Nominee Vs Legal Heir : Who will inherit (or) own your Assets? | Importance of WILL

We all know that life is short and unpredictable. In this short journey, we all take lot of investment and financial decisions. We earn, save and invest money in various financial products like; Bank Fixed deposits, real estate properties, Shares, Mutual Funds, Insurance policies etc.,

For many of us, our lives revolve around our loved ones. But, What happens to your financial assets if you meet your end unexpectedly? What will happen to your investments? Who will own your assets after you are no-more?

Death is certain. It’s a fact. No human gets to predict when or how they will meet their maker in the end, which is why ensuring the care and protection of our loved ones is one of the most important decisions we must make and execute before a tragedy befalls us.

So, how to ensure your assets are properly distributed to your loved ones? What options do we have?

The first thing that comes to our mind would be, Nomination. You can declare a nominee(s) for your investments and your nominee can claim the ownership of your investments or assets after your death.

Is it so simple and straight-forward? No. What if, your nominee is not a legal heir. In such a case, can a legal heir who is not a nominee, claim his/her share in your investments? Are these rules same for all types of financial products? Let’s understand..

Nominee Vs Legal Heir & Importance of WILL

1) Life Insurance & Nomination :

We buy Life Insurance to ensure that our loved ones are taken care of financially when we are no longer there. It is very important to have a proper nomination, to ensure that in the event of death, the life insurance policy’s claim money goes into the right hands.

Old Rule :

  • The nominee of a life insurance policy is just a care-taker! Only the legal heirs have the right on ‘claim money’. Yes, you read it correctly. The nominee of your life insurance policy was supposed to distribute the money to the insured’s legal heirs (if they were different from the nominees).
  • For example : If you nominate your brother as a nominee to your life insurance policy, he has to distribute the claim money to your legal heirs ; your spouse or children. This can easily lead to legal tussles over the distribution of death proceeds.
  • Another example can be; If you nominate your spouse as a nominee to your life insurance policy, he/she can claim policy money. But, other legal heirs also have the right on the claim money.

New Rule :

  • As per the new nomination rule (2015), the concept of ‘Beneficial Nominee‘ has been introduced. Beneficial nominees are direct dependents of the policy holder i.e., Spouse, children or parents.
  • As per Insurance Laws (Amendment) Act, 2015 – If an immediate family member such as spouse / parent / child is made as the nominee, then the death benefit will be paid to that person and other legal heirs will not have a claim on the money.
  • If you (policyholder) nominate your spouse, children or/and parents, they would be Beneficial Nominees. No one else can claim your life insurance policy monies. For example : If you nominate your spouse as beneficial nominee, no one else (even other legal heirs) can have right on the death claim proceeds.
  • So, the concept of beneficial nominee is like a WILL.
  • Kindly note that this new rule is not applicable for life insurance policies that are taken under MWP (Married Women’s Property) Act.
  • Kindly also read – ‘What is Assignment of Life insurance policy? Assignment Vs Nomination‘.
  • Even as per the new rule, you can nominate any person other than beneficial nominees as your nominee, but do note that your nominee has to distribute the claim money and your legal heir(s) have their right on the money.
  • In the absence of a nomination, the insurance company discharges the claim amount to the Class I legal heir, that is, to son, daughter, spouse and mother. If you have a WILL, the proceeds will be distributed according to the wishes that you have stated in your WILL.
  • In case, you owe someone money, your creditors can still recover their dues by attaching your property, including life insurance policies. Their rights supersede that of beneficial nominees.

2) Nomination Rules for Bank Fixed Deposits, Mutual Funds, Bonds etc.

If you have invested in bank fixed deposits, mutual funds or bonds, you would have nominated at least one individual as your Nominee for those investments. Kindly note that nominee is again just a Care-taker of these investments. He/she has to receive the asset/money from the concerned bank or financial institution and transfer/distribute that to Legal owners. Your legal heirs have rights on these investments.

3) Employees Provident Fund (EPF) & GPF

EPF PF Provident Fund after death of EPF member nominee legal heir family member pic

Upon the death of an EPF member, the Employee Provident Fund amount is paid to the nominee that was nominated at the time of opening of the account. If there was no nominee assigned then the EPF amount is paid to the immediate members of the family.

