While there are certain differences between nomination and will, it is important to know who a nominee is and a legal heir. A nominee is a person you appoint to take care of your assets or funds after you die. A nominee does not have to be your blood relative or your family; he/she can even be your friend. At the same time, a legal heir is your own son/daughter or your spouse, who, after your death, will inherit all your assets and money. Lets read about Nomination V/S Legal Heir: Who Will Inherit Or Own Your Assets?
Nomination And Its Terms
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A nomination is when an account holder can select an individual funds’ trustee the funds after the account holder dies. People nominate a person due to certain benefits. One of those benefits is that, after the death, the bank can directly give the funds and other items to the nominee without any Succession Certificate or court order. This makes it easier to claim the balance amount, which the nominee further hands over to the deceased’s family members.
However, it is not at all mandatory to nominate an individual. It completely depends upon the account holder, whether he/she wants to nominate a person or not. There is no rule stating that there must be a nominee. Anyone who wishes to nominate an individual to his/her bank account can do so without much problem. You can select one or more than one nominee for your account too.
It is important to select a nominee wisely, as he/she will be the caretaker of your account. A nomination is not like Will. In a will deed, a person states all of his/her property to his/her legal heir, which no one else can take away.
Once you appoint someone as your account’s nominee, you can even change, cancel, or add more nominees to the account. However, there are some rules in case of joint accounts for doing so. For joint accounts, all the account holders must sign to select or cancel a nominee.
In case of a nominee for a minor, the guardian needs to fill out the forms and sign the documents wherever necessary.
Things To Remember While Appointing A Nominee
You need to remember certain things r while appointing someone as a nominee for your bank account.
- It would help if you mentioned the nominee’s full name, age, relationship status, and address.
- It would help if you did not write the nomination in favor of a wife or your kids.
- If your nominee is a minor, you need to take the signature and details of his/her guardian.
Importance Of Will
Will deed is a type of document, which you can use to nominate or state your legal heir. In this written statement, you can hand over the property and your assets to a person of your wish. This person is your legal heir. However, you can always choose anyone to be your legal heir in the willing deed.
Moreover, a will deed is applicable for change as many times as you want. It means you can change your will deed as many times as you want, you can add another legal heir, or even change your legal heir. With the willing deed’s help, you can even distribute the property among your children for the future. All you need is a will deed from the court and your lawyer, who will write your will. Although there is one thing that you should remember, the last will deed which you have signed before your death is the final will. It means that before your death, they will ensure that you have prepared the final will, and no one can change it.
It is important to have a will to prevent any future confusion and misunderstandings amongst your children. A will helps you distribute everything equally, and hence, it will prevent any confusion in the family. In addition to that, if you have a will, nobody can take your assets after your death, except the people you have mentioned in your will.
A person needs to think a lot before stating anyone as his/her legal heir, as the whole property and assets will be given to him/her after the death. If you choose the wrong person, then your property will be in the wrong hands. Hence one needs to think a lot before making a will. If you have any doubts about your will, you can discuss it with your lawyer and change it before it’s too late.
Difference Between Will And Nomination
Will and nomination are two different terms and have two different meanings. Though they might seem similar, they are not. While nomination is the process of selecting an individual to be the caretaker of the assets and funds in your bank after your death, a will deed is not the same. A will is a statement that makes sure that your life insurance, properties, and money will go to the person you have selected as your legal heir. It does not matter whether you have a nominee or not; the money will be appointed as per your will.
A will is a written statement where you can assign anyone to have the right to your property or money after your death. You can change your will whenever you wish to, but the last will before your death will be the final. All the proceedings will be made according to the final will deed.
Who Inherits Your Money After You Die?
This is one of the most asked questions which people have. If you have already appointed a nominee and have a will ready, then you might be thinking about who will get what after you die. Here are the instances that will decide whether your nominee or your legal heir will get your property.
1. Deposit Money
In the case of deposit money, if the depositor dies, then the whole balance will go to the nominee to “keep” it safe and hand it over to the legal heir. A nominee cannot claim the money and use it for his/her benefits. The nominee must give the whole money to the legal heir of the dead depositor.
However, if the depositor does not have any nominee, then the deposit money is handed over to the immediate family members of the deceased, which includes the spouse and kids of the deceased. In such cases, the bank gives the money to the spouse or kids after all the formalities are done.
