The BuyT Desk
Based on the 2018 report, more than 5,500 crore rupees are lying in scheduled banks unclaimed, and the primary reason behind it is no nomination. Nomination ensures that the nominee will be entitled to receive all the assets after the account holder’s death. According to the legal rights, the nominee is just a trustee, and that will eventually be passed on to the legal heirs of the deceased.
When Can You Nominate?
Whenever you open a fixed deposit account or engage yourself in any other kind of investments, such as shares or mutual funds, there would be a separate section for nominees. You can choose to ignore or fill up the blank columns.
Who Is A Nominee?
When an account holder nominates a person to facilitate the deposits in their account or investment in mutual funds, then in case of the original account holder’s death, the nominee receives the details of the account. A nominee can be anyone: a parent, sibling, spouse, kids. One can have multiple nominees. In case the share is large, it can be divided among two nominees.
Why Is Nomination Important?
If there is no nomination, and unfortunately the account holder passes away, then the entire asset or share will become unclaimed. The family needs to go through legal procedures to prove that they are the legal heir of the deposits lying in the account. A nomination can help to provide financial security for the surviving partner or family member of the deceased.
What Are The Regulations For Nomination?
Different financial institutes have their standard process of nomination and also claim settlement. Now, due to a lack of nominations, the entire process becomes straining and emotionally staggering. Nomination is a quick process and must be regularized and recommended to every account holder. If the nominee is a minor, then a guardian needs to be assigned.
What Is The Nomination Process For The Financial Asset?
Life insurance — Here, you will get the concept of a beneficial nominee. The policyholder can only assign the position to any close relative. In the case of a minor, a guardian is required, and nomination can be changed within 10 years of the policy.
Mutual funds — Utmost 3 persons can be nominated to share the funds equally, and they need not be close relatives. To avoid any future claims usually, the nominees are placed according to the will.
Bank accounts — You get to select only one nominee for every account or FDR. In the case of FD, you need to have multiple accounts to nominate more than one candidate but one for each account.
So, before you think of investments, you must discuss the plans. This helps to eliminate the hardship in case of an unfortunate accident of the account holder. Try to ensure nomination according to the Will so that there is no legal binding during the asset transfer. And, every investment comes with a disclaimer to educate the investor. Go through the objectives of the financial institution, read the schemes and judicial restrictions.
