Nomination is simply the right to receive whereas a Will decides who eventually will own the asset
My father passed away some months ago. While sorting his documents, I found that in case of some of his investments an uncle of mine is the nominee. I was thinking of selling an investment – will I, as the legal heir need the nominee’s approval to sell? What is the nominee’s standing compared to legal heirs?
Birendra Kumar Solanki, Jaipur
You are in a tricky situation. According to the law, a nominee is a custodian or trustee and not the owner of the assets, and ultimately is legally bound to transfer it to the legal heirs. Which opens the next question – who is the legal heir? Ideally, a legal heir is someone who is mentioned in the Will. However, if the deceased person hasn’t left a Will, then the legal heirs of the assets are decided according to succession laws like Hindu Law or Muslim Law.
Many a times, people assume that by making nominations they are making the right move by defining the succession of their assets.
However, that is not the case. Nomination is a must because if you don’t nominate, then your legal heirs will need to run from pillar to post to prove that they are the actual heirs. Till that time, all your assets and investments, like mutual funds or insurance will be stuck with the respective companies. However, the main reason to appoint a nominee is to have someone you trust, who, in the event of your death, will become a guardian of your assets and distribute it to the legal heirs. It is for this reason that nominees and legal heirs are the same for many people.
Nomination is simply the right to receive whereas a Will decides who eventually will own the asset. For example, if a husband has nominated his wife in his life insurance policy, then upon his death, all the proceeds of his life insurance policy will go to her. However, if the husband’s Will says that a portion of or the entire asset should go to his parents and children, then in that case, the wife will have to part with the asset accordingly.
There are exceptions to this rule, especially when it comes to stock investments. In this case, in the absence of a Will, the nominee becomes the ultimate owner of the shares, because the law of inheritance does not apply. However, if you have a Will then that will supersede the nomination. In your case, the Will left by your father will decide the fate of the investment and if you have any rights to it, depending on what his Will states.