In case the nominee is not a legal heir and if the deceased employee has not made a WILL mentioning who should get his PF amount and what share of it, then the nominee may not get the deceased person’s PF amount. He/she may just be a care-taker. The legal heir can claim to have the right to get the deceased’s PF balance.

If the deceased person has made a Will stating that the nominee should get the PF benefits, then the nominee only shall reap the benefits.

4) Shares (Stocks / Direct Equity)

There has been so many different court judgments on, ‘who can own the shares after the demise of original shareholder’. Is it a nominee or a legal heir?

Old judgement : As per previous high-court judgement, if there is no WILL, the nominee can own the shares after the demise of original share-holder / investor. It has been quoted that Company law is different to law of succession i.e., legal heirs can not claim their right over them. (Shares are governed by Companies Act.)

High court judgement nomination legal heir WILL Stocks shares life insurance property pics

Recent Court Judgement : The Supreme Court has consistently been in favor of ‘law of succession act’, meaning the Companies and Depositories Act cannot take precedence over the laws of succession. Also, based on the recent Bombay High Court Judgment (2015-16), it has been clarified that Nominee of Shares is only a Trustee and temporary care-taker of these investments. Legal heirs as per the law of succession are the right owners.

Conclusion :

We know that anything and everything can be challenged in the Court of Law. Accumulating assets/wealth is important, but it is equally important to ensure that your inheritance is passed on smoothly to your heirs. So, how to ensure that your assets and investments are passed to the beneficiaries as originally intended by you?

Above points clearly states that ‘nomination is only a means and not an end’. Legally, the Law of Succession (legal heirs) is given more importance than rules of nomination. Is there any better option than these two??

Draft a WILL‘. Yes, WILL supersedes all laws, rules and regulations.  WILL overrides the nomination in case its different. A Will is a legal document that clearly sets out your wishes for the distribution of your assets after your demise. It puts an end to most of the possible legal tussles.

Kindly make sure that your WILL and Nominations give same direction for your different Assets / investments. This will avoid any potential conflicts among the beneficiaries or legal heirs. For example : If you write a WILL making your children as beneficiaries on your life insurance policy, it is also advisable to make them as Nominees in that particular policy.

Continue reading other related articles;

  1. What is e-WILL? 
  2. How to write a WILL? (Sample WILL)
  3. All you need to know about ‘the last WILL & Testament’
  4. What is Ancestral Property? | Definition & Important Legal rules

(Facebook Featured image courtesy : (Post first published on : 17-February-2017)

  • Usha gore says:

    My father had 3 brothers and two sisters they have 7 hectare farm ,one sister and two brothers expired still talathi put name of two sisters children in 7/12 and the tragedy is that one son of my aunt expired and again talathi putting name of my aunts grandson. My one aunt who alive not willing to take part of this farm and same my other aunt who has expired, her sons also not willing to take part in 7 hectares farm.there are so much trouble as poor person to make part of farm in between 3 brothers because they government servants like talathi not willing to do this for father is tired now by doing all this consequences. Pls help us

  • Praveen says:

    Dear Mr Reddy
    My Uncle passed away last year. He was not married and had no children. He nominated my father for his fixed deposits and post office provident fund. He made no will.
    Since my father is a legal heir and a nominee, is he the sole owner of the accounts or his other brothers and sisters have a legal share as well?

    • Sarathy says:

      yes sir in this case

    • Sreekanth Reddy says:

      Dear Praveen,
      Ideally, your uncle should have left a WILL.
      A nominee is a mere care-taker of assets. I believe, other legal heirs (brothers & sisters) can also claim their share in the deposits, if they wish so!

