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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Dear Sreekanth,
I have few queries..my 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.
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?
Dear Ruby,
As your grand-father has not left any WILL, all the legal heirs (2 sons + 3 daughters) will have their right to claim in the property.
Related article : What is an Ancestral property & Self-acquired property?
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.
Thanks
Nitin
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.
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.
Legal will is supersedes all laws,rules and regulations.
Please clear one my doubt again this rule is for land property also.
Dear Nitin..Yes, it is applicable for Land investments too!
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.
Dear Adarsh ..I believe that Miss B can be the owner of the FDs in absence of Mrs A.
Sir,
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.
Dear Ramesh ..Suggest you to kindly go this article..can be useful... '5 ways of transferring your real estate property'.
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.
Regards,
RaviSV
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?
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.
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.
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.
Maninder
You are welcome dear Maninder ..Keep visiting and do share the article(s) with your friends :)
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?
Dear jeyabarathi,
WILL is the best possible option. You may consider writing a WILL.