Life is uncertain and pandemic has made us realise that in a very stronger sense. In this pandemic, it is important for us to set our personal finance matter right and look beyond and think how are finances going to benefit our loved ones, beyond us.
An individual often believes that once he or she has filed the Nomination section of his investment then the nominee automatically becomes the beneficiary of the underlying assest after the individual’s demise.
As per Law, A nominee is only a custodian of the asset and not the ultimate beneficiary of the asset. The Nominee only has the right to represent on behalf of the owner and does not necessarily have any kind of entitlement over the asset. If something happens to the owner, then the nominee is legally bound to hand over the underlying asset to the legal heir and conduct all the necessary paperwork to effect the same. This rule is applicable to most of the financial assets.
Each of the Financial asset type has got its own eventual owner, and to name few
|Immovable property||Legal Heir|
|Shares/ demat A/c||Legal Heir|
|Corporate deposits||Legal Heir|
|Bank / Fixed deposit||Legal Heir|
|Locker control in bank||Legal Heir|
|Mutual funds||Legal Heir|
|Empolyee Provident Fund||Nominee|
|Insurance||Nominee( in certain cases)|
That means for all other assets like bank accounts (all kinds of accounts), property, demat accounts, mutual fund holdings, equity shares, PPF, corporate fixed deposits — the nominee acts like a custodian.
A person has a single nominee but can have more than one legal heir, in such a case in order to pass on the wealth in a smoother manner without a hazzle between the legal heirs , it is important for an individual to write a will.
In most of the scenario, Nominee is made during the purchase of the financial asset, and we fail to review the nominee when our life takes a huge turns. When a person was umarried at the age of 22 would have had his father or mother as his nominee, which he would have failed to change after his marriage and kids at age of 45 years.
A will, a composite document that specifies an individual’s wish to pass on his asset in a specified manner about who and how much a person is entitled. A will also becomes a document to announce a person’s asset details and the nature of his financial assets to his legacy.
This does not mean that nomination is not a necessary one. If there is NO nominee then there is no way the organisation will be able to hand over the underlying proceeds. In the absence of a nominee, the legal heir(s) need to furnish succession certificates, affidavits for each and every investment and to each and every entity with whom such investments / financial assets have been held.
How to write a will ?
Writing a Will is a simple process. A individual has to list the various asset details and needs to specify who will be benefited with the asset after the individuals demise. Will can also talk about the individuals sentiment over a movable asset and material and how it needs to be handled after his/her demise.
Will is not a compulsory registerable document , so a will written in a plain piece of paper and properly executed and attested by two witnesses will become a valid will. But, it is advisable to register a will as a registered will cannot be tampered with, mutilated, destroyed or stolen.
Will needs to be executed when an individual person is in proper mental health.
Though will is simple document to be written , it is recommended for the individual to take a legal opinion and hire an expert especially if there is an anticipation of conflict in whatever manner. It is recommended to Review your will every 2 years , and make changes according to how your life takes you.