  • Ami says:

    My father in law made my husband nominee for a flat and gave 100% share to my husband before his death.
    My husband has a brother .who was the actual owner of this flat

  • Sayyad Abdul bari says:

    Sir my uncle was nominee of my father’s policy when we are minor and he also claimed my father’s insurance from LIC without informing us and now he is not giving the money that he gets so what can we do now legally

  • Govindan S says:

    HEarty thanks for this excellent artilcle on nomination. Is it mandatory to register the will? Is it difficult to implement as per the will if not registered?
    difference between online and offline will-could you explain
    Govindan S

  • Gaurav says:

    Our parents died in 1990 working under
    central goverment section. Since my sisters married and lives abroad she made a succession certificate stating that my brothers the legal hier and all the benefits of moms and dads is entitled to him. On behalf of those documents the benefits from dads office were received however from moms office they state that my sister was nominated as a nominee by mom and no law or even the succession certificate stating me as legal heir by ny sister can overrun it. It took 9 years for them to clarify this that to when a legal notice was sent asking for the status. Now my sisters abroad with kids and its difficult for her to come by and start this process all over again. Can they ignore the legal hier succession certificate from court kindly advise please.

    • Sreekanth Reddy says:

      Dear Gaurav,
      Are you referring to PF payout (mother’s)??

      • Gaurav says:

        Yes sir in regards to Pf ….

        • Sreekanth Reddy says:

          Dear Gaurav,
          Upon the death of an EPF member, the Employee Provident Fund amount is paid to the ‘nominee’ that was nominated at the time of opening of the account. If there was no nominee assigned then the EPF amount is paid to the immediate members of the family.

          I believe that your sister can contact the concerned PF office and authorize a representative to claim the monies.

  • Shreyash Narole says:

    Hello sir my grand father died on 15 may 2018 now he had an fixed deposit and bank balance left behind which had only single nomine means my father but when we were under process to get money suddenly my father s three sisters and their husband have done case on us so I would like to ask you sir that wether money will be distributed or will only get to my father because my father sisters and their husband dont have enough value of my grandfather since he was on death bed from one month he use say to make phone call but they use to reject phone call or make some nonsense reason

    • Sreekanth Reddy says:

      Dear Shreyash,
      Did you Grand Father leave any WILL?
      Kindly note that nominee is just a Care-taker of his Bank Deposits. He has to receive the asset/money from the concerned bank or financial institution and transfer/distribute that to all Legal owners.
      Legally, your Aunts have rights on these Deposits.
      But, your father can fight a legal battle citing the reasons mentioned by you, but better to settle this issue amicably.

  • Rekha says:

    My query is that my paternal grandma’s sister died of cancer. She was unmarried, so no child of her own. She had made a will of her property to be distributed to her nieces and nephews. My father, one of her nephews, was made the nominee of her bank account few months before her death. She didn’t change the will. Now, does it mean that all the money will be distributed to her nieces and nephews according to the will that was made years ago or will my father own the money as he was the nominee of her bank account?

    • Sreekanth Reddy says:

      Dear Rekha,
      Kindly note that WILL supersedes all other Acts/rules related to Hindu Succession Act.
      Kindly note that nominee for Bank account is again just a Care-taker of the Bank deposits. He has to receive the asset/money from the concerned bank or financial institution and transfer/distribute that to Legal owners or all legal heirs.

  • Uma says:

    Dear Sreekanth! I have a query. My father recently passed away. He had a fixed deposit in his name leaving my elder brother as nominee. But, in his will drafted a few years ago, after allocating all the immovable properties to all his children, he has clearly mentioned that all the other properties which were not mentioned in the will, should go to my younger brother. So, my query is, this, above mentioned FD will also come under “other properties” and will go to my younger brother or my elder brother who is the nominee will get the entire maturity from the FD?
    Thanks in advance.

    • Sreekanth Reddy says:

      Dear Uma,
      The WILL supersedes all other rules and norms.
      I believe that your younger brother has the right to inherit the FD amount.

      Kindly note that nominee in a Bank deposit is just a Care-taker of these investments. He/she has to receive the asset/money from the concerned bank or financial institution and transfer/distribute that to Legal owners.

      • Uma says:

        Thanks for your prompt response! The doubt arose because the FD was started a few months ago whereas the will is few years old. Do you believe the will applies even if the FD was started much later? Thanks once again.

        • Dear Uma,
          It depends on what is written in the WILL.
          If there is a blanket clause which reads as ‘all immovable assets’ should go the concerned person then this clause is applicable to even newly opened FDs.

