While looking through old pictures, Anjali felt overwhelmed with sadness at the sudden loss of her husband, Sanjay.
The situation became even more complicated when it was revealed that Sanjay had chosen his nephew, Raj, as the nominee for the shares he left behind. These shares amounted to more than a crore.
Anjali’s lawyer argued that, as the legal heir to her husband who died without a will, she should have ownership rights and be able to do anything she wished with them.
However, the court disagreed, stating that Anjali, couldn’t own the shares because she wasn’t the nominee. She cannot stake a claim over the shares her husband once owned. The nomination of Sanjay’s nephew takes precedence, leaving Anjali caught up in a tangle of legal complexities.
Do You Think Nominees Get Everything?
Confused about what happens to your assets after you’re gone? You’re not alone. A recent LinkedIn poll revealed that 29% of respondents believe nominees automatically inherit everything, and 14% even assumed spouses and children automatically share equally, regardless of nominees.
With nearly 30% believing nominees inherit everything, it’s crucial to understand the nuances. So, are nominees instant heirs, temporary caretakers, or something in between?
You’ve saved for years, built a nest egg, and want to ensure your loved ones are taken care of after you’re gone.
So you name a nominee for your insurance, your mutual funds, and even your property, assuming that this person automatically gets the inheritance.
Do nominees automatically inherit everything or is it more complicated than that?
A nominee is someone you choose to receive specific assets after your death, like insurance payouts or mutual funds but it’s important to note that the nominee may not be the final owner of your assets. This depends on your will or succession laws.
Why bother nominating someone if they might not inherit everything?
So, naming a nominee isn’t about guaranteeing who gets everything. It’s about making things fast and smooth for your loved ones. They get the money or assets quickly, then handle the rest according to your wishes or the law.
When does the nominee become the Owner and not just the Custodian?
This “simple transfer” rule doesn’t hold true across all asset classes. Remember Anjali, the one with the lost inheritance? Not all nominees are created equal! Here’s how ownership plays out for different belongings.
Will Vs Nominee: Why a Will Guarantees Your Wishes
Rohan, a 58-year-old, wanted to ensure his wife, Shreya, inherited everything after his passing. He named her beneficiary on his insurance and investments. He thought it was enough.
When he passed away, though Shreya was the nominee, the succession laws recognized his children who were well settled as legal heirs, granting them equal rights to the assets.
This wasn’t Rohan’s intention, leaving Shreya vulnerable to potential family disputes and delays in receiving her rightful inheritance.
The Lesson:
Nomination is a good first step, however, it’s not the final act. For true peace of mind, a Will is crucial.
Consider Rohan’s story, a simple Will naming Shreya as the sole beneficiary for his assets could have saved the day. It would have ensured her financial security and honoured his intentions, leaving no room for ambiguity or legal challenges.
For a comprehensive financial planning guide, refer to my previous article at https://theprudentinvestor.in/where/. It covers creating an emergency folder, writing a will, and avoiding common mistakes.
Procrastinating on your Will? You’re not alone! Let’s get it done together.