2. Mutual Funds
If you are investing in mutual funds and have appointed a nominee for your investment, then he/she will not be the legal owner of the shares after your death. Nomination cannot override the laws of succession. If a shareholder dies, then the nominee must take care of the shares and hand it over to the legal heir when he/she is of legal age.
The nominee is not the owner of the shares, and neither can he/she invest in the shares and use them in any way. This right is only with the legal heir of the deceased.
3. Insurance Money
In the case of insurance money, there are some different rules. For insurance money, you need to appoint a beneficial nominee. When the insurer dies, the insurance money will go to the beneficial nominee, and he/she can use the money.
You can name your spouse, kids, or your parents as a beneficial nominee while having insurance. In this case, the beneficial nominee is not the caretaker or trustee of the insurance money; instead, he/she is the one who can benefit from the money.
If you appoint someone other than your immediate family members as the “beneficial nominee,” then he/she cannot benefit from your insurance money. In this case, the nominee will act as a caretaker and have to hand over the insurance money to the deceased’s legal heir.
4. Employee Provident Fund (EPF)
Employee provident fund is the amount that an employee gets after his/her retirement. An employee must make a nomination while opening an EPF account. In case the employee dies, the whole money of the EPF account will go to the nominee and not to the legal heir.
Here, the law of succession does not work. However, the EPF rules clearly state that you need to appoint a nominee who is your family relative. The nominee can be your uncle, father, mother, daughter, or anyone from your family. In case the employee dies, the legal heir has no right to claim the EPF money. Only the nominee can claim the money and use it. However, if there is no nomination, then the EPF money is given to the deceased employee’s immediate family members.
5. Public Provident Fund (PPF)
In the Public Provident Fund case, the nominee is treated as the caretaker of the amount in the PPF account. In such cases, the deceased’s legal heir has full right over the amount in the PPF account.
Here, the nominee cannot use the money; neither can he/she benefit from it. The nominee must give the money of the PPF account to the legal heir when he/she is of legal age.
Can A Nominee Inherit Assets?
A nominee is only the caretaker of the assets and not the legal heir of the assets. Though a person can nominate anyone for his assets or bank accounts, the nominee has no right over the money.
The laws of succession, which states that a legal heir can only inherit the deceased’s assets, makes it clear that a nominee can never own it. If you think that your nominee will claim all your money after your death, then you are probably wrong. A nominee is only a trustee or caretaker of your money, and he/she must give it to your legal heir at the end.
It is important to have a nominee to make it easier for your family to claim the money from your shares and funds after your death. If you do not have a nominee, it will take a long time to claim the banks’ money after your death. Furthermore, it is important to choose a person whom you trust as your nominee, as he/she is the one who will be responsible for taking care of your deposit money and will hand it over to your family.
There are many cases when the nominee takes the money and does not hand it over to the family members, leading to a problem. Hereby, one needs to think before assigning someone to be their nominee.
As I have said before, it is necessary to have a nominee, but if you have a nominee, it will benefit your family after your death. You can make your spouse or your kids your nominee; in such cases, the money will remain in safe hands, and your family will benefit from it.
However, if you have a will deed done for your property, you do not need to worry about the money falling into the wrong hands. You can make a will and have the property named in your family members, in which the nominee will not have a say. However, if you have a minor in your will, then the nominee will be the trustee for your property and hand it over to the minor when he/she is of the right age.
1. Will my nominee be the owner of my money after I die?
No, your nominee can never be the owner of your money after your death. A nominee is a trustee who will take care of your money and hand it over to your immediate family members, like spouses and kids.
2. What is a beneficial nominee?
A beneficial nominee is a person who will have the right over your insurance money after your death. The beneficial nominee can only be among your immediate family members, like your wife or kids.
3. How many times can I change my Will?
You can change your Will as many times as you want. There is no fixed number of times for changing the Will.
4. Can I remove the nominee from my account?
Yes, you can remove the nominee from your account by talking with your bank. Not only that, but you can also nominate another person for your bank account.
5. Is Will the final statement for my property?
Yes, the Will deed is the final statement, and nobody can change it. The final Will that a person has made before his/her death is the statement that everyone has to follow.
No matter if you have a nominee or not, only your legal heir can inherit your assets. The nominee or anyone else cannot have any right over your assets, and neither can they claim it. In the case of EPF money, the nominee will get the money, and so is the case of insurance, where the beneficial nominee will get the insurance money. So, it would be best if you thought before nominating anyone in these two cases.