          • Himakar says:

            sir shall you please mention the citations relating to the above
            matter i.e., will prevails over the nominee

        • Sreekanth Reddy says:

          Dear Uma,
          It depends on what is written in the WILL.
          If there is a blanket clause which reads as ‘all immovable assets’ should go the concerned person then this clause is applicable to even newly opened FDs.

  • neelu says:

    my father was an l i c employee . he died last year from heart attack and my mother is nominee … now my mother is not giving us money for our study properly . we have to beg like a bagger for money .it is like a mental torture .i have four sisters and all are studying .. do we have any claim on the money given by l i c after my father death .nominee is my mother .pliz reply

    • Dear Neelu,
      Sorry to know about the loss of your father and the situation in your family!
      I believe all legal heirs will have the rights to get their share in the proceeds received from your father’s employer. Also, as a parent it is your mother’s responsibility to take care of her children.
      Try to settle this issue amicably (approach other elder members of your family/relatives), else consult a civil lawyer and take appropriate action.

      Related article:
      What is Ancestral Property? | Definition & Important Legal rules

  • Sudip Nath says:

    Dear Sreekanth,
    I have few uncle passed away to left 5lakh in his saving a/c. He was a bachelor. He was entered me as a nominee of his saving account. He was made a settlement deed of his land and house hold property in my name. I have four other uncles. Now my question is if other four uncles claim for the money then what will be the numbers of dividing heads? Can I get a part of money as nominee apart from my father’s part?
    Please help me out from those puzzles.

    • Dear Sudip,
      If the land/property are his self-acquired ones then no other individual can claim a share. You are the sole-owner of such properties.
      Whereas, bank deposits, legal heirs can claim their shares. Nominee to a bank a/c is just a care-taker.

  • ruby says:

    Hi. I have one query. The house we live in was constucted by our grandfather & He is no more. He has not left any will either. Last year my grandmom also expired. There are 2 Sons including my father and 3 Daughters. I just wanna knw that can my father’s sisters claim their share in the property or no. Can only two brothers share the property without any issue?

  • Nitin Vichare says:

    If in CHS one flat’s nominee is Mr. A and in registered will of Main Owner flat’s given to Mr. B then who will become the owner of flat.
    Both A and B are Son of deceased.
    Please clear me.


    • Dear Nitin – If WILL has been written after assigning the nominee as A, in such a scenario, I believe that Mr B will still be the next owner of the property.

      • Nitin Vichare says:

        If WILL has been written BEFORE assigning the nominee as A, THEN WHAT ?

        • Dear Nitin…If one writes a WILL and then buys the property policy, how will it be included in the already written WILL.
          Either the investor has to update his/her WILL or change the nominee as per his/her wishes.

          If the WILL does not has this property then MR A can be the owner of the property.

  • Nitin Vichare says:

    Legal will is supersedes all laws,rules and regulations.
    Please clear one my doubt again this rule is for land property also.

  • Adarsh says:

    I have a complex situation here & need urgent guidance.

    Mrs A & Miss B are owning 10 FDs jointly few as “Either or Survivor” & few as “Anyone or Survivor” clause. Mrs A has 2 children:
    Mr X (whose name is not there in FD but is legal heir of Mrs A) &
    Miss B (whose name is there in FDs as a joint holder & also is legal heir of Mrs A).

    Now, my question is in absence of Mrs A, who would be the owner of FD amount? Is it solely Miss B as she is jointly holding the FDs with Mrs A or will Mr X also have right even if his name is not there in FDs?

    Kindly help.

  • RAMESH says:

    My father owns a residential house in his name(which is self acquired) has made a WILL in the name of three sons against this residential house. My father passed away. Now my two brothers are not interested in the property. How can they transfer their share of property in my name. Release Deed (with or without consideration) will helpful me in savings registration taxes or sale deed. Please help me.

  • Ravi SV says:

    dear srikanth,
    i am 60 years old and retired person, I had sold my own property in 2016 and got a capital gain of Rs10.00 lakhs., and i was told either i have to reinvest or pay 20% as capital gain tax.
    Now this year i like to buy a flat worth of 40.00 lakhs along with my son, as combined purchase.
    so can i invest Rs20.00 lakhs and balance my son likes to go for a loan to bank and he is working.
    is it okay legally or not advised, if okay i need not pay the capital gain tax of Rs 2.00 lakhs.

