Savings Bank Account: When one opens a bank account a special nomination form is given. The a/c holder needs to fill the form completely and all the copies and original form needs to be signed. There can be only one nominee for each account and the signing needs to be witnessed. Incase of demise of the account holder the nominee needs to approach the bank with all the required documents i.e. claim form, death certificate, proof & customer copy of Nomination. If the legal heirs want to lodge a complaint it would be against the nominee and not the bank as bank has paid the money as per the terms of the nominations filed with them.
Mutual Funds: The Mutual Funds Regulations of SEBI allow nominations for their unit holders. This is beneficial as many people invest through mutual funds. The asset management company provides a nomination facility for their unit holders incase of any sudden demise of the unit holder. Multiple nominations can also be done in Mutual funds. A non-resident Indian can be a nominee, subject to the SEBI rules & regulations. Incase of death the units in the name of the unit holder will be transferred in the name of the nominee.
Shares: Every shareholder can nominate a person to whom the shares will be held by in the event of the shareholder’s death. However incase of shares the rule of nomination at the time of claim is little different. If the shares are jointly held, then the ownership of the shares goes to the surviving holders. The nominee is nowhere in the picture. In case of single holding, the nominee is superior to legal heirs and also to whatever one writes in their will. Incase of death the shares are transferred in the name of the nominee and become entitled to all the rights attached. Regardless of what is stated in a privately executed will, a company would have to deal with the nominee as a person implementing the rights of the deceased shareholder.
Thus whenever one decides to buy a financial product to invest their funds one should remember that it is equally important to have a nominee(s) for the same. Since financial products are bought for a future goals for your heirs,nomination makes it easy for them to receive it incase of one’s sudden demise. A nomination can however be changed as and when the owner wants during his life. To claim after the demise of the owner the nominee needs to produce all the legal documents as decided and asked by the bank, company etc.
Nomination is the most simple form of Estate Planning. It is also the first step in your succession planning. Along with nominations, do make a will also. This will ensure that the wealth created by you during your lifetime is passed on without hassles & bad blood to your family members!