registration Act 1908