    • Dear Ravi Ji,
      Yes, you can invest in a new property and claim tax exemption on Capital gains.
      But there are conflicting court judgement regarding the extent of claim that one can take in case if the gains are invested in a joint property (new).
      One can claim tax exemption up to his/her share in the new joint property.
      However, as per a recent high court judgement, an individual can claim full tax exemption even if the proceeds are invested in a joint property.
      You may kindly take an advice from a CA too.
      Kindly read : How to save taxes on sale of property?

  • aks says:

    Dear Sir,
    My father acquired all the money , mother was housewife. Father left a will where he gave life interest to mother and universal /residual beneficiariship to me , the son. Mother used the interest income and dividends from father’s estate assets. The accountant put FDs and DMAT a/c under mother’s individual name.
    So, I am registered nominee on both DMAT and FDs by my late mother. But, AXIS BANK has been giving me hard time for last 8 months and not releasing funds to me . Every time there is a different answer and they donot even want to tell why they can not release funds to the nominee. I have complained to their nodal officer and principal nodal officer but no result. Can you please tell me what might be the cause of this behavior of AXIS Bank employees.

    • aks says:

      I forgot to tell that AXIS Bank employee told me that there is no court order restraining the bank from releasing funds.
      appreciate your assessment and reply.

  • Maninder Singh says:

    Dear Sir

    Really a wonderful and Life Saver Article for me. My sincere thanks to you. I am lucky that I am subscriber of your blog.


  • jeyabarathi says:

    I have some fixed assets and investments in mutual funds and fixed deposits.I have the spouse and two daughters.I want to give my assets and investments equally to all the three.In such case, is it necessary to execute a Will?

  • Mahesh says:

    Dear Sreekanth,

    Very informative and useful article. I have a question.

    If Husband owns a stock jointly with Wife and have nominated a Third person then in case of death of Husband will the shares, as per the Company Laws, be transferred to Wife who is a joint holder or the Nominee.

    Similarly, if joint holder i.e., Wife dies then will shares be transferred in the name of Husband, the First owner or the Nominee appointed.

    Please clarify.

    • Dear Mahesh,
      I believe that the stock investments will be owned by the other joint-holder.

      “For jointly held accounts, the securities are transmitted to surviving holders on submission of the duly filled transmission form, and duly attested copy of the death certificate of the deceased holder. For transmission of securities, the surviving holders need to have or open a separate DP account with names in the same sequence in which the names appear in the joint account to be closed. ” (Source : ET)

    • mahesh says:

      Dear Sreekanth,

      Thanks for your quick reply.

  • Madhava das says:

    Dear Sreekanth,

    Thanks a lot for sharing this excellent article & awesome explanations.

    Madhava das

  • Ajay says:

    Even as per the new rule, you can nominate any person other than beneficial nominees as your nominee, but do note that your nominee has to distribute the claim money and your legal heir(s) have their right on the money.

    Hi Sreekanth

    You can not name any person (except Spouse, children and parents) as a beneficial nominee.

  • H K Vyas says:

    I want your suggestion on my family property in mumbai.actually we have a joint business canteen in mumbai,where owner name is my fathers elder brother who is died now.
    They have no mention nominee and any will . Now after there death their family is creating trouble and want to overtake that canteen.
    What can my father do in this matter, can my father file a court case in this matter to get part in this open title property.
    Please suggest me sir,, i want your valuable suggestion.

    H K Vyas

  • vijayan varma says:

    Thanks for the excellent article on nomination Mr Sreekanth..Some financial institutions create unnecessary hassles in settling the claim of the nominee. There should be directive from the higher-ups/ RBI to ensure that this does not happen.There should also be a provision to issue certificate of nomination to the depositor by the financial institution concerned( free or on payment basis) so that the depositor is assured that in the event of his death, the money will to the right person.

  • RAJ says:

    Dear Sreekanth,
    Excellent article with superb explanation. Thanks for sharing.


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