Nominee Or Legal Heirs: Who Will Own Your Assets?
someone what is a nomination? Or who is a nominee? The answer will be instant and simple; nominee is a person whom we nominate to own our assets after our death. But this is not fully correct. Everyone is aware of nomination but what does it really mean from a legal point of view, very few are aware of it.
Nomination is a procedure done for the security of financial products or assets that you own and the person whom you nominate for these assets is the nominee. Your nominee will own your assets but he will get the custody to take care of your assets after your death. He will have the power to distribute your asset to your legal heirs whom you would have mentioned in the Will. Legal Heirs could either be your kids, mother or your father. If there are no legal heirs mentioned in your Will then your assets will be distributed according to the succession laws (According to this law after your death a nominee is only the caretaker of your assets not the owner).
Here are few ways your asset can be inherited by your nominee, listed by Sakina Babwani of Economic Times.
1. Life Insurance
People take life insurance policy to secure their dependents. A positive side of life insurance policy is that you can register more than one nominee, but on a condition that one nominee should be from your family. You can also add your friend as your nominee. To do this, you need to submit certain documents related to that person. According to Section 39 of Insurance Act, after the death of the policy holder your nominee will acquire all the right on your policy without any added benefits.
2. Mutual Funds
You make an investment to for secure your financial asset and as well as protect your family. In case if you don’t do investments carefully then after your death your family members have to struggle to claim it. In order to avoid such mess, be sure of making the Will including all the formalities related to nominations and also investments and accounts. While purchasing units in mutual funds, you can include up to three people as your nominee. Among this nominee one could be a minor too, it’s just that the guardians name should be mentioned in the nomination formalities.
3. Shares
About 75 to 80 per cent people invest in shares and debentures even in this investment you can nominate a person as a nominee. According to Section 109(A) of the Companies Act you can choose a nominee for your shares and debentures at any point of time. Thus nominees will be the owner for all your shares and debentures after your death but if you have drafted a Will then even your legal heirs can have rights on the shares. If the Will is not drafted before your death then the real owner will be your nominee after you.
4. Public Provident Fund
Public Popular Fund comes under the list of popular funds chosen by the people. Central Government came out with this scheme under the name PPF (Public Provident Fund) Act of 1968. Provident fund is a scheme for long term savings which was started by government to provide employees with the retirement security. Once you open your PPF account always ensure to have a nominee for your account which will help the nominee to receive the fund wholly after your death. If there are no nominees then your legal heirs will only get Rs.1 lakh that too after several formalities
5. Savings Account and Fixed Deposits
Nowadays when you open a new account in the bank you need to fill the nominees’ name for your account. The best benefit out of this nomination is that even after the death of the account holder the money in his account and the lockers including his contents will be released to the nominee by the bank overriding the succession laws. If you have only one account you can have only one nominee but in case of different accounts you can nominate different individuals.
6. Co-operative Housing Societies And Properties
In this case even if you nominate a person for your property the nominee will not get the ownership directly after you. The housing society has to transfer all the shares in the name of nominee, after which the nominee becomes the in charge of distributing or transferring among the legal heirs.
7. Other Investments
ULIP is one kind of life insurance plan it gives two benefits to the investor in the form of insurance and investment under a unique plan. The annuity returns depends on the annuity chosen by you. Annuity is nothing but a contract between the insurance company and you where you pay a lump sum amount to the company you will get disbursements regularly after some point of time.The annuity will be provided to you until you are alive and the nominee gets the initial premium paid by the policy holder initially.
It is good to have a better investing knowledge but along with that always make sure that you are well versed with the legal aspects of nominations to have a better financial life ahead and after you even your family will be free from all the legal issues.
(Ask Experts for reliability)
someone what is a nomination? Or who is a nominee? The answer will be instant and simple; nominee is a person whom we nominate to own our assets after our death. But this is not fully correct. Everyone is aware of nomination but what does it really mean from a legal point of view, very few are aware of it.
Nomination is a procedure done for the security of financial products or assets that you own and the person whom you nominate for these assets is the nominee. Your nominee will own your assets but he will get the custody to take care of your assets after your death. He will have the power to distribute your asset to your legal heirs whom you would have mentioned in the Will. Legal Heirs could either be your kids, mother or your father. If there are no legal heirs mentioned in your Will then your assets will be distributed according to the succession laws (According to this law after your death a nominee is only the caretaker of your assets not the owner).
Here are few ways your asset can be inherited by your nominee, listed by Sakina Babwani of Economic Times.
1. Life Insurance
People take life insurance policy to secure their dependents. A positive side of life insurance policy is that you can register more than one nominee, but on a condition that one nominee should be from your family. You can also add your friend as your nominee. To do this, you need to submit certain documents related to that person. According to Section 39 of Insurance Act, after the death of the policy holder your nominee will acquire all the right on your policy without any added benefits.
2. Mutual Funds
You make an investment to for secure your financial asset and as well as protect your family. In case if you don’t do investments carefully then after your death your family members have to struggle to claim it. In order to avoid such mess, be sure of making the Will including all the formalities related to nominations and also investments and accounts. While purchasing units in mutual funds, you can include up to three people as your nominee. Among this nominee one could be a minor too, it’s just that the guardians name should be mentioned in the nomination formalities.
3. Shares
About 75 to 80 per cent people invest in shares and debentures even in this investment you can nominate a person as a nominee. According to Section 109(A) of the Companies Act you can choose a nominee for your shares and debentures at any point of time. Thus nominees will be the owner for all your shares and debentures after your death but if you have drafted a Will then even your legal heirs can have rights on the shares. If the Will is not drafted before your death then the real owner will be your nominee after you.
4. Public Provident Fund
Public Popular Fund comes under the list of popular funds chosen by the people. Central Government came out with this scheme under the name PPF (Public Provident Fund) Act of 1968. Provident fund is a scheme for long term savings which was started by government to provide employees with the retirement security. Once you open your PPF account always ensure to have a nominee for your account which will help the nominee to receive the fund wholly after your death. If there are no nominees then your legal heirs will only get Rs.1 lakh that too after several formalities
5. Savings Account and Fixed Deposits
Nowadays when you open a new account in the bank you need to fill the nominees’ name for your account. The best benefit out of this nomination is that even after the death of the account holder the money in his account and the lockers including his contents will be released to the nominee by the bank overriding the succession laws. If you have only one account you can have only one nominee but in case of different accounts you can nominate different individuals.
6. Co-operative Housing Societies And Properties
In this case even if you nominate a person for your property the nominee will not get the ownership directly after you. The housing society has to transfer all the shares in the name of nominee, after which the nominee becomes the in charge of distributing or transferring among the legal heirs.
7. Other Investments
ULIP is one kind of life insurance plan it gives two benefits to the investor in the form of insurance and investment under a unique plan. The annuity returns depends on the annuity chosen by you. Annuity is nothing but a contract between the insurance company and you where you pay a lump sum amount to the company you will get disbursements regularly after some point of time.The annuity will be provided to you until you are alive and the nominee gets the initial premium paid by the policy holder initially.
It is good to have a better investing knowledge but along with that always make sure that you are well versed with the legal aspects of nominations to have a better financial life ahead and after you even your family will be free from all the legal issues.
(Ask Experts for reliability)
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