• Family members

• Relative

• Others

Practically anybody can be your nominee, but the preference must be given to you family members.

Appointment of a nominee ensures that there is an interim arrangement to take care of legal and financial matters of the deceased till the time his wealth can be divided among his legal heirs.

As explained by various courts in India from time to time, nominee does not have an “absolute” ownership of the assets —the money in the bank account —for instance. They are only the custodians of this property till the time a legal heir claims it. Legally put, a nominee does not get an interest, title or ownership in assets of the nominators.

After the death of a person, all their assets—-including the fund in his various bank accounts, PF account, PPF account, FDs, RDs, etc.—go to their legal heirs. This division is made according to his will. In case they have not left a will, laws of succession will apply, according to their religious faith. In case the person is a Hindu, for instance, the Indian Succession Act, 1925, will come into play.

In that sense, the role of the nominee is of an intermediary. The nominee basically receives and distributes the funds on behalf of others.

A nominee may or may not be the legal heir of a person. Supposing a person nominates his son as the nominee in his PF account. Also suppose that the deceased has not left a will— known as dying intestate in legal parlance. In this case, the son is the nominee as well as the legal heir if the deceased. It is another matter that the list of legal heirs of a person is quite long and there might be several other Class-1 heirs with their respective legal claims.

Supposing the deceased leaves a will and leaves all his property to his wife. In this case, the son would remain just a nominee and not the legal heir.

That said, a person can give away all his self-acquired property to a person of his choice. The same rule is not applicable on his ancestral property. Laws of inheritance apply in division of such property.

In most cases, appointing a nominee is an optional choice. However, it is in the interest of an account holder to appoint a nominee. This will ensure the transfer of assets takes place in a smooth manner with a custodian in the form of the nominee taking care of the business.

The recent regulation updates by SEBI in the benefit interest of safeguarding investors, have amended the mandatory nomination especially in MF and Equitiy related instruments.

Even if you have not added a nominee in your bank account, you can do so anytime by visiting a branch or conducting the activity online. Also, you have the option to change your nominee anytime you want.

Add a legal heir as your nominee: Banks insist on you add a family member as your nominee at the time of opening of bank accounts, etc. This is done primarily to avoid dispute and confusion. It is also in your own interest to nominate a person who is among your legal heirs, legal or intended.

Nominee is not the legal heir: The mere act of nomination does not provide a nominee any right in your assets. Nomination that way is no substitute for making a will. In case you want your self-acquired properties to go to a person who is not your legal heir, you would have to specify this in your will.

Minor nominee would require a custodian: If you have made a young person the nominee in your bank account or insurance policy, their legal guardians would be decision makers till the nominee attains adulthood.

Since banks won’t force you to appoint a nominee, should you still take the trouble? The answer is, definitely. According to experts, nomination is one of the several means to facilitate for a hassle-free transfer of assets post your demise.