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..
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 :
New Rule :
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.
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.
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.)
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.
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.
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(Facebook Featured image courtesy : Legaldesk.com) (Post first published on : 17-February-2017)
This post was last modified on December 13, 2025 12:59 pm
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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 us.my father is tired now by doing all this consequences. Pls help us
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?
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!
yes sir in this case
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
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
Dear Sayyad,
May I know when did this happen? (Year)
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
Regards
Govindan S
Dear Govindan,
It is not mandatory but advisable to get it registered to avoid any future legal issues.
I guess you are referring to online WILL service provider. You can get a will done through a service provider online..
Hello,
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.
Dear Gaurav,
Are you referring to PF payout (mother's)??
Yes sir in regards to Pf ....
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.
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
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.
Hello,
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?
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.
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.
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.
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.
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.
sir shall you please mention the citations relating to the above
matter i.e., will prevails over the nominee
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